Money market accounts vs. high-yield savings accounts: Here's which one experts recommend now

CBS News

2 days ago

Savers have come out on top over the past few years, thanks to the rate hikes conducted in 2022 and 2023 by the Federal Reserve to help tame inflation. The decisions the Federal Reserve makes for its federal funds rate have an impact on interest rates on both borrowing and saving products. And, as rates remained elevated, it allowed savers to take advantage of higher yields on deposit products such as money market accounts and high-yield savings accounts.
The rate climate has started to shift recently, however. The Fed moved forward with several rate cuts at the end of 2024. And, while the Fed has kept the federal funds rate steady throughout 2025, the CME Group FedWatch tool shows a high probability of rate cuts after the Fed's September meeting.
Given the current rates and potential rate cuts soon, which savings product is ideal for your situation? We spoke to various savings experts about money market accounts vs. high-yield savings accounts and what to consider. Here's what they had to say.
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Money market accounts and high-yield savings accounts are two similar savings vehicles, but with some important distinctions. Both come with variable interest rates, unlike certificates of deposit (CDs), which have fixed interest rates. Both also typically offer higher interest rates than standard savings accounts.
The major difference is that a money market account also comes with a debit card and checks, whereas most high-yield savings accounts don't. Below, we cover additional nuances to consider when looking at a money market account vs. a high-yield savings account.
Money market accounts and high-yield savings accounts have variable rates that change. The annual percentage yield (APY) on each account can be pretty similar in some cases, though some money market account APYs may be slightly higher. For example, many money market and high-yield savings accounts offer rates between 3.4% and 3.5% currently, including those from large financial institutions like Ally Bank and Discover.
So, the rates on money market accounts and high-yield savings accounts are generally pretty comparable. That said, it can depend on the bank. There are money market accounts from large financial institutions that are offering rates closer to 2% on money market accounts, and there are also certain banks offering much higher high-yield savings APYs at closer to 3.8%. So, it's important to weigh each option against the others you're considering.
You should also note that some accounts have tiered APYs that determine rates based on the account balance. While both high-yield savings accounts and money market accounts can have tiered APYs, it's generally more common with money market accounts. In some cases, you may need to have a substantial amount of money in a money market account to get a higher APY.
"The advantage of money market accounts is that they often offer competitive yields along with limited check-writing or debit access, which can be useful for people who want access to their cash and want some traditional features common in checking accounts. The downside is they may require higher minimum balances and may have tiered rates, meaning only large deposits earn the top offered APY," says Shana Hennigan, chief business officer at Raisin, a savings marketplace.
"A money market account can work well for someone who wants to park a large nest egg but still have occasional access for payments, like a retiree managing cash flow. A high-yield savings account is a good fit for building an emergency fund or saving toward short-term goals, like a vacation or down payment, especially if the person values ease and flexibility," says Hennigan.
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High-yield accounts help you earn more money on your savings thanks to an above-average APY. To access that rate, you must open an account and meet minimum deposit and balance requirements.
While it's possible to have no minimum deposit on both money market accounts and high-yield savings accounts, that isn't common. Most accounts will have minimums you must meet, though there is typically a lower barrier to entry with a high-yield savings account. Conversely, many banks may have a high minimum opening deposit for a money market account, which could be in the four-figure range.
"Typically, savings accounts have lower account minimums, and they also may have the higher rate on the product starting at a lower amount, because oftentimes they're positioned more to capture everyday liquid savings," says Derik Farrar, head of everyday banking and borrowing at U.S. Bank.
Both money market accounts and high-yield savings accounts also offer a high degree of accessibility. One notable difference, though, is the unique access that a money market account offers to your cash via a debit card or check.
"Where the debit card or the check writing capabilities can be beneficial is if you know that you have a couple of purchases coming up, and you know you just want to be able to pay for it directly from the account versus having to transfer back into a checking account," says Farrar.
But while money market accounts come with these unique benefits, it's still essential to weigh them against some of the potential drawbacks.
"Money market accounts can offer a solid mix of interest and flexibility, with features like check writing, debit access, and online transfers. Some reward higher balances with better rates. Just watch for fees, minimums, and withdrawal limits," says Becca Craig, certified financial planner at Focus Partners Wealth.
Craig notes that high-yield savings accounts can offer more competitive rates, with some also offering no fees or minimums. Plus, they're a good choice for short-term or emergency savings funds that you don't need regular access to.
It's always a good idea to save, whether you use a money market account or a high-yield savings account to do so. And, it's an even better idea to save while earning a high rate of return, as you can earn more on the money you set aside. Both money market accounts and high-yield savings accounts provide a safe place to put your savings, but there are several factors to weigh when deciding which one is a better option for you.
"For most people, it comes down to accessibility, fees, and how the account will be used. Both money market accounts and high-yield savings accounts offer FDIC insurance up to a certain amount, but they can be beneficial in slightly different ways," says Craig.