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High-yield savings vs. money market account: How to compare for the best fit with your money

Kelly Suzan Waggoner
Updated
High-yield savings vs. money market account (sarayut Thaneerat via Getty Images)

High-yield savings accounts (HYSAs) and money market accounts (MMAs) are two bank accounts that offer safe, stable spots for storing your money and growing your savings at more than 10 times the 0.42% national average you’d earn with a traditional savings account. And with the Federal Reserve's back-to-back lowering of benchmark interest rates last year and at least two more cuts planned in 2025, these two accounts are back in the spotlight as among the best ways to prepare for lower interest rates.

It's true that HYSAs and MMAs share many similarities, including how they earn interest and how they protect your money. But they also have a few differences that come down to how — and how often — you can access your money.

Here's how to compare these two savings options to leverage high rates to best fit your budget and financial goals.

A high-yield savings account (HYSA) is a deposit account that earns a higher rate of interest on your money than you'd find with a traditional savings account. The rate of interest is expressed as the APY, which is the annual percentage yield you can expect on your savings in a year, including compounding. The higher your APY, the faster your money can grow, making these accounts an ideal spot for building an emergency fund.

The interest rate on an HYSA is variable, meaning it fluctuates depending on market conditions, much like a traditional savings account. And while these accounts used to limit withdrawals to six per month, the Federal Reserve suspended that limitation during the pandemic, resulting in flexible access to your money without penalties or fees on most accounts.

You can open a high-yield savings account with most banks and credit unions, though today’s highest rates are at digital or online-only banks. These banks work like your everyday bank, partnering with in-network ATMs that accept deposits and allow you to link external accounts — an everyday checking or savings account, for instance — for easy electronic transfer of your money.

Many high-yield accounts allow opening deposits of under $100, though some HYSAs require a larger opening deposit to earn the highest advertised APY, so you’ll want to carefully read the fine print when comparing options.

As with a traditional savings account, your deposits and earned interest are insured for up to $250,000 per depositor, per bank, by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), depending on the financial institution.

💡 Expert take: Here's why my high-yield savings account is worth it — even after Fed rate cuts

  • High APYs. Earn more than 10 times the national average when compared to a traditional savings account.

  • No or low fees. High-yield savings accounts come with low or no fees and minimum deposit requirements, making it easy to maintain and manage your money in the long term.

  • Federally insured up to $250,000. High-yield savings account deposits are insured by the FDIC or the NCUA for up to $250,000 per person, per account.

  • Not a checking account. While most HYSAs allow you to withdraw or add to your money as needed, you’ll need to transfer money to a traditional or high-yield checking account for everyday banking.

  • Transfers may not be instant. You may need to wait up to three days for transfers to or from your account to clear, depending on the bank or account.

Dig deeper: Can you lose money in high-yield savings? It's unlikely — but here's what to watch for

A money market account (MMA) is a type of high-yield savings account that offers a high rate of return on your deposit with the benefits of a checking account, though with limited flexibility. Like a high-yield savings account, the interest you earn with an MMA is expressed as a variable APY, which means it can increase or decrease at any time, depending on the market.

A money market account typically comes with a debit card for withdrawals and check-writing capabilities for paying bills, gifting cash and automatic online payments. Some accounts limit withdrawals to six per month, though many others have relaxed restrictions. If there are limitations, they typically don’t apply to in-person or ATM withdrawals, so you’ll want to read your account’s terms. Most online banks partner with nationwide ATM networks and allow you to link everyday accounts for convenient banking.

And deposits and any interest you earn in your MMA are insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).

You can open a money market account as you would a traditional or high-yield savings account at most banks and credit unions — and here, too, rates tend to be higher with a digital or online bank.

Some MMAs pay different APYs depending on your total account balance through tiered rates — effectively, the higher your balance, the better your rate of return. Depending on the account, you may also be required to maintain a high balance of $2,500 or more to open the account or avoid fees, though you can find accounts without minimum deposits.

Dig deeper: How much should you keep in a high-yield savings account?

  • High rates of return. Strong potential yields are like those of a high-yield savings account — considerably higher than you’ll earn with a traditional savings account.

  • Debit and check-writing privileges. Unlike an HYSA, MMAs tend to offer a debit card and checks, which can be useful for accessing or moving your money.

  • Insured by the FDIC. Money market accounts are insured by the FDIC or NCUA for up to $250,000 per person, per account.

  • May require minimum balance. An MMA may require a minimum account balance to open the account and avoid fees.

  • Earnings may be tiered. Money market accounts often require higher balances to earn the highest advertised rates.

  • Potential withdrawal limits. Some money market accounts limit withdrawals to six a month, which means you might need a traditional checking account for everyday banking.

Dig deeper: I've saved $10,000 — now what? 5 smart moves to supercharge your growth

High-yield savings accounts and money market accounts are deposit accounts that offer more similarities than differences.

Both HYSAs and MMAs extend significantly higher rates of return than a traditional savings account. And while APYs for MMAs used to beat those of HYSAs, in a continued high-rate environment, you can still find competitive rates of up to 4.5% APY or higher, no matter which account you choose — especially when comparing digital or online banks.

