From Time:
If you’re looking to grow your wealth and emergency fund, it’s important to secure a higher interest rate for your savings. The average annual percentage yield (APY) for traditional savings accounts in the U.S. is only 0.47%. Fortunately, there are options like money market accounts and high-yield savings accounts that offer much better APYs.
Money market accounts (MMAs) are ideal for short-term savings goals and offer better-than-average APYs. They can provide checks, debit cards, and ATM access, but may have minimum opening deposits and balance requirements, as well as withdrawal limits.
On the other hand, high-yield savings accounts offer better APYs than MMAs, typically with lower-to-no minimum balance requirements. They’re offered by online-only banks and credit unions, but have fewer withdrawal options and no physical branch access.
When deciding between a money market account and high-yield savings account, consider factors such as minimum balance requirements, ease of access to your funds, and the APY offered. Currently, the best MMAs and HYSAs offer APYs in the range of 4% to 6%, which is significantly higher than traditional savings accounts.
In the end, both money market accounts and high-yield savings accounts offer high APYs and the safety of FDIC or NCUA insurance. The best choice for you depends on your specific financial goals and needs. Regardless of your decision, both account types offer a great combination of high APYs and low-to-no risk.
Read more: Money Market Account vs. High-Yield Savings Account