May 9, 2024 — Earn Up To 5.12% – Forbes Advisor – Technologist

Current Money Market Rates

Right now, the average money market rate sits at 0.60%, but the best rate today is 5.12%.

Here are today’s money market account rates:

• Average APY: 0.60%
• Highest Rate: 5.12%

Source: Curinos. Data accurate as of May 8, 2024. Rates are based on a $10,000 minimum deposit amount.

What Are Money Market Rates?

Money market rates are interest rates tied to a money market savings account. These rates are variable rather than fixed, so they can fluctuate and change without notice, and they may also be tiered, so higher balances yield more favorable rates. Money market interest earnings are credited as a percentage of your balance.

The rate you earn on your balance is your interest rate, while the money you make on your balance with compound interest over a year is reflected in your annual percentage yield or APY. Compound interest is the interest you earn on the interest you’ve already made.

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 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.