As interest rates begin to fall due to the Fed’s recent rate cuts, it’s more important than ever to make sure you’re getting a competitive interest rate on your savings. One option you may want to consider is a money market account (MMA).
These accounts are similar to savings accounts: they offer interest on your balance, but may also have a debit card and/or the ability to write checks.
Wondering where to find the best money market account rates today? Here’s what you need to know.
From a historical perspective, interest rates on money market accounts have been quite high. According to the FDIC, the national average interest rate for money market accounts is just 0.66%, but the highest interest rates on money market accounts often pay more than 4% APY or even more – similar to the rates offered on high-yield savings accounts.
Here’s a look at some of the best MMA rates available today:
Check out our picks for the 10 best money market accounts available today >>
Additionally, the table below contains some of the best savings and money market account rates currently available from our verified partners.
As of July 2023, the Fed maintained a target range for its federal funds rate of 5.25%–5.50%. However, as inflation cooled and the economy improved, the Fed cut the fed funds rate by 50 basis points in September, and another 25 basis points in November. In December, the Fed made its last interest rate cut of the year (25 basis points). The Federal Funds rate is now 4.25%-4.50%.
As a result, money market interest rates have started to fall. Further interest rate cuts are expected in 2025, meaning this may be the last chance for savers to take advantage of today’s higher interest rates.
Read more: Can you lose money in a money market account?
Since interest rates on money market accounts are still high, these accounts are an attractive option for savers. Still, deciding whether it’s the right time to put money in a money market account also depends on your financial goals and broader economic conditions. Here are some important factors to consider:
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Liquidity needs: Money market accounts provide easy access to your money, as they often offer the ability to write checks or access a debit card (although there may be a limit on monthly withdrawals). If you want to keep your money accessible while still earning a decent return, a money market account may be ideal.
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Savings goals: If you have short-term savings goals or want to build an emergency fund, a money market account can provide a safer place for your money, with returns that are better than most traditional savings accounts.
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Risk tolerance: For conservative savers who prefer to avoid the ups and downs of the stock market, money market accounts are attractive because they are covered by FDIC insurance and cannot lose principal. However, if you are saving for a long-term goal such as retirement, riskier investments are needed to generate higher returns that will help you reach your savings goal.
Since interest rates are still high, now may be a good time to consider a money market account, especially if you’re looking for a balance of safety, liquidity, and better returns than traditional savings accounts. Comparing rates from different institutions can help you find the best options available.
