Sean Jackson
The Federal Reserve didn't cut interest rates at its latest meeting. This is fantastic news for savers, as rates of return remain somewhat high on savings options. However, the winds of change might be coming soon for your savings.
The July jobs report indicated slowing growth, prompting the Fed to reconsider its policies moving forward. And one way to stimulate job growth is through rate cuts.
While the Federal Reserve Chair Jerome Powell didn't say they would cut rates at their September meeting, he also said conditions were favorable for change, which should prompt savers to act fast while rates are higher.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you're searching for places to store your cash, a money market account or high-yield savings account could be wise options to consider. Since both offer different perks, investigating them in further detail can help you decide which option is best for you.
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.
Check out some of the best money market accounts:
Account | APY | Min. Opening Deposit |
|---|---|---|
4.35% | $1,000 | |
4.32% | $1,000 | |
4.31% | $100 | |
4.25% | $50 | |
4.25% | $100 | |
4.01% | $0 | |
4.01% | $2,500 | |
3.85% | $1 | |
3.75% | $5,000 |
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 close to 4.5% 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. You can see balance requirements and current rates for some of the best options below:
Account | APY | Min. opening deposit |
|---|---|---|
4.35% | $0 | |
4.30% | $500 | |
4.30% | $500 | |
4.30% | $5,000 | |
4.25% | $0 | |
4.25% | $100 | |
4.25% | $1,000 | |
4.25% | $2,500 | |
4.20% | $0 | |
4.15% | $10 | |
4.00% | $25,000 |
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 on money market account vs high-yield savings account
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.
Related Content
-
Ask the Editor: What medical expenses are deductible?Ask the Editor In this week's Ask the Editor Q&A, Joy Taylor answers questions on the tax deduction for medical expenses, from Medicare premiums to teeth whitening.
-
Backdoor Roth IRAs: Help Your Kids Keep More of Their InheritanceConverting to a backdoor Roth IRA via an IRS "loophole" is an estate planning tool that gives heirs tax-free income in retirement. It can help you, too.
-
Starbucks Just Announced Red Cup Day and It's Sooner Than You ThinkThe coffee chain's annual holiday cup giveaway returns — with a twist — as the holiday beverage lineup launches early and staff investments ramp up.
-
Avoid These Four Mistakes in the Run Up to RetirementYou can learn a thing or two from the retirees who went before you.
-
Where to Deposit Your Social Security CheckIf you receive Social Security checks, where you deposit them matters because it can help grow your earnings. See the best options.
-
Pickleball is Causing Costly Eye Injuries. Are You Keeping Yourself Safe?The nation’s fastest growing sport is sending more players to the ER and adding to health care costs. Here’s how to protect your eyes (and your wallet).
-
Pet-Friendly Hotels That Go Beyond 'Dogs Allowed'Here are some of the best destinations to take your pet on vacation.
-
From Camping to Boating: Here's How to Stay Connected Off-GridThere's nothing quite like the peace of off-road adventures. However, ensure you have a stable connection in case you need it.
-
How to Protect Your Home From Keyless Break-insWhile smart locks enhance home security, skilled intruders may bypass them. Here's how to strengthen your defenses.
-
Should Your Brokerage Firm Be Your Bookie? A Financial Professional Weighs InSome brokerage firms are promoting 'event contracts,' which are essentially yes-or-no wagers, blurring the lines between investing and gambling.
