A money market account is a deposit account with savings features, not automatically a high-yield savings account. A high-yield savings account is usually a savings account marketed with a relatively high annual percentage yield, or APY.
Both accounts can hold short-term savings, but the account name does not tell you which one will pay more. Rates, fees and access rules can change, so check the terms as of ****.
At an FDIC-insured bank, eligible deposits in both account types are generally insured up to $250,000 per depositor, per insured bank, for each ownership category. Credit union deposits may receive comparable protection through the National Credit Union Administration.
Money Market Account vs. High-Yield Savings Account
| Feature | Money Market Account | High-Yield Savings Account |
|---|---|---|
| Account type | Deposit account with savings features | Savings deposit account with a relatively high APY |
| Typical access | May include checks, a debit card or ATM access | Usually electronic transfers and bank withdrawals |
| Minimum balance | More likely to require a minimum balance | Often has a low or no minimum, but terms vary |
| Interest rate | Depends on the institution and account terms | Depends on the bank and account terms |
| FDIC or NCUA insurance | Available when offered by an insured bank or credit union | Available when offered by an insured bank or credit union |
| May suit | Savings that may need occasional payment access | Emergency funds and savings goals |
What Is a Money Market Account?
A money market account is a savings-style deposit account offered by a bank or credit union. It may pay interest while providing more spending access than a standard savings account.
Depending on the institution, a money market account may include:
- Check-writing privileges
- A debit card or ATM access
- A higher minimum opening deposit or balance
- Limits on certain checks, debit transactions or electronic transfers
The Consumer Financial Protection Bureau says money market accounts often pay more than other savings accounts, but they may also have transaction limits and minimum-balance requirements.
What Is a High-Yield Savings Account?
A high-yield savings account is generally a savings account that pays a higher APY than a traditional savings account. "High-yield" describes the account's rate and marketing position. It does not guarantee that the account will always pay more than every money market account.
Savings rates are variable. A bank can change the APY, and the highest advertised rate may require a minimum balance, direct deposit or other conditions. Compare these details before opening an account:
- APY
- Minimum balance required to earn the advertised rate
- Monthly maintenance fees
- Transfer and withdrawal rules
- Deposit insurance
- Whether the rate is promotional
Federal disclosure rules require financial institutions to provide information about APYs, interest rates, fees and minimum-balance requirements for deposit accounts.
Which Account Usually Pays More?
Neither account type automatically pays more. Compare the specific APY instead of relying on the account name.
Some money market accounts pay competitive rates, while some high-yield savings accounts pay more. A money market account may offer a lower rate because it includes check-writing or debit-card access, but that is not always the case.
When comparing two accounts with the same balance:
- Choose the money market account if it has the higher APY and you want check or debit access.
- Choose the high-yield savings account if it has the higher APY and you mainly want to save.
- Check whether either account lowers its rate below a certain balance.
Which Account Is Better for an Emergency Fund?
A high-yield savings account is usually the simpler choice for an emergency fund because it keeps savings separate from everyday spending and commonly provides access without check-writing features.
A money market account may suit you better if you want to pay occasional large expenses directly from your savings, such as:
- A home repair
- A tax bill
- A tuition payment
- A vehicle purchase
- A contractor invoice
Compare the APY, fees, insurance and access rules before choosing.
Do Not Confuse a Money Market Account With a Money Market Fund
A money market account is a bank or credit union deposit account.
A money market fund is a mutual fund offered through a brokerage or fund company. It invests in short-term securities and is not FDIC-insured. Money market funds are generally considered lower-risk investments, but their value is not protected in the same way as an FDIC-insured bank deposit.
Before depositing or investing money, check whether the product is described as:
- Money market deposit account: A bank deposit that may be FDIC- or NCUA-insured
- Money market mutual fund: An investment product that is not FDIC-insured
Bottom Line
A money market account may be the better fit when you need check-writing or debit-card access from your savings. A high-yield savings account is often the simpler option for an emergency fund or short-term savings goal. In either case, compare the actual APY, fees, balance requirements and insurance before opening the account.