October 17, 2024 — Rates Move Upward – Forbes Advisor – Technologist

Current Money Market Rates

Right now, the average money market rate sits at 0.59%, but the best rate today is 5.00%.

Here are today’s money market account rates:

• Average APY: 0.59%
• Highest Rate: 5.00%

Source: Curinos. Data accurate as of October 16, 2024. Rates are based on a $10,000 minimum deposit amount.

What Are Money Market Rates?

Money market rates are the interest rates you earn on your balance in a money market account. Rates for money market accounts are variable, meaning they are subject to change at any time and are calculated as a percentage of your balance. Often, money market accounts have tiered rates with larger balances earning the best rates.

The interest rate for a money market account represents how much money you earn on your balance, and the annual percentage yield (APY) represents how much you earn on your balance plus compound interest over the course of a year. Compound interest is the interest you earn on interest as it’s added back to your account.

How Does a Money Market Account Work?

Money market accounts are interest-bearing deposit accounts that work similarly to savings accounts. You deposit money whenever you have some to spare and it grows more interest 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 fund accessibility, often including checks and debit cards, though you might be limited to six monthly transactions.

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

How To Open a Money Market Account

Before opening a money market account, look into at least a few options with different banks. Compare minimum balance requirements, monthly fees, withdrawal limits and APYs to choose the best fit. Don’t forget to check out the conditions to earn the highest interest rates too.

You can typically 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 show a government-issued ID. Then, once you’re approved, you can make your initial deposit.

Money Market Account vs. Savings Account

Money market accounts resemble checking accounts in some ways but are most similar to savings accounts. Like savings accounts, you earn interest on your balance and can add or remove funds at any time. Your balance is insured and easily accessible in either type of account. Both savings and money market accounts may have monthly fees, balance requirements and transaction limits, but money market accounts tend to have higher fees and minimums.

Money market accounts are usually more flexible than savings accounts because they may offer debit cards and check-writing capabilities. This makes them a little like checking accounts, but unlike checking accounts, money market accounts often limit monthly transactions.

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 won’t have to pay many fees. When you need easy access to your money but you plan 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 minimum balance requirements to earn the best rates or if a money market account charges fees that will deplete your earnings, it may not be worth it. Consider other savings options if you’re looking for lower minimum requirements, or explore interest checking accounts if you need unrestricted access to your cash.