How it works
A HYSA-versus-money-market comparison projects the two dominant cash-parking vehicles onto your actual balance, deposits and horizon, because their differences are structural rather than promotional. High-yield savings accounts are bank products: FDIC-insured, paying a posted APY that the bank can change whenever policy shifts. Money markets arrive in two flavors — bank accounts with similar insurance, and mutual funds whose seven-day yield already nets out expense ratios but whose custody falls under SIPC rather than FDIC protection. Yield gaps between them are typically small; the defaults here show a 20-basis-point edge compounding $30,000 plus $250 monthly into roughly a $150 advantage for savings across three years — real money, yet rarely decisive alone. Access patterns differentiate more sharply than yield: money-market funds offer same-day settlement with checkwriting privileges, while savings accounts move through ACH in one to three days, a friction that matters exactly when emergencies strike. Rate behavior diverges too — fund yields float weekly with policy rates while account APYs move in stickier steps, meaning the leader often swaps depending on where the rate cycle sits. The rational structure treats them as complements: emergency reserves wherever access feels fastest, larger known-horizon cash wherever the yield currently leads, rebalanced whenever the gap widens past half a point.
Formula
End balance = FV(starting balance, APY, years) + FV(monthly stream, APY, years), compounded monthly
Tips
- Compare net figures: fund 7-day yields are post-expense, so pit them against APY directly.
- FDIC covers bank accounts; SIPC custody is different — know which product you hold.
- Rate cycles flip leaders — recheck the gap quarterly rather than marrying either side.
- Access speed matters most for emergency money; yield matters most for parked cash.
- Split large balances across both when insurance limits start binding at either institution.
Frequently asked questions
- Which earns more: high-yield savings or money market?
- Whoever's rate leads that quarter — gaps swing both directions as policy rates move. The default comparison shows savings ahead by about $150 over three years on $30,000 plus $250 monthly, a 20-basis-point edge that compounds slowly enough for access features to legitimately outrank it.
- Is a money market fund FDIC insured?
- No — funds fall under SEC regulation with SIPC covering custody failures, not deposit losses. Government-only funds carry minimal risk through their holdings, and many brokerages sweep idle cash into insured bank programs instead. Verify which wrapper you actually own before assuming bank-style protection.
- Why is money market yield lower than my savings APY?
- Fund yields subtract expense ratios before publication, typically 0.1–0.5%, while advertised savings APYs arrive gross. Bank money-market accounts layer low tiered rates instead. The net-net is usually within a quarter point of each other, small enough that liquidity preferences should decide.
- Can these rates change after I open an account?
- Both float. Fund yields reset weekly with overnight rates; banks adjust account APYs at their discretion, usually lagging Fed moves. Neither locks — CDs do that. Treat any current spread as temporary and recheck whenever the central bank moves or a statement shows the gap drifting past half a point.
- Where should an emergency fund sit?
- Whichever you will actually reach without hesitation — same-day money-market checkwriting suits some households, next-day ACH suits others. Both beat checking's near-zero yield decisively; the $30,000 profile here leaves several thousand dollars on the table over three years if left uninvested.