Historically, the highest money market rates beat out rates on traditional savings accounts, so they’re often the account of choice for those looking to maximize their money. But with more banks offering high-yield savings accounts (HYSAs), money market accounts may not be as advantageous as they were before.

When it comes to money market accounts vs. high-yield savings accounts, there are key differences in terms of yields, minimum deposits, and fees.

What is a money market account?

A money market accounts is a type of deposit account you can use to grow your savings. They're commonly offered by banks and credit unions. You can use a money market account to save for an emergency, a dream vacation, or a down payment on a home.

Money market accounts can be appealing because they typically provide higher annual percentage yields (APYs) than savings accounts. As of this writing, the average rate for a traditional savings account was just 0.47%. For a money market account, the average rate was 0.67%.

Money market accounts also are more accessible than a traditional savings account; you can withdraw money by writing a check or you can use a debit card to withdraw money at an ATM. However, money market accounts often restrict the number of withdrawals or transfers you can do each month. Depending on your financial institution's policies, you may incur excessive use or withdrawal limit fees if you exceed six in a month.

These accounts are backed by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), so your deposits are protected up to a maximum of $250,000. When you’re worried about safety, knowing that your money market account is secure can give you peace of mind.

What is an HYSA?

A high-yield savings account is a type of savings account that offers significantly higher APYs than the national average. They’re usually available from online banks; because they don’t have brick-and-mortar locations, they have less overhead costs and can provide higher rates to attract customers.

Depending on the bank or credit union, APYs on HYSAs can be as high as 5% or more — significantly higher than the national average for traditional savings accounts.

Like money market accounts, HYSAs are usually backed by FDIC or NCUA insurance. And HYSA customers may also have to abide by the six-per-month withdrawal limit. Exceeding that limit could cause your account to be transferred to a checking account, or you may have to pay excessive use or withdrawal fees.

Money market account vs. high-yield savings account: Key differences

Money market accounts and HYSAs are tools you can use to grow your savings. They’re secure accounts backed by the FDIC or NCUA and they both provide higher APYs than traditional savings accounts. However, these accounts do differ in several significant ways:

• APYs: It’s possible to find HYSAs with higher APYs than money market accounts offer.

• Minimum deposits: You often need hundreds or even thousands of dollars to open an account with a money market account. But with an HYSA, you can typically open an account with a $0 minimum deposit requirement.

• Balance requirement: Although some money market accounts have low minimum deposit requirements, you usually must maintain a much higher balance to earn the highest-possible APY. For example, you may need to maintain a balance of $25,000 or more to earn the best rate. By contrast, HYSAs don’t usually have tiered rates – the same high rate applies to everyone, regardless of their balance.

• Monthly fees: A HYSA usually has low fees or the bank or credit union may charge no fees at all. But money market accounts usually involve monthly account maintenance fees, which can cost as much as $25 per month.

• Accessibility: When it comes to accessibility, money market accounts tend to have an edge over HYSAs. Money market accounts allow you to withdraw money with a check or debit card, while HYSAs are more limited. Unless the bank behind the HYSA operates branches and teller services, you can only make electronic funds transfers.

Pros and cons of money market accounts vs. HYSAs

Which account is better for you: a money market account or an HYSA? Each account has its advantages and drawbacks:

Pros of money market accounts

• They have higher APYs than traditional savings accounts: Money market account APYs are typically higher than the APY you’d get with a traditional savings account opened at a local bank or credit union.

• Money market accounts provide easy access to cash: Money market accounts give you check-writing privileges and access to a debit card, making it easy to withdraw money.

• Money market accounts are liquid: Unlike some other options, such as certificates of deposit (CDs), money market accounts are liquid, meaning you can access your money — without penalty — whenever you want.

Cons of money market accounts

• They usually have higher minimum deposit requirements than savings accounts: Although the minimum deposit requirements vary by bank or credit union, money market accounts often require you to have hundreds or even thousands to open an account. The minimum deposit requirement can be a significant hurdle for those just starting out or those that are new to saving money.

• You’re limited in how many withdrawals you can make: Although it’s easier to access your money with a money market account, you are limited in how many withdrawals or transfers you can make per month. If you exceed that limit, the bank can charge you hefty fees per every excess transaction.

• They often have higher fees: Money market accounts usually charge monthly account fees, and the fees can range from $5 to $25 per month.

Pros of HYSAs

• HYSAs provide higher-than-average APYs: HYSAs provide APYs that are much higher than the national average for traditional savings or money market accounts.

• They have low minimum deposit requirements: HYSAs usually have low deposit requirements, so you can open an account with as little as $0.

• Usually, HYSAs have no monthly fees: Because HYSAs are often provided by online banks with low operating costs, they don’t usually have monthly fees.

Cons of HYSAs

• The APY can change: With some financial products, such as CDs, you can lock in the APY for a specific period, such as 12 to 48 months. But with an HYSA, the rate can change along with market conditions, so the rate could decline.

• They’re harder to access: With an HYSA, the only way to access your money is to transfer it to another account. You can’t make withdrawals with a check or debit card.

• You can’t visit a branch: HYSAs are usually offered by online banks, so there aren’t local branches you can visit. When you need in-person help, that can be a frustrating problem.

Money market accounts vs. HYSAs: Which account is right for you?

High-yield savings account vs. money market: Which is better? There’s no right answer that applies to everyone. Which account type makes the most sense depends on your financial goals, how much money you have available to open a new account, and how much cash you intend to leave in the account.

For those that don’t have a lot of money on hand or those that don’t want to worry about monthly fees, an HYSA is likely the better choice. HYSAs provide higher-than-average APYs, and they usually have no minimum deposit requirements, nor do they charge monthly fees.

For those that have substantial amounts of money available, a money market account may be a wiser choice than a savings account. If you deposit a large amount — such as $25,000 or more — and maintain that balance, you can earn a much higher APY. Plus, you can easily access that money with a check or debit card when you need to tap into your savings.

Regardless of which account you choose, do some research before opening an account. APYs, minimum deposits, and fees vary between financial institutions, so compare several options to find the best APY at the lowest cost.