High-yield savings accounts have become popular in recent years as the high-interest earning alternative to traditional savings accounts. But there's another type of deposit account where your money can safely grow with a high APY: Money market accounts.
At first glance, high-yield savings accounts and money market accounts have many similarities, but there are a few differences to watch out for that can help you decide which account is best for you.
What we'll cover
- What's a high-yield savings account and what's a money market account?
- High-yield savings account vs. money market account
- Which should you choose?
- Bottom line
What's a high-yield savings account and what's a money market account?
A high-yield savings account is a deposit account where your money grows quickly (at least compared to traditional savings accounts) while remaining fairly accessible. High-yield savings accounts are offered by many (but not all) online and in-person banks.
A money market account is also a deposit account that offers higher interest compared to a traditional savings account, but it also includes some capabilities more commonly found in traditional checking accounts, such as access to your funds via debit card or check. These kinds of accounts are offered by banks and credit unions.
Both high-yield savings and money market accounts enjoy FDIC insurance up to $250,000 per person, per bank, and per account type, making them among the safest choices for where to put your money. You can also deposit and withdraw money from both accounts whenever you want since there isn't a time limit for keeping your money in either account to earn a return. Just note that individual accounts may limit how many withdrawals you can make per month, or require you to keep a minimum balance in the account.
High-yield savings account vs. money market account
At this point, you may be thinking that money market accounts and high-yield savings accounts have a lot in common. And while they do share many similarities, high-yield savings accounts and money market accounts also have quite a few differences to look out for.
Minimum balance requirement
Many high-yield savings accounts have no or low minimum balance requirements to start earning interest. For instance, the Varo Savings Account requires you to deposit at least $0.01 to start earning interest.
Varo Savings Account
Bank Account Services are provided by Varo Bank, N.A., Member FDIC.
Annual Percentage Yield (APY)
Begin earning 3.00% APY and qualify to earn 5.00% APY if meet requirements
Minimum balance
$0.01 to earn interest
Monthly fee
None
Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle
Excessive transactions fee
None
Overdraft fee
None
Offer checking account?
Yes
Offer ATM card?
Yes, if have a Varo Bank Account
Terms apply.
Money market accounts, on the other hand, usually have higher minimum balance requirements. Those minimum balance requirements can range anywhere from a few hundred dollars to a few thousand dollars. However, it's still possible to find money market accounts that don't have a minimum (or have a low one). The Ally Bank Money Market Account is one option with no minimum balance requirement. This account also doesn't charge any monthly maintenance fees.
Ally Bank® Money Market Account
Ally Bank® is a Member FDIC.
Annual Percentage Yield (APY)
Up to 4.25% APY
Minimum balance
None
Monthly fee
None
Offer checks?
Yes
Offer debit/ATM card?
Yes
Terms apply.
Check writing and debit card access
One of the biggest differences between these two accounts is that money market accounts allow you to write checks and use a debit card linked directly to the account. These capabilities allow you easier access to your cash compared to most high-yield savings accounts, which rarely have these features.
If you have a high-yield savings account that only operates online and need to spend the money, you'd have to transfer the cash to your checking account, which could take anywhere from 1–3 business days, and then you'd be able to either withdraw cash or use your debit card.
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Which should you choose?
The typical minimum balance requirement is perhaps the biggest difference between a high-yield savings account and a money market account. Money market accounts can have minimum balance requirements of hundreds or even thousands of dollars. If you think you'll have trouble keeping that much money in your account, you should pass on a money market account.
These minimum requirements also make money market accounts a little less suited for an emergency fund compared to a high-yield savings account. You never know when you'll need to pull cash from your emergency fund — and you also never know how much you'll need.
If you don't have enough cash to meet the minimum requirement or worry that an emergency will leave you incurring monthly maintenance fees, you should opt for a high-yield savings account (or look for a money market account with low or no minimum requirements, though your choices may be more limited compared to a high-yield savings account).
CNBC Select consistently recommends the Marcus by Goldman Sachs High Yield Online Savingsaccount because it doesn't charge any fees for overdrafts, excessive transactions or monthly maintenance.
Marcus by Goldman Sachs High Yield Online Savings
Goldman Sachs Bank USA is a Member FDIC.
Annual Percentage Yield (APY)
4.50% APY
Minimum balance
None
Monthly fee
None
Maximum transactions
At this time, there is no limit to the number of withdrawals or transfers you can make from your online savings account
Excessive transactions fee
None
Overdraft fee
None
Offer checking account?
No
Offer ATM card?
No
Terms apply.
When it comes to having quick and easy access to your cash, money market accounts beat high-yield savings accounts because of their check-writing capabilities and debit card access. This way, you can bypass the additional steps you'd have to go through to spend your money from a high-yield savings account. The Quontic Bank Money Market Account, for example, offers an APY of up to 5.00% and only requires a minimum opening deposit of $100. It also gives you a debit card to let you easily — and quickly — withdraw your money.
Quontic Bank Money Market Account
Quontic Bank is a Member FDIC.
Annual Percentage Yield (APY)
Up to 5.00% APY
Minimum balance
$100 minimum deposit
Monthly fee
None
Offer checks?
Yes
Offer debit/ATM card?
Yes
Terms apply.
But if you'd still prefer to go with a high-yield savings account, you can also look for one that offers an ATM card or a debit card of its own, which isn't very common. The UFB Secure Savingsis one high-yield savings account that does offer an ATM card. The Ally Bank Savings Account also offers an ATM card, but only to customers who also have an Ally Bank Checking Account.
UFB Secure Savings
UFB Secure Savings is offered by Axos Bank ® , a Member FDIC.
Annual Percentage Yield (APY)
Up to 5.25%APY on any savings balance; add a UFB Freedom Checking and meet checking account qualifications to get an additional up to0.20%APY on savings
Minimum balance
$0, no minimum deposit or balance needed for savings
Fees
No monthly maintenance or service fees
Overdraft fee
Overdraft fees may be charged, according to the terms; overdraft protection available
ATM access
Free ATM card with unlimited withdrawals
Maximum transactions
6 per month; terms apply
Terms apply.
Read our UFB Secure Savings review.
Bottom line
Money market accounts and high-yield savings accounts have many similarities but the differences can be real dealbreakers — namely when it comes to the minimum deposit requirement on money market accounts. Otherwise, the checking account and debit card access can make this type of account more accessible than a high-yield savings account.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every deposit account review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best banking products.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
