The Federal Reserve made the decision to cut its target rate three times in 2024, resulting in a decrease in deposit rates, including money market account (MMA) rates. With rates on the decline, it is crucial now more than ever to compare MMA rates to ensure you are maximizing your earnings on your balance.
According to the FDIC, the national average money market account rate currently stands at 0.63%. However, there are still some top accounts offering rates of 4% APY and higher. Given the likelihood that these rates may not be available for much longer, it is advisable to consider opening a money market account now to take advantage of the high rates being offered today.
When looking at the top MMA rates available currently, it is important to note that the amount of interest you can earn from a money market account is dependent on the annual percentage rate (APY). The APY takes into account the base interest rate and how often interest compounds, with money market accounts typically compounding interest daily.
For example, if you were to deposit $1,000 into an MMA with an average interest rate of 0.64% and daily compounding, your balance would grow to $1,006.42 after one year, with just $6.42 in interest earned. On the other hand, choosing a high-yield money market account offering 4% APY would result in a balance of $1,040.81 after one year, including $40.81 in interest.
The more you deposit into a money market account, the more you have the potential to earn. Using the same example of a money market account with a 4% APY, but depositing $10,000 instead, your total balance after one year would be $10,408.08, with $408.08 earned in interest.
In conclusion, it is crucial to compare MMA rates to ensure you are earning the maximum amount possible on your balance. By choosing a high-yield money market account with a competitive APY, you can potentially earn significantly more interest on your deposits. Take advantage of today’s high rates by opening a money market account now and start maximizing your earnings.
