Editorial note: We earn a commission from affiliate links on Forbes Advisor. Commissions do not influence the opinions or ratings of our editors.
Current money market interest rates
The average money market interest rate is currently 0.61%, with peak interest rates reaching up to 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 21, 2024. Interest rates are based on a minimum deposit of $10,000.
What are money market interest rates?
Interest rates on money market savings accounts are often referred to as money market rates. These earnings are typically credited daily or monthly as a percentage of your savings balance. Money market rates change daily. Banks and credit unions that pay tiered interest rates often reserve the best rates for the largest balances.
An interest rate represents the earnings earned solely on your account balance. An annual yield that takes into account compounding interest is called an annual percentage yield (APY). Compounding interest is interest that accrues on interest as you earn it.
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 you open a money market account, take the time to review offers from different banks. In addition to looking for the highest interest rates, you should compare minimum balances and deposit requirements, monthly fees, and withdrawal limits. Look for an account with competitive interest rates that you can easily qualify for.
Typically, you can submit an application for a money market account online or in person at a branch. The application will ask you to provide basic information, including your name, address, Social Security number, employment status and income. You will also likely need to provide government-issued identification. Once 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’re looking for a safe place to keep some cash while earning interest. These are FDIC or NCUA insured accounts that offer convenient options for accessing your money and higher interest rates than many other deposit accounts. If you can meet the initial deposit requirements to open an account and maintain the necessary balances to earn the best interest rates, a money market account may make sense for you.
However, a money market account may not be worth it if you end up paying more in fees than you earn in interest, or if minimum balance requirements and transaction limits cause you unnecessary stress. If you need an account for everyday use, consider a checking account that offers interest. For lower minimums, you may have better luck with a savings account.
