Average Money Market Rates: Maximizing Your Savings Potential (2024)

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• The average money market account earns 0.64% Annual Percentage Yield (APY), according to the FDIC.
• The actual interest rate on a money market account may depend on the account balance and bank.
• Money market interest rates can change over time.

A money market account functions like a savings account — it earns a small amount of interest and can help money grow, and has monthly limits on withdrawals.

To learn more about the impact of money market account rates on savings, we'll dive into how money market rates are determined and where to find the best money market accounts.

Introduction to money market rates

Definition and importance

The money market account rate tells you how much you'll earn by keeping money in it. When looking at money market rates, you might see two different numbers — the interest rate and the annual percentage yield (APY).

Both of these numbers are expressed as percentages. The difference between these two numbers is that the APY tells you how frequently the interest is compounded, while the interest rate doesn't. If you're trying to figure out how much interest you'll earn in a year, you should refer to the APY, not the interest rate.

How money market rates work

Your money market account's rate will vary based on several factors, including the balance, which bank you use, and the current interest rate market. The average money market account rate is 0.64% APY based on an average of $10,000 to $100,000 balance tiers, according to the FDIC.

Money market accounts have variable rates, just like traditional savings accounts. The rate can change over time, and you'll get a notice from your bank if this happens.

Factors influencing money market rates

Money market rates tend to change with the overall economy and interest rates set by the Federal Reserve. The Fed may adjust rates to ensure that long-term interest rates, maximum employment, and price stability are maintained.

You'll see money market account rates drop at financial institutions when the Fed cuts rates and rise when the Fed raises rates.

Money market accounts currently offer competitive rates because the Federal Reserve raised the federal funds rate several times in 2022 and 2023. Once inflation gets closer to 2%, the Fed will likely cut rates in a future. The Fed anticipates at least 3 rates cuts in 2024.

Comparing money market rates

Money market interest rates vs. high-yield savings interest rates

Money market accounts will typically have higher interest rates than the average savings account's interest rate.

But, among banks that have both high-yield savings accounts and money market options, high-yield savings accounts often come out on top.

Money market account interest rates vs. CD rates

Money market account interest rates are generally lower than average CD rates. Also, keep in mind that CDs pay fixed rates while money market accounts have variable interest rates. This means that the CD rate will stay the same for the term that you've chosen, but money market account rates can fluctuate at any time.

Average money market rate by bank

Each bank sets different rates for its money market accounts. Money market accounts are offered at both brick and mortar banks and online banks. Here are current money market rates offered by several popular banks.

Some banks offer higher interest rates for people with several accounts at one bank. Check with your bank to see if a special relationship rate could apply to your money market account.

How to find the highest money market rates

Money market account rates are generally more competitive at online banks than at brick-and-mortar banks. Credit unions also pay high interest rates on money market accounts, but you may need to meet certain membership requirements to join (That said, there are a couple of credit unions that anyone in the U.S. can join.)

While money market account rates can help narrow down options, they shouldn't be the only thing you use to determine your top pick. Money market accounts have other features that should be considered as well. For example, financial institutions set different minimum opening deposits for money market accounts. The standard minimum opening deposit requirement across most financial institutions is $1,000. Some banks, however, let you open a money market account with $0.

Common bank fees are another feature that can greatly impact your account decision. Some banks charge monthly service fees if you don't have a certain balance, while others do not charge any monthly service fees.

Strategies for maximizing returns with money market accounts

You can use the following tips to maximize returns on money market accounts:

• To maintain the highest rate on a tiered interest money market account, review your bank statement regularly or set balance alerts.
• To avoid monthly bank maintenance fees, choose a fee-free money market account or meet the monthly activities to waive monthly fees.
• Compare money market account rates from various financial institutions to make sure you're getting a high rate.

Money market account rate FAQs