Driven by the arrival of online banking and a competitive rate environment, high-yield savings accounts (HYSAs) became prominent in the mid-2000s. Money market accounts (MMAs) have been around since the 1980s and offer healthy returns, as well.
At first glance, the two accounts seem almost interchangeable. But there are key differences that can determine which option is better for you.
What's a high-yield savings account?
An HYSA is a savings account with a higher APY than a traditional savings account, often more than 10 times as high.
HYSAs are often offered by digital-first institutions. which have less overhead and are interested in attracting customers to other financial products, and by credit unions, which reinvest profits in better returns for members.
Funds in an HYSA are fairly liquid, but you may need to transfer money to an external bank first, which can take one to three business days.
Some banks also cap withdrawals from HYSAs at six per month.
What's a money market account?
A money market account is a deposit account that combines the interest of a savings account with features more commonly found in a checking account, such as check-writing and debit cards.
MMAs are commonly offered by brick-and-mortar banks and credit unions.
Money market account vs. HYSA: What's the difference?
Both HYSAs and MMAs have healthy APYs and are FDIC-protected up to $250,000 per person, per bank, and per account type. And unlike a CD, you can easily deposit and withdraw money from either. But there are differences to look out for.
Minimum balance requirement
While HYSAs usually have no (or low) minimum balance requirements, MMAs may require you to keep anywhere from a few hundred to several thousand dollars in your account.
Ally Bank's MMA has no minimum balance requirement, though, and no maintenance fees, either.
Ally Bank® Money Market Account
Annual Percentage Yield (APY)
Up to 3.30% APY
Minimum balance
None
Monthly fee
None
Offer checks?
Yes
Offer debit/ATM card?
Yes
Terms apply.
Pros
- Above-average APY
- No minimum balance
- No monthly fee
- Access to checks and debit/ATM card
- Out-of-network ATM reimbursement up to $10 per month
Cons
- No physical branch locations
Check-writing and debit cards
If you want the accessibility of a checking account, only an MMA lets you write checks and use a debit card linked to the account. With an HYSA, , you have to transfer the cash to your checking account, which can take up to three days to clear.
MMA vs. HYSA: Which should you choose?
There are pluses and minuses to both money-market accounts and high-yield savings accounts.
The minimum balance requirement is perhaps the biggest issue with an MMA. It also makes them less well-suited for an emergency fund, since you don't know when or how much you'll need in a pinch.
If you're worried about meeting a minimum requirement or that an emergency will leave you incurring monthly maintenance fees, opt for a high-yield savings account. CNBC Select consistently recommends the Marcus by Goldman Sachs High Yield Online Savings account, which doesn't charge fees for overdrafts, excessive transactions or monthly maintenance.
The EverBank Performance Savings Account also earns a competitive APY with no minimum balance requirements, no monthly fees and no conditions to earn the advertised rate.
EverBank Performance℠ Savings
Annual Percentage Yield (APY)
3.90% APY
Minimum balance
None
Monthly fee
None
Maximum transactions
You may conduct up to 20 external transfers per day, subject to a maximum of 10 transfers that pull deposit funds from a linked external account into your accounts at EverBank and a maximum of 10 transfers that send deposit funds from your accounts at EverBank to a linked external account, and up to 50 total external transfers per month.
Excessive transactions fee
None
Overdraft fees
N/A
Offer checking account?
Yes
Offer ATM card?
Yes
Terms apply.
Pros
- Strong APY
- No minimum balance required
- No monthly fees
- Free ATM card and no ATM fees
Cons
- Limited physical branch locations
Marcus by Goldman Sachs High Yield Online Savings
Annual Percentage Yield (APY)
3.50%
Minimum balance
None
Fees
No monthly maintenance, overdraft or excessive transactions fee
Maximum transactions
No limit to the number of withdrawals or transfers you can make
Checking account
No
ATM card
No
Terms apply.
Pros
- No minimum balance or deposit
- No monthly fees
- No limit on withdrawals or transfers
- Easy-to-use mobile banking app
- Offers no-fee personal loans
Cons
- Higher APYs offered elsewhere
- No option to add a checking account
- No ATM access
For quick access to your cash, money market accounts win the day. You get a debit card and check-writing capabilities, bypassing the additional steps (and days) to get money out of an HYSA.
The Quontic Bank Money Market Account offers a competitive rate and only requires an opening deposit of $100.
Quontic Bank Money Market Account
Annual Percentage Yield (APY)
Up to 4.00% APY
Minimum balance
$100 minimum deposit
Monthly fee
None
Offer checks?
Yes
Offer debit/ATM card?
Yes
Terms apply.
Pros
- Above-average APY
- No monthly fee
- Access to checks and debit/ATM card
- Physical branch locations
Cons
- $100 minimum deposit
ATM access with an HYSA is rare but not unheard of: Both UFB Portfolio Savings and Ally Bank Savings come with ATM cards. (Ally requires customers to also have a checking account, though.)
- Strong APY on savings balances
- No minimum deposit or balance required for savings
- No monthly fees
- Free ATM card with unlimited withdrawals
- Free transfers between direct deposit accounts
- Online and SMS banking available
- Mobile check deposits
- Security features include fraud and anti-virus protection, SSL encryption for connection, automatic logouts after inactivity
- Potential overdraft fee, though overdraft protection is offered
- Certain types of withdrawals and transfers may be limited
- $10 excessive transaction fee per transaction over 6/month
- No physical branch locations
FAQs
Which is better, a money market account or a high-yield savings account?
Whether an MMA or HYSA is better for you depends on your needs. If you're focused on a high APY, with no fees or balance requirements, an HYSA is probably your best bet. If you want debit card access and the perks of a brick-and-mortar bank, go for a money-market account.
How much will $100,000 earn in a money market account after a year?
The best money market accounts earn at least 4% APY. At that rate, $100,000 would earn roughly $4,000 in interest over 12 months.
Is there a downside to a high-yield savings account?
High-yield savings accounts have variable interest rates, so you can lose out on potential earnings at any time. They're also commonly offered by online banks, which can lack the customer service and robust financial offerings of brick-and-mortar banks. Unlike MMAs, most HYSAs don't come with debit card or check-writing privileges, so access to funds is more limited.
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