As interest rates begin to fall following 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 to consider is a money market account (MMA).
These accounts are similar to savings accounts. You will earn interest on your balance and may also include debit card or check transfer facilities.
Want to know where the best interest rates on money market accounts are right now? Here’s what you need to know.
From a historical perspective, interest rates on money market accounts have been very high. According to the FDIC, the national average interest rate on money market accounts is just 0.64%, but top interest rates on money market accounts are often 4% APY or higher, which is similar to the interest rates offered on high-yield savings accounts.
Here are some of the best MMA ratings currently available.
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Additionally, the table below features some of the best savings and money market account rates currently available from our verified partners.
Deposit account interest rates, including money market rates, are tied to the federal funds rate. This is the interest rate range set by the Federal Reserve and the range of interest rates that banks charge each other for overnight loans. When the Federal Reserve raises the federal funds rate, savings account rates typically increase as well. Conversely, if the Fed lowers interest rates, deposit rates will fall.
Starting in July 2023, the Fed has maintained its target range at 5.25% to 5.50%. But as inflation subsided and the economy improved, the Fed cut the federal funds rate by 50 basis points in September. As a result, money market interest rates began to fall. With further rate cuts expected in 2024 and 2025, now may be savers’ last chance to take advantage of currently high interest rates.
Read more: Can you lose money in a money market account?
Given that money market account interest rates remain high, these accounts are an attractive option for savers. Even so, determining whether it’s the right time to put money into a money market account also depends on your financial goals and broader economic situation. Important factors to consider are:
Liquidity needs: Money market accounts often have check transfer capabilities and debit card access, giving you easy access to your money (although there may be limits on monthly withdrawals). there is). If you need to maintain access to your money while earning a decent yield, a money market account is ideal.
Savings Goals: If you have short-term savings goals or want to build an emergency fund, a money market account is a safer place to store your cash with better returns than most traditional savings accounts .
Risk Tolerance: For conservative savers who want to avoid the ups and downs of the stock market, money market accounts are attractive because they are backed by FDIC insurance and there is no loss of principal. However, if you’re saving for a long-term goal like retirement, riskier investments are needed to generate higher returns to reach your savings goals.
With interest rates still rising, now is 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. Maybe. Comparing rates from different institutions can help you find the best option.
