What Are the Differences Between the APY on a Savings Account Vs. a High Yield Money Market Account?

Brick and mortar banks compete with online banks for deposit accounts.
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Savings accounts and high yield money market accounts are two different interest-bearing account types offered by banks and some credit unions. Traditionally, savings accounts offered greater flexibility, lower deposit requirements and a lower APY -- the annual percentage yield for your account when compounding is included. With the advent of online banking and the resulting nationwide competition for depositors, the difference between these two account types has lessened considerably. In general, these changes have diminished the advantages of high-deposit accounts over accounts with smaller balances.

Savings Accounts Requirements

You can open a savings account at the bank of your choice, either online or at your local branch. Savings accounts usually have no minimum initial deposit requirement. Many charge a fee if the average monthly balance falls below a minimum, which often ranges from $100 to $300. Some banks waive the fee if you deposit a minimum amount each month, usually $25.

Money Market Requirements

Minimum deposits to open money market accounts vary widely, from no minimum to $25,000. Money market accounts usually charge a higher fee than savings accounts if your account balance averages less than a monthly minimum. One bank charges $3 for savings accounts with deposits that fall below the minimum, while another charges $8 for money market accounts that fall below the minimum. Money market accounts usually have higher minimum requirements than savings accounts, often $1,000. A few banks, however, have much higher monthly minimums and some have the same minimums for both account types. The same bank that has no minimum deposit requirement for a money market account has no minimum monthly balance requirement. A few banks offer moderately higher APYs -- often about 0.10 to 0.25 percent higher -- for accounts with deposit minimums ranging from $25,000 to $100,000.

Interest Rate Comparison

The traditional view of APY interest rates on savings accounts and money market accounts is that money market accounts offer higher rates. This remains true at some institutions, but others now have identical rates for both account types, further diminishing the differences between the two account types. Also, some banks offer higher APYs on savings accounts than other banks offer on money market accounts, so it pays to shop rates at several banks before opening either account type. Several online sites list these rates for most major institutions, making rate comparisons easy.

Other Differences

One of the few remaining advantages of money market accounts over savings accounts is that many institutions offering money-market accounts include a check-writing privilege. Most banks now offer an ATM card for both account types, allowing you to withdraw from the account (without charge) a limited number of times each month, usually ranging from two to six withdrawals.

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