Traditionally, money market rates have lagged behind interest rates on CDs and other time instruments for investing. People who have cash in money market accounts usually have it there as a place to park it in between investments. For instance, most people who do have money in a MMA have it in their stock broker account. Rather than have the unused cash sit and earn nothing, it at least earns a little interest until it can be put to work somewhere else.
With interest rates at a near all time low, you may find that some of the best money market interest rates are competitive now and should be considered as an alternative to bank certificate of deposits and Treasury bills. T bills have actually paid 0.00% interest for awhile and now pay just over that and putting your money in a money market account is surely a better deal than that.
With Treasury bills and bank CD’s, you are agreeing to lock your money up for 6 months, 1 year, 2 years or some other time period. They give you no flexibility if you suddenly need the money or interest rates change. Money market accounts, on the other hand, allow you to pull the money out at any time with no penalty. This makes them superior to any timed investment, especially if you can get a comparable interest rate.
Additionally, you may be able to find a money market account at a bank that is offering an bonus rate for some promotional purpose. If you can find that, you may be able to get as much as .25 of a percent which is significant right now. If you are able to get some kind of a promotional bonus, the interest you earn with that MMA may even put it about the same as the rate you can get with a CD.