March 28, 2024 — Earn Up To 5.13% – Forbes Advisor – Technologist

Current Money Market Rates

Right now, the average money market rate sits at 0.59%, but the best rate today is 5.13%.

Here are today’s money market account rates:

• Average APY: 0.59%
• Highest Rate: 5.13%

Source: Curinos. Data accurate as of March 27, 2024. Rates are based on a $10,000 minimum deposit amount.

What Are Money Market Rates?

Interest rates for money market savings accounts are often called money market rates. These earnings are typically credited as a percentage of your savings balance on a daily or monthly basis. Money market rates change every day. Banks and credit unions that pay tiered rates often reserve the best rates for the largest balances.

An interest rate represents the earnings made solely on your account balance. A yearly rate of return that factors in compound interest is called your annual percentage yield (APY). Compound interest is interest that accrues on the interest as you earn it.

How Does a Money Market Account Work?

A money market account (MMA) is a type of interest-bearing deposit account offered by banks and credit unions. MMAs at banks are insured by the FDIC, while MMAs at credit unions are insured by the NCUA. In both cases, depositors are covered for up to $250,000 per account type, protecting your money in the event of bank failure. Money market accounts work like other savings accounts in that you deposit money freely and earn interest on your balance. You can take out funds whenever you need to, but you may be restricted to six transactions per statement period.

Money market accounts typically pay higher interest rates than other deposit accounts, including traditional savings accounts. And unlike typical savings accounts, they usually offer debit cards, check-writing capabilities or both, providing convenient access to cash. Money market accounts often have higher deposit and balance requirements than many bank accounts.

How To Open a Money Market Account

To open a money market account, start by researching accounts to choose the option with the best rates for the amount you plan to save. Make sure you can meet opening and ongoing balance requirements to earn interest and avoid fees. In addition to rates and minimums, consider account fees, withdrawal limits and other features to find the best fit.

When you’re ready to open an account, you can submit an application online or at a bank branch. The application will ask for personal information, including your name, address, Social Security number, employment status and income. You’ll also need to provide a government-issued ID. Once your application is approved, you can make your first deposit. Be sure to transfer at least the minimum opening deposit required.

Money Market Account vs. Savings Account

Money market accounts share similarities with both savings and checking accounts. Like savings accounts, a money market account allows you to deposit money at your convenience and earn regular interest on your balance. Both accounts are safe and liquid, with easy access to your cash and insurance on your deposit. Either account can have monthly fees, withdrawal restrictions and balance requirements to earn interest and avoid fees. However, money market accounts typically have higher fees and balance requirements.

Like checking accounts, money market accounts often offer debit cards and checks, making them more convenient than the average savings account. However, money market accounts may limit your transactions, making MMAs less than ideal for regular use.

Is a Money Market Account Worth It?

A money market account is worth it if you want to save now but have easy access to your cash later. The accounts are safe options for putting away money because they’re FDIC- or NCUA-insured and won’t lose value. As long as you can meet deposit and balance requirements to avoid fees and earn interest, you’ll be in good shape with a money market account.

If you can’t fulfill the requirements for earning the highest rates, or if a money market account imposes fees that exceed your earnings, an MMA might not be worth it. Explore other savings accounts for smaller balances, or consider interest-bearing checking accounts if you frequently need to access your funds.