Money Market Account vs. High-Yield Savings Account

last updated 30 July 2024

Torn between opening a money market account vs. high-yield savings account? With so many savings account options out there, choosing where to store your cash can be challenging. Both money market accounts and high-yield savings accounts can help you build your savings, thanks to their high savings rates, but deciding between the two can be tricky.

If the Fed were to cut interest rates, savings rates would begin to drop. However, inflation rates have caused the Fed to hold off on any rate cuts for the time being. As the Fed rate is expected to go down, consider locking in rates while they're still high.

Because of this, it’s important to research which account type is better suited to you and your financial needs. Start by comparing the features of each kind of account below.

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Which is more accessible?

Most money market accounts make accessing your funds easier than high-yield savings accounts. This is because money market accounts usually offer check-writing privileges, and in some cases, even allow you to pay directly from your account with a debit card or easily pull funds from an ATM.

On the other hand, to spend the money in a high-yield savings account, you’ll often have to connect the account to an existing checking account and then transfer funds from one account to the other, making it a bit more difficult to access your cash. For this reason, if an emergency arises and you need quick access to your savings, a money market account has an advantage over a high-yield savings account.

Which is less risky?

Both money market accounts and high-yield savings accounts are solid choices if you're looking for a risk-free way to maximize your savings. This is because both high -yield savings accounts and money market accounts offered by banks or credit unions are FDIC or NCUA insured.

This means that if your bank fails and goes under, you won’t have to worry about losing your hard-earned cash. FDIC insurance protects up to $250,000 in individual deposit accounts and up to $250,000 for each person’s share of joint accounts. NCUA insurance is similar, covering accounts held at credit unions. NCUA insurance covers up to $250,000 per credit union member. These protections cover accounts at both brick-and-mortar banks and online banks.

Which has a higher APY?

Both money market accounts and high-yield savings accounts possess much higher savings rates than traditional savings accounts, with some even offering over 5% APY. However, high-yield savings accounts sometimes beat out money market accounts when it comes to APY, so it’s important to compare rates before opting for one account over the other. Opening a savings account with a high APY, whether it's a high-yield savings account or a money market account, is a no-brainer. You'll earn interest on your cash (free money!) with little effort on your part.

See our list of top money market accounts and best high-yield savings accounts to compare current rates today. You can also compare current rates among high-yield savings accounts by using the tool below.

What are the minimum balance and deposit requirements?

Many high-yield savings accounts have very low balance and deposit requirements, making them accessible to all people, even those with low savings balances. On the other hand, when compared to high-yield savings accounts, money market accounts often have higher minimum balance requirements. With a high minimum balance requirement, it's easier to fall below your account minimum, making you more likely to incur fees. However, there are exceptions; you can find money market accounts with no or low balance requirements.

Bottom line

Overall, both money market accounts and high-yield savings accounts have their pros and cons. So, when should you choose a money market account over a high-yield savings account?

Typically, money market accounts are better suited to people with larger amounts of money they’re looking to save, as they’ll be able to meet any minimum balance requirements and therefore avoid fees. On the other hand, individuals who are just beginning to save and don’t have large amounts of cash to put in an account should opt for a high-yield savings account (or a money market account with a low minimum balance requirement).

Additionally, because cash is more accessible in a money market account, these accounts make good options for individuals who plan on spending from the account every so often. If you don't plan on withdrawing cash from your savings, unless in an emergency, opt for a high-yield savings account with a high APY.

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.