Money market account rates have been declining for the past two years, making comparison more crucial for maximizing earnings on deposits. The Federal Deposit Insurance Corporation reports the national average rate currently stands at 0.58%.
Despite the overall decrease, some financial institutions are offering annual percentage yields exceeding 4% on their top money market accounts. These higher rates may not remain available indefinitely.
Four years ago, the average money market account rate was 0.07%, making current rates historically elevated by comparison. The interest earned on a money market account depends on the APY, which accounts for both base interest and compounding frequency.
With a $10,000 deposit at the average 0.58% rate and daily compounding, the balance would reach $10,058.17 after one year, generating $58.17 in interest. At a 4% APY, the same deposit would grow to $10,408.08, yielding $408.08 in interest over the same period.
Money market accounts typically impose more restrictions than traditional savings accounts. Many require higher minimum balances to qualify for optimal rates and avoid fees, and some limit monthly withdrawals to six transactions.
No banks currently offer 7% interest rates on money market accounts or other deposit accounts as standard offerings. Some local banks and credit unions occasionally provide limited-time promotional rates approaching 7%, but these usually apply to restricted balances.