Money market accounts offer high interest rates, but rates are decreasing

From Yahoo Finance: 2025-04-07 06:00:00

Money market accounts (MMAs) offer high interest rates, liquidity, and flexibility. Rates have decreased but some accounts still pay over 4% APY. TotalBank currently offers the highest rate at 4.47% APY with a minimum $25,000 deposit. Rates fluctuate due to changes in the Federal Reserve’s target interest rate.

In recent years, the Fed’s actions have led to varying MMA rates. After the 2008 financial crisis, rates were low to stimulate the economy. Rates rose as the economy improved but dropped in 2020 due to COVID-19. In 2022, rates increased, but as of 2025, they are on a downward trend.

When comparing MMAs, consider factors beyond interest rates like minimum balance, fees, and withdrawal limits. Some accounts require high balances or charge fees. Shop around for competitive rates without restrictions. Ensure your account is FDIC or NCUA insured for up to $250,000 per depositor.

The national average MMA rate is 0.64%, but top accounts offer 4% to 4.5% APY. Earnings on $50,000 depend on the APY and time in the account. While no MMAs offer 5% APY, some high-yield savings accounts do. Check with online banks, local banks, or credit unions for high rates.

Read more: April 7, 2025 (earn up to 4.47% APY)