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Ask the expert: When is it a good time to look for higher money market rates?

| MoneyRates.com Senior Financial Analyst, CFA
min read

Q: I'd like to get a better rate on my money market account, but it seems like money market rates have been kind of stagnant lately. Is there a particularly good time to shop for money market rates--that is, is there a certain time of the month when they tend to be updated?

A: Shopping for money market rates can be one of those activities that lulls you into a sense of complacency right before conditions change dramatically. Lately, we've seen one of those lulls: According to the FDIC, money market rates nationally have averaged 0.25 percent or slightly lower since mid-October. However, that doesn't mean things aren't geared up to change some time soon.

What makes this marketplace hard to predict is that money market rates don't change on any regular schedule, and not all banks change their rates at the same time. Essentially, a bank may change its money market rates for any one of three reasons:

  1. Event-driven changes. An unexpected development, whether it is a surprising number in an economic release or a geopolitical event, could cause a bank to abruptly re-evaluate its rate policies.
  2. Market-driven changes. Long-term interest rate trends can affect money market rates slowly but steadily. Recently, market rates have been rising, and this could soon start to affect money market rates.
  3. Competitive changes. Think of this as a price war, only in reverse. Instead of cutting prices, two or more banks that are competing for the same target market could tactically raise rates in an attempt to attract customers.

With online resources like MoneyRates.com, it only takes about a minute to check on the latest money market rates. So, if you want to be sure you don't miss out on higher rates when they do finally arrive, make checking into MoneyRates.com part of your regular web browsing routine.

Got a financial question about saving, investing, or banking? MoneyRates.com invites you to submit your questions to our "Ask the Expert" feature. Just go to MoneyRates.com and look for the "Ask the Expert" box on the lower left.

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Richard Barrington:
Richard Barrington is the primary spokesperson and personal finance expert for MoneyRates.com… (more)
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1 Comment
No Stocks 4me Cramer 9 January 2011 at 9:10 pm

Hmmmm lets see "when" !!!!

With the BLS crap numbers game to keep the CPI below inflation so not to pay any COLA and this Bernakapart financial general keeping rates at 0, while the banks get all the free money they need. why pay the silly savers any better rates than a lousy 1 % or less.

I used to be OK with just a 2% COLA and 4 or 5 % on my CD's, now its a crap shoot to "contribute" to the economy.

"when" is a long off time it seems.