A money market account interest rate is the percentage at which the bank or financial institution will pay you for holding your funds in their account.
The interest rate is usually calculated as an annual percentage rate (APR) and paid out to you on a regular basis, such as monthly or quarterly.
When you open a money market account, you are essentially lending money to a bank or financial institution.
They, in turn, use your money to invest in low-risk assets such as government bonds, CDs, and commercial paper.
The interest rate that the bank or financial institution earns on these investments is higher than the interest rate they pay you for holding your funds in their account.
The difference between the interest rates is known as the “spread,” and it’s how banks and financial institutions make a profit
The interest rate on a money market account is important because it directly impacts how much you can earn on your deposits.
You can make more money if the interest rate is greater.