Money market accounts (MMAs) provide a middle ground for savers who want higher interest rates than those typically offered in traditional savings accounts and want more flexibility in their accounts. MMA rates rose slightly last week, according to data from Kyrinos, and are significantly higher than at the same time last year, thanks to the Fed’s year-long efforts to rein in inflation.
Money market account interest rate
According to Curinos data, the average APY for money market accounts with a minimum balance of $10,000 is now 0.56%, slightly higher than last week.
The highest rate in the Curinos dataset is 5.13%, so you may be able to find a higher rate with your own research.
If you invest $10,000 in MMA at an interest rate of 5.13% compounded daily, you could earn more than $520 in interest over a year, assuming no withdrawals or additional contributions.
Money market accounts and savings accounts
Interest rates on money market accounts typically offer higher yields than interest rates on savings accounts. MMAs often require higher minimum deposits or balances, but banks and financial institutions typically reward customers who maintain larger balances with higher interest rates.
Currently, the average interest rate for an MMA with a minimum balance of $10,000 in Curinos’ dataset is 0.56% APY, while the average interest rate for a savings account with a balance of $10,000 is only 0.23% APY.
Keep in mind that savings accounts are good for specific purposes, like maintaining an emergency fund or building up a down payment for a home. By putting your money in a high-yield savings account, you’ll earn interest and hopefully never want to spend it again.
What is a money market account?
Think of a money market account as a combination of a savings account and a checking account. They often offer competitive interest rates and usually require a higher minimum balance. Enjoy the benefits of a high-yield savings account while issuing debit cards and checks, all FDIC insured up to $250,000. Although these accounts aren’t designed for everyday spending, they do offer some flexibility for limited transactions.
methodology
To establish average money market account rates, Curinos focused on accounts intended for personal use. Money market accounts that fall into certain categories are excluded, such as promotional offers, relationship-based accounts, private, youth, seniors, and students/minors. The average money market account rates quoted above are based on a minimum deposit of $10,000.
Frequently asked questions (FAQ)
Depending on your bank, you may be able to complete the process online. You will need to provide basic information such as name, address, date of birth, social security number, and phone number. Additionally, if you fund your new money market savings account online, you’ll need to enter your account number and routing number for the bank you’ll use to make your initial deposit.
Once your account is opened and funded, you can manage it like any other bank account. This includes regularly checking your statements and account activity, setting transaction alerts, and linking other bank accounts for seamless transfers.
In some cases, yes. Some banks and credit unions may charge a monthly maintenance fee, which may be waived if you maintain a certain minimum balance.
MMAs are subject to federal regulations that limit the number of certain types of transactions (such as transfers and withdrawals) to six per month, so some may charge fees for excess transactions. It is essential to check the account terms and fee structure before opening a money market account to ensure you are getting the best deal for your financial situation.
