High-yield savings accounts vs. money market accounts

The ins and outs of high-yield accounts


It may not come as a surprise that putting money away can help protect you from the unexpected and financial hardship.1 But it’s not always that easy, especially if you’re not sure where to save money.

Two possibilities are high-yield savings accounts and money market accounts. If you’re not sure what they are and how they work, let’s take a closer look at the two savings vehicles.

Key benefits to high-yield savings and money market accounts

High-yield savings accounts and money market accounts typically come with higher annual percentage yields (APY) than standard savings accounts.2 Typically, they’re both also insured by the Federal Deposit Insurance Corporation (FDIC)-insured.

So, what does that mean?

Potential savings and growthAPY is an annualized rate that helps you understand how much money you’ll earn on your balance after a year.3 So with one of these products, you may be able to save and grow your money.

Security: Both of these types of accounts are typically FDIC-insured, up to allowable limits, at insured institutions.2 This means that, on the off chance that your bank fails, you’re insured up to that limit.

What is the difference between high-yield savings and money market accounts?

A big difference between money market accounts and high-yield savings accounts is the access they provide to your money. Money market accounts tend to come with checkbooks, whereas high-yield savings accounts typically don’t. But both accounts may still have monthly withdrawal limits.2

There may also be differences in requirements to open and maintain an account, such as minimum balances and deposits, and fees. Typically, savings accounts are easier and less expensive to open.2

A few things to keep in mind about high-yield savings and money market accounts

Because these products typically offer higher APYs than your standard checking or savings account, they could come with a few rules.

Minimum initial deposits: These types of accounts may require a minimum deposit. This is the minimum amount of money you need to open an account. Money market accounts typically have higher requirements.2

Minimum balance requirements: These products may also come with a minimum balance that you need to keep in the account to earn the highest APY offered and avoid fees.2

Transactions limits: Even though some money market accounts may come with a debit card and a checkbook, they may still be considered savings vehicles. So some banks, as they do with high-yield savings accounts, may limit the number of monthly transactions you’re allowed.2

Which is better: a money market account or a high-yield savings account?

There’s no right or wrong answer. Both of these products can help you build your savings for a rainy day (unless you’re saving for vacation or a wedding—then hopefully it’s sunny). If you’re looking to choose one, consider things such as interest rates, minimum deposits and minimum balances. A little research can go a long way.

Are money market and high-yield savings accounts worth it?

They certainly can be. If you’re looking to start saving—and can meet the minimum initial deposit and minimum balance requirements that generally come with these higher savings rates—one of these accounts may be right for you.

The bottom line: There aren’t too many differences between these types of accounts. Both can help you save and grow your money. And if you’re thinking of opening one, research is the name of the game.


This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

  1. Why savings matters: the latest research (undated). Retrieved February 9, 2022, from https://www.consumerfinance.gov/start-small-save-up/why-savings-matters/.
  2. The best places to save your money: Money market accounts, savings accounts and CDs (January 20, 2022). Retrieved February 9, 2022, from https://www.bankrate.com/banking/savings/money-market-vs-savings-accounts-vs-cds/.
  3. Glossary of Banking Terms and Phrases — Annual Percentage Yield (APY) (undated). Retrieved February 8, 2022, from https://www.helpwithmybank.gov/glossary/index-glossary.html.

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