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Current money market interest rates
The current average money market interest rate is 0.61%, but the best interest rate is currently 5.15%.
Here are the current interest rates for money market accounts:
- Average APY: 0.61%
- Highest interest rate: 5.15%
Source: Curinos. Data current as of August 27, 2024. Interest rates are based on a minimum deposit of $10,000.
What are money market interest rates?
Money market rates are the interest rates you receive on your balance in a money market account. Money market account interest rates are variable, meaning they can change at any time, and are calculated as a percentage of your balance. Money market accounts often have tiered interest rates, with larger balances earning the best rates.
The interest rate on a money market account tells you how much money you’ll earn on your balance, and the annual percentage rate (APY) tells you how much you’ll earn on your balance plus compound interest over the course of a year. Compound interest is the interest you earn on interest that’s added back to your account.
How does a money market account work?
A money market account (MMA) is an interest-bearing deposit account you can open at a bank or credit union. These are insured by the FDIC for banks or the NCUA for credit unions up to $250,000 per depositor. The insurance protects your funds if your bank goes bankrupt.
Like other savings accounts, your money grows with interest earnings in an MMA, and you can deposit or withdraw funds at any time. You may also be able to write checks or use a debit card, but depending on your bank, you may be limited to six transactions per statement period.
Money market accounts may offer higher interest rates than traditional savings accounts. However, they often require higher minimum deposits and balances.
How to open a money market account
Before opening a money market account, you should look at at least a few options at different banks. Compare minimum balance requirements, monthly fees, withdrawal limits, and APYs to choose the best solution. Don’t forget to check the terms and conditions to get the highest interest rates.
Typically, you can apply for a money market account online or in person. You will need to provide personal information such as your name, employment status and income, address and social security number, as well as provide government-issued identification. Once your application is approved, you can make your first deposit.
Money market account vs. savings account
Money market accounts are similar to checking accounts in some ways, but are most similar to savings accounts. As with savings accounts, you earn interest on your balance and can deposit or withdraw funds at any time. Your funds are insured and easily accessible in both types of accounts. Both savings accounts and money market accounts can have monthly fees, balance requirements, and transaction limits, but money market accounts tend to have higher fees and minimums.
Money market accounts tend to be more flexible than savings accounts because they can offer debit cards and check-writing capabilities. This makes them somewhat similar to checking accounts, but unlike checking accounts, money market accounts often have limits on monthly transactions.
Is a money market account worth it?
A money market account is worth it if you have the funds to meet the deposit and balance requirements and you don’t have to pay a lot of fees. If you need easy access to your money but want to save it for now, money market accounts are a low-risk way to earn interest. They are also FDIC or NCUA insured.
If you can’t meet the minimum balance requirements to get the best interest rates, or if a money market account charges fees that eat into your returns, it may not be worth it. Consider other savings options if you’re looking for lower minimums, or explore interest-bearing checking accounts if you need unrestricted access to your cash.
