Published 11:03 a.m. ET May 12, 2023
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The average money market account (MMA) rate ticked up by one basis point since last week to 0.53%, and four points over the past month. Now is a great time to consider opening one of these accounts as they can be a worthy option for savers who prioritize account flexibility and higher interest rates than those typically found offered by traditional savings accounts.
Money market account rates
Money market accounts currently average an APY of 0.53%, per Bankrate data, a one basis point increase from one week ago and up four basis points from last month.
The highest rate in Bankrate’s dataset today, though, sits at a much heftier 4.75%, so shop around to see what high rates you can find.
If you were to invest $10,000 into an MMA with a 4.75% interest rate that compounds daily, you would earn about $490 in interest over a year, assuming no withdrawals or additional contributions are made.
Money market accounts vs. savings accounts
Money market account rates usually offer higher yields than what you’ll find on savings accounts, especially those offered at brick-and-mortar banks. MMAs often require a higher minimum deposit or balance, but banks and financial institutions typically reward clients for maintaining larger balances with higher rates.
Currently, the average rate on an MMA in Bankrate’s dataset stands at 0.53% APY, while the average rate you’ll find on a savings account with a $10,000 balance is 0.25% APY.
Keep in mind that savings accounts are better suited to achieve a particular goal, such as maintaining an emergency fund or amassing a down payment on a home. By placing your funds in a high-yield savings account, you’ll earn interest and you’ll hopefully also be less inclined to spend the money.
What is a money market account?
Think of a money market account as a mixture between a savings and checking account, often offering competitive interest rates and typically requiring a higher minimum balance. You can enjoy the perks of a high-yield savings account while having access to a debit card and check-writing, all with FDIC insurance up to $250,000. Though not designed for everyday spending, these accounts provide some flexibility with limited transactions.
Frequently asked questions (FAQs)
Depending on the bank, you might be able to open your money market account online. You’ll need to provide some basic information, such as your name, address, date of birth, Social Security number and phone number. Additionally, you’ll need to supply the account number and routing number of the bank you intend to use for your initial deposit if you’re funding a new money market savings account online.
Once your account is opened and funded, you can manage it just like any other bank account. This includes regularly reviewing your statements or account activity, setting up transaction alerts and linking it to your other bank accounts for seamless transfers.
In some cases, yes. Some banks or credit unions may charge monthly maintenance fees, which can sometimes be waived if you maintain a certain minimum balance.
Others may impose fees for excess transactions, as MMAs are subject to federal regulations limiting the number of certain types of transactions (such as transfers and withdrawals) to six per month. It’s essential to review the account terms and fee structures before opening a money market account to ensure you’re getting the best possible deal for your financial situation.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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