How to Get a Higher Rate Than the Typical Money Market Account

Opening a bank account with a high interest rate makes a lot of sense. You might as well earn a return with the cash you’re keeping on the sidelines in case you need it for an emergency.

Money market accounts are a popular option for people who want to earn interest on their savings but don’t want to get stuck with a low rate. According to the FDIC, the typical money market account interest rate is 0.60% (as of 11/18/24) annual percentage yield (APY)¹ <p class="">The product and annual percentage yield (APY) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your area. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. Always verify account details and availability with the financial institution before opening an account.<br></p> . It’s possible to only end up with 0.01% APY, but it’s also possible to find an account with up to 5% APY if you know where to look.

Key takeaways

• Money market accounts allow you to earn a risk-free return on your idle cash.
• You’ll have to compare several money market accounts to find the best rates.
• Money market rates vary, depending on whether you use an online bank or a brick-and-mortar bank.
• Consumers can also consider alternatives such as CDs and high-yield savings accounts.

What is a money market account?

A money market account is a type of bank account that accrues interest over time. These accounts usually come with check writing privileges, one of the things that sets them apart from savings accounts.

You don’t have to worry about losing your money since these accounts are FDIC-insured. While you may be able to earn a higher return with stocks and real estate, those investments also carry significant risk of loss. Your money market account will continue to grow over time as you store your savings and collect interest.

Money market accounts are suitable for people who want to receive a risk-free return on their capital. These individuals don’t need massive returns, but they want something respectable for the cash that they don’t plan on using. Money market accounts are also liquid. You can withdraw money at any point without incurring any penalty fees or jumping through hoops to access your cash like you have to with certificates of deposit (CDs).

These bank accounts are slightly different from money market funds. While money market accounts are bank accounts, money market funds are mutual funds that pay interest like a money market account. You can write checks against a money market account, but you cannot write checks against a money market fund.

Typical money market account interest rates

The money market account interest rate is currently 0.60% (as of 11/18/24), but this number fluctuates from time to time. The FDIC regularly records interest rates across various bank accounts and financial products. Money market account interest rates usually hover around 0.60%, per the FDIC.

Online banks tend to have money market account interest rates that exceed the FDIC’s average rate. It’s possible to find online banks that have APYs above 4%.

The best banks give you a high APY regardless of your balance while others require that you deposit more money to access a higher yield. These banks have tiers in place that reward people who do more business with the bank. It’s also possible to receive a higher rate with a relationship bonus if you link another account held at the same bank.

Online bank interest rates usually edge out brick-and-mortar banks. This trend is common in the industry since online banks have less overhead and can offer more competitive rates to attract new customers. Here’s how the rates vary for each type of bank.

Money market rates at brick-and-mortar banks

Bank	APY
Republic Bank	4.46%
First Citizens	Under $25,000: 0.05% $25,000-$99,999.99: 0.07% $100,000-$499,999.99: 0.10% $500,000+: 0.15%
Hanover Bank	3.50%
Sky One Federal Credit Union	$2,500-$24,999.99: 0.10% $25,000-$49,999.99: 0.20% $50,000-$99,999.99: 0.30% $100,000-249,999.99+: 0.40%
U.S. Bank	Under $25,000: 0.01% (as of 12/20/24) Above $25,000: 0.25%
Capital One	0.80%
PNC	0.02%

Note that fees incurred could reduce earnings on all accounts.

Money market rates at online banks

Bank	APY
Redneck Bank	Balances under $100,000: 4.40% Balances over $100,000: 0.5%
Quontic	4.75% (as of 11/19/24)
Prime Alliance Bank	4.50% (all balances)
EverBank	1.00%-4.30% (as of 12/06/24) depending on the balance
CFG Bank	4.52%
First Internet Bank	Balances of $1,000,000 or less: 3.77%  Balances of more than $1,000,000: 4.69%
Discover	3.60% (as of 12/18/24) depending on the balance

Note that fees incurred could reduce earnings on all accounts.

How to open a money market account

Opening a money market account is straightforward, but you should compare the fees, rates, and policies of each bank before making a decision. Once you choose a bank, you can follow these steps.

• Gather the necessary documents: The bank will request important documents that verify your identity, such as your photo ID and Social Security Number.
• Create an account with the bank: You may have to create an account with the bank’s platform before you can set up a money market account. You’ll have to create a username and password to get into your account.
• Fund your money market accounts: Some banks have minimum deposit requirements for their money market accounts. For instance, a First Citizens Bank money market account requires a $500 minimum opening deposit, and the Republic Bank has a $2,500 minimum opening deposit requirement.

Money market account alternatives

A money market account isn’t your only choice for earning interest on your extra cash. These are some of the other financial products you could consider.

Certificates of Deposit

These accounts have fixed interest rates for a predetermined term. If the Fed decides to lower rates, your CD will continue to deliver interest at the assigned rate. However, money market accounts have variable rates, which means interest income will immediately decrease if the Fed reduces its rate.

While the best CD options vary for each bank, you can find CDs with terms ranging from three months to ten years, and rates can exceed 5% APY in some cases. Your money is usually locked in the account until it matures.

Some banks let you withdraw money from a CD without incurring any penalties while others may impose a penalty fee if you want to access any of the funds before the maturity date. You can often reinvest interest into the CD to earn more money or send each interest payment to a bank account of your choice.

High-Yield Savings Accounts

These accounts have variable interest rates just like money market accounts. While the best savings accounts have higher yields than money market accounts, you can’t write checks with them.

Most banks limit you to six withdrawals from a high-yield savings account each month before fees apply. You may also have to deposit more money to receive the maximum APY for a tiered account.

Money Market Mutual Funds

These mutual funds offer exposure to multiple short-term bonds. They have competitive rates like money market accounts, but you can’t write checks with them. Most brokerage firms, like Fidelity and Vanguard, put your spare cash into a money market fund. Some money market funds have higher rates than money market accounts to compensate for the lack of check-writing privileges and debit cards.

FAQs

Bottom line

The average money market account rate isn’t a good indicator of what’s available right now. It’s possible to find accounts with rates above 5.00% APY, but you’ll probably have to narrow your search to online banks for that type of rate. Once you’ve found a money market account (and its APY) that you’re happy with, you can proceed to create an account and fund it.

The best money market accounts could be useful for people who don’t want to put their money into risky investments. The return is risk-free since your money market account is insured by the FDIC. Letting interest accumulate will give you more money if you ever need to tap into your account for an emergency.