Money market accounts work like other savings accounts in that you deposit money freely and earn interest on your balance. In both cases, depositors are covered for up to $250,000 per account type, protecting your money in the event of bank failure.
MMAs at banks are insured by the FDIC, while MMAs at credit unions are insured by the NCUA. How Does a Money Market Account Work?Ī money market account (MMA) is a type of interest-bearing deposit account offered by banks and credit unions. Compound interest is interest that accrues on the interest as you earn it.
A yearly rate of return that factors in compound interest is called your annual percentage yield (APY). Banks and credit unions that pay tiered rates often reserve the best rates for the largest balances.Īn interest rate represents the earnings made solely on your account balance. These earnings are typically credited as a percentage of your savings balance on a daily or monthly basis. Interest rates for money market savings accounts are often called money market rates. Rates are based on a $10,000 minimum deposit amount. Here are today’s money market account rates:
Right now, the average money market rate sits at 0.56%, but the best rate today is 5.13%.
