Between March 2022 and July 2023, the Federal Reserve raised its benchmark fee 11 occasions. Because of this, cash market account (MMA) rates of interest rose sharply.
Nevertheless, the Fed slashed the federal funds fee by 50 foundation factors in September, and one other 25 foundation factors in November and December. So deposit charges — together with cash market account charges — have began falling. It’s extra essential than ever to check MMA charges and make sure you earn as a lot as potential in your stability.
The nationwide common cash market account fee stands at 0.66%, in accordance with the FDIC. This won’t seem to be a lot, however contemplate that three years in the past, it was simply 0.07%, reflecting a pointy rise in a brief time period.
That is largely as a consequence of financial coverage choices by the Fed, which started elevating its benchmark fee in March 2022 to fight skyrocketing inflation. In actual fact, the Fed elevated charges 11 occasions. Nevertheless it lastly lower its benchmark fee 3 times in late 2024, inflicting deposit account charges to begin dropping
Even so, among the prime accounts are at present providing upwards of 5% APY. Since these charges will not be round for much longer, contemplate opening a cash market account now to reap the benefits of at the moment’s excessive charges.
Right here’s a have a look at among the prime MMA charges out there at the moment:
See our picks for the ten finest cash market accounts out there at the moment>>
Moreover, the desk under options among the finest financial savings and cash market account charges out there at the moment from our verified companions.
The quantity of curiosity you’ll be able to earn from a cash market account relies on the annual share fee (APY). It is a measure of your complete earnings after one yr when contemplating the bottom rate of interest and the way usually curiosity compounds (cash market account curiosity usually compounds day by day).
Say you place $1,000 in an MMA on the common rate of interest of 0.66% with day by day compounding. On the finish of 1 yr, your stability would develop to $1,006.62 — your preliminary $1,000 deposit, plus simply $6.62 in curiosity.
Now let’s say you select a high-yield cash market account that gives 5% APY as a substitute. On this case, your stability would develop to $1,051.27 over the identical interval, which incorporates $51.27 in curiosity.
The extra you deposit in a cash market account, the extra you stand to earn. If we took our similar instance of a cash market account at 5% APY, however deposit $10,000, your complete stability after one yr can be $10,512.67, that means you’d earn $512.67 in curiosity.
