The Federal Reserve cut the federal funds rate three times in 2024 and three times in 2025. Deposit interest rates, including those for money market accounts, have been declining as a result.
According to the FDIC, the national average rate for money market accounts is currently 0.58%. Some high-yield accounts, however, offer annual percentage yields well above 4%, which is more than six times the average.
Interest rates vary significantly between financial institutions. Several banks, particularly online banks, and credit unions have highly competitive offers. Online banks operate exclusively via the web, which reduces their overhead costs. They often pass these savings to customers through higher deposit rates and lower fees.
Credit unions are not-for-profit financial cooperatives known for providing competitive rates and fewer fees. Many have membership requirements, though some allow nearly anyone to join.
Money market accounts can be suitable for short-term savings goals, such as building an emergency fund or setting aside money for upcoming expenses. They generally offer higher interest rates than regular savings accounts and provide easier access to funds compared to certificates of deposit.
These accounts are considered low-risk and are FDIC-insured up to $250,000 per depositor, per institution. Many require a minimum balance to open the account and earn the highest advertised rate. If the balance is not maintained, fees may apply or the best rates might not be available.
Money market accounts may limit the number of transactions allowed each month. For those needing frequent access to funds, this could be a consideration.
No account or investment guarantees a 12% return. To earn strong returns and grow wealth significantly, investing in market securities like stocks, mutual funds, or exchange-traded funds is a common strategy. The stock market has historically returned about 10% per year on average.