$50,000 high-yield savings account vs. $50,000 money market account: Which can earn more now?
If you're looking for a home for a large amount of money, like $50,000 or more, and don't want to deal with any market volatility that could adversely affect your principal and interest, you may be considering skipping stocks and bonds. And while a certificate of deposit (CD) account could be a viable alternative, especially with interest rates there high now and earnings easy to calculate thanks to their fixed nature, CDs aren't always simple to manage. If you need the money before the CD has matured – which is possible, if not likely with a large deposit – you'll need to pay an early withdrawal fee to regain access.
Fortunately, there are alternative accounts savers can explore now that come with high rates and flexibility to make withdrawals and deposits as needed. Both high-yield savings and money market accounts are two such options. And both could be viable for $50,000, since savers will be able to pivot with ease should they want to adjust their savings strategy in the future. Before getting started, however, it's important to calculate the interest-earning possibilities each account type offers right now.
Between a $50,000 high-yield savings account and a $50,000 money market account, then, which can earn more right now? That's what we'll calculate below.
Start earning more interest on your money with a high-yield savings account now.
$50,000 high-yield savings account vs. $50,000 money market account: Which can earn more now?
Both account types have variable interest rates that, unlike CD rates, will be responsive to market conditions. That can be problematic if interest rate cuts are issued later this year, as many anticipate. Still, a Fed rate cut is unlikely to be major to start and rates on both of these accounts won't fall in an identical fashion. Still, some speculation will need to take place to determine the interest earnings possible with a $50,000 deposit.
Here's what each can earn now, calculated using today's top rates, on the assumption that they'll remain the same over the next year:
- $50,000 high-yield savings account at 4.35% after six months: $1,075.92
- $50,000 money market account at 4.40% after six months: $1,088.16
- Difference between accounts: The money market account makes $12.24 more.
- $50,000 high-yield savings account at 4.35% after nine months: $1,622.54
- $50,000 money market account at 4.40% after nine months: $1,641.09
- Difference between accounts: The money market account makes $18.55 more.
- $50,000 high-yield savings account at 4.35% after one year: $2,175.00
- $50,000 money market account at 4.40% after one year: $2,200.00
- Difference between accounts: The money market account makes $25.00 more.
In each of the above instances, the money market account earns more. But the difference between the two isn't stark, and the above calculations are made on the assumption that you can find rates as high as those noted. While these are available for savers now, taking advantage of them may require the use of an online bank, as lending institutions with physical branches tend to offer less competitive rates.
Start shopping for money market and high-yield savings accounts online here.
The bottom line
If you don't want to give up access to your money but still want to earn a high rate and not have to worry about stock market ups and downs, both high-yield savings and money market accounts are viable options to explore, especially for a large, five-figure amount like $50,000. Returns here are substantial and flexibility can be maintained. Wherever you ultimately decide to deposit your money, just be sure to avoid keeping it in a traditional savings account since average rates there are under 0.40%, essentially meaning you're losing money by not making a switch.