Money market account rates have been declining for the past two years, according to financial data. The Federal Deposit Insurance Corporation reports the national average currently stands at 0.58%.
Despite the overall downward trend, certain financial institutions are offering annual percentage yields exceeding 4% on their 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.
A deposit of $10,000 in an account with the average 0.58% rate and daily compounding would grow to $10,058.17 after one year, generating $58.17 in interest. With a 4% APY account, the same deposit would reach $10,408.08, earning $408.08 in interest over twelve months.
Money market accounts typically compound interest daily. The interest earned depends on the annual percentage rate applied to the account balance.
Compared to traditional savings accounts, money market accounts often carry more restrictions. Many require higher minimum balances to qualify for optimal rates or avoid fees. Some limit monthly withdrawals to six transactions.
No banks currently offer 7% interest rates on money market accounts as standard offerings. Some local banks and credit unions occasionally provide promotional rates approaching 7% on limited balances during special periods.