Money Market Rates Move Higher in 2017
Money market account rates are slowly moving higher in 2017, primarily as a result of the fed funds rate increases. Starting out the year, the highest money market rates offered by online banks were around 1.00 percent. Right now, the best online money market rate is 1.15 percent from My Banking Direct.
Interest rates are moving higher this year because the Federal Reserve increased their key benchmark interest rate, the fed funds rate, three times in 2017. The Fed has been very forthcoming and said they expect to increase the rate four times this year, so that leaves us one more rate hike.
You will only find money market rates at or above 1.00 percent with online banks. Local and regional banks are the second best place to go for rates but most of those banks don't offer rates as high.
The last place you want to go is the big national banks. For example, Bank of America's very best money market rates is a paltry 0.06 percent. Think 0.06 percent is bad? Wells Fargo's Way2Save account has a current internet rate of 0.01 percent.
The good news is that looking forward, money market rates are moving higher in 2017 and in future years. With at least one more fed funds rate increase this year, money market rates will probably move towards 1.25 percent.
Fed Funds Rate and Money Market Rates in 2018 and 2019
Of course, the one thing that would derail any forecast for higher interest rates is a recession.
Quick tip: If it looks like a recession is eminent, money market rates will decline because they are variable rate accounts. So be sure to lock in a higher rate with a certificate of deposit. You can find a list of CD rates at MonitorBankRates.com.
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