Find out how much you could earn at current money market account rates. Deposit interest rates (including money market account rates) have been falling over the past two years. That’s why it’s more important than ever to compare MMA rates and make sure you’re earning as much as possible with your balance.
The national average money market account rate stands at 0.56%, according to the FDIC. This may not seem like much, but consider that four years ago, it was just 0.07%. So, by historical standards, money market account rates are still quite high.
Still, some of the top accounts currently offer more than 4% APY. Since these rates may not last much longer, consider opening a money market account now to take advantage of today’s high rates.
Here’s a look at some of the best MMA rates available today:
The amount of interest you can earn with a money market account depends on the annual percentage rate (APY). This is a measure of your total earnings after one year by considering the base interest rate and how often interest is compounded (interest on money market accounts is typically compounded daily).
Let’s say you invest $10,000 in an MMA at an average interest rate of 0.56% compounded daily. At the end of a year, your balance would grow to $10,056.16: your initial deposit of $10,000, plus $56.16 in interest.
Now let’s say you choose a high-yield money market account that offers 4% APY. In this case, your balance would grow to $10,408.08 over the same period, which includes $408.08 in interest.
Compared to a traditional savings account, a money market account may have more restrictions. For example, money market accounts often require a higher minimum balance to get the best interest rate and/or avoid fees. Certain MMAs may also limit the number of withdrawals you can make per month (usually six).
In general, there are no banks that offer a 7% interest rate on money market accounts or any other type of deposit account. That said, you may be able to find local banks and credit unions applying limited-time promotional rates on certain accounts, which could be as high as 7%. However, promotional rates at this level typically apply to a limited balance.
Read more: Are there already savings accounts with 7% interest?