October 22, 2024 – Earn up to 5.00% – Forbes Advisor

Current money market interest rates

Currently, the highest money market rate is 5.00%, compared to a national average rate of 0.58%.

Here are the current interest rates for money market accounts:

• Average APR: 0.58%
• Highest rate: 5.00%

Source: Curinos. Data is as of October 21, 2024. Prices are based on a minimum deposit amount of $10,000.

What are money market interest rates?

Money market interest rates are interest rates tied to a money market savings account. These interest rates are variable rather than fixed, so they may fluctuate and change without notice. They can also be tiered, so higher balances result in cheaper interest rates. Money market interest income is credited as a percentage of your balance.

The interest rate you earn on your balance is your interest rate, while the money you earn on your balance with compound interest over a year is reflected in your annual percentage yield or APR. Compound interest is the interest you receive on the interest you have already received.

How does a money market account work?

Money market accounts are interest-bearing deposit accounts that function similarly to savings accounts. You deposit money whenever you have some left over, and the interest increases the longer you leave it alone. These accounts are insured by the FDIC for banks and the NCUA for credit unions up to $250,000 per depositor. Money market accounts offer convenient access to funds, often including checks and debit cards, although you may be limited to six monthly transactions.

Compared to regular savings accounts, money market accounts typically offer higher interest rates. However, they tend to require higher minimum deposits and balances to earn them.

How to open a money market account

Before you open a money market account, consider 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 also check the conditions to get the highest interest rates.

Typically, you can apply for a money market account online or in person. You must provide personal information such as your name, employment status and income, address, and social security number, and provide government-issued identification. Once you have received approval, you can make your first deposit.

Money market account vs. savings account

Money market accounts function like savings accounts in some ways and checking accounts in others. Similar to savings accounts, money market accounts allow you to deposit money as you wish and earn interest on your savings. Both are highly liquid and secure deposit accounts that may apply withdrawal limits, balance requirements and monthly fees.

Similar to checking accounts and unlike most savings accounts, money market accounts can come with debit cards, checks, or both. This makes them a little more flexible than the typical savings account, but money market accounts can limit transactions and are not intended for everyday use. Money market accounts also typically have higher fees and deposit and balance requirements.

Is a money market account worth it?

A money market account is worth it if you have the funds to meet 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 option for earning 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 has fees that eat into your earnings, it may not be worth it. Consider other savings options if you want lower minimums, or check interest checking accounts if you need unlimited access to your cash.