Some MMAs come with tiered interest rates that earn you stronger yields the larger your balance — great for big savers, though something you’ll want to understand before you open an account.

An HYSA typically won't require a high minimum opening deposit or high account balances to earn strong yields, though some MMAs do, depending on the bank and the account. Carefully read the account's terms and conditions before signing up to make sure you can comfortably deposit and maintain any balance required for the highest yields and to avoid fees.

Other differences between these two account types come down to the way you can access your money. Money market accounts often come with a debit card and allow limited check-writing, which you won’t find with a high-yield savings account.

Both of these savings accounts offer a safe, secure way to grow your nest egg without risk. And even after rates come down, your money will earn more interest than your traditional savings account can.

Yet neither are likely to offer the highest returns when compared to riskier investment products like stocks, ETFs and mutual funds.

Dig deeper: How much should you keep in a high-yield savings account?

HYSAs and MMAs are low-risk spots to store your savings and earn competitive yields. Yet you have other options to consider for safe ways to grow your money.

A CD is a type of FDIC-insured deposit account that offers a guaranteed rate of return on your money in exchange for keeping it locked for a set period of time — from three months to five years or longer. Unlike HYSAs and MMAs, which come with variable interest rates that can fluctuate with the market, CD rates are fixed, offering predictable returns that won't change over the life of your term.

CDs have historically offered higher rates than an HYSA or MMA, but you typically can’t access your money before the CD's maturity date without incurring an early withdrawal penalty.

You can leverage short-term gains with long-term stability with a CD ladder that divides your money across different term lengths so they expire — and pay out

If you aren't ready to lock up your money into one long-term CD, building a CD ladder into your savings strategy offers a way to leverage short-term gains with long-term stability at today's highest rates by spreading out your deposit across multiple, staggered terms for rolling returns on your money.

Dig deeper: High-yield savings account vs. CD: Rates, fees and access to your funds

A high-yield checking account is like an HYSA or MMA in that it offers higher APYs than traditional savings accounts, but it’s also like a more flexible money market account in that it supports unlimited debit and check-writing privileges.

In exchange for high yields, these accounts often require you to maintain a specific daily balance, commit to a minimum number of debit transactions monthly or opt in to e-statements and online banking to earn the highest advertised rates.

While an HYSA or MMA can earn you more on your savings than a traditional account can, stocks, index funds and mutual funds average higher returns than CDs, though with higher potential losses. Get started with our editorial roundup of the best low-cost brokerage accounts and investment platforms that can simplify and even automate your investments for long-term growth to grow your retirement savings or create a steady income stream.

Dig deeper: 7 best investment platforms for every type of investor

Learn more in our growing personal finance library to save money, earn money and build your wealth:

Learn more about deposit accounts, saving money and planning for your future with these commonly asked questions. And take a look at our growing library of personal finance guides that can help you earn money, save money and grow your wealth.

Saving up $10,000 is an impressive milestone that opens up several financial opportunities that can better position you for a more stable financial future. You can put it to work through passive income streams, contribute to growing a retirement fund or pay down high-interest debt. See our guide to the five smartest moves to make with your $10,000.

Both types of accounts offer a low-risk way to earn money on your savings with key differences

A money market account is a low-risk interest-bearing deposit account that’s offered by banks, credit unions and financial technology companies. Money within a money market account is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration for up to $250,000 per person, per account.

A money market mutual fund is a type of mutual fund that’s offered by brokerage accounts and investment platforms. This type of fund invests in low-risk, short-term debt securities like treasury bills and cash equivalents with protections under the Securities Investor Protection Corporation, and not the government.

Most advice suggests your starter fund should be at least $1,000, but you may consider a fund that’s half of your monthly expenses. If you’re gainfully employed — especially if you’re the main breadwinner for the family — the rule of thumb is three to six months’ worth of expenses in an emergency fund that can keep your finances afloat after a job loss. Learn more about how to maintain your rainy-day reserves in our guide to building an emergency fund on any budget.

What happens to your bank account when you die largely depends on whether you’ve named a beneficiary to receive your assets after you die or you share the account with a joint owner. Learn more — including tips you can take now to avoid complications down the road — in our guide to bank accounts after a death.

Yes, for most people. A financial advisor can help you manage your money as you plan for retirement, while giving you a sense of how much you can spend during retirement to make your savings last. Their market expertise may also help maximize your savings. If you’re anxious about retirement, working with an advisor can also give you peace of mind by assuring you that you’re on the right path. Start with our guide to finding a trusted retirement advisor.

Kelly Suzan Waggoner is personal finance editor at AOL. Before joining AOL, Kelly was managing editor at Bankrate and editor-in-chief at Finder, where she led a team focused on helping people to make unfamiliar financial decisions around banking, lending, credit cards, investments and more. Kelly’s expertise also has been featured in Nasdaq, Lifehacker and other publications. Today, she's dedicated to empowering those planning for, newly entering or fully enjoying retirement to get the most out of their finances — whether that's saving money, managing debt, maximizing rewards or growing their wealth.

Article edited by Yahia Barakah

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