Editorial Note: We earn a commission from affiliate links on Forbes Advisor. Commissions do not influence our editors’ opinions or evaluations.
Current money market rates
Right now the average money market rate is 0.61%, but the best rate today is 5.15%.
Here are today’s money market account rates:
- Average APY: 0.61%
- Highest rate: 5.15%
Source: Curinos. Data accurate as of August 20, 2024. Prizes are based on a minimum deposit amount of $10,000.
What are money market rates?
Money market interest is the interest you earn on your money market account balance. Prices for money market accounts are variable, meaning they can change at any time and are calculated as a percentage of your balance. Often, money market accounts have differentiated 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 rate (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 when it is added back to your account.
How does a money market account work?
A money market account, or MMA, is an interest-bearing deposit account you can open at a bank or credit union. These are insured up to $250,000 per depositors by the FDIC at banks or the NCUA at credit unions. The insurance protects your balance if your bank goes bankrupt.
As with other savings accounts, your money in an MMA will grow as it earns interest, and you can add or withdraw money at any time. You may also be able to print checks or use a debit card. However, depending on the bank, you may be limited to six transactions per accounting period.
Money market accounts can offer higher interest rates than typical savings accounts. On the other hand, they often require higher minimum deposits and balances.
How to open a money market account
Before opening a money market account, spend some time checking out what different banks offer. In addition to shopping around for the highest rates, you’ll want to compare minimum balance and deposit requirements, monthly fees, and withdrawal limits. Look for an account that offers competitive rates that you can easily qualify for.
You can typically 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 present a government-issued ID. After being 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. Like savings accounts, you earn interest on your balance and can add or remove money at any time. Your balance is insured and easily accessible on both account types. 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 minimum requirements.
Money market accounts are usually more flexible than savings accounts because they can offer debit card and check-writing features. This makes them somewhat 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 want to save now but have easy access to your cash later. Accounts are safe ways to put money away because they are FDIC or NCUA insured and will not lose value. As long as you can meet the deposit and balance requirements to avoid fees and earn interest, you’ll be in good shape with a money market account.
If you can’t meet the requirements to earn the highest rates, or if a money market account charges fees that exceed your earnings, an MMA may not be worth it. Explore other savings accounts for smaller balances, or consider interest-bearing checking accounts if you need to access your funds frequently.