NerdWallet's Smart Money Podcast
Rising Insurance Costs and Choosing the Best Savings Account for Your Money
27 Jan 2025
How are rising climate risks affecting home insurance costs?
Here are a few things to think about. First, fees and minimum balances. You can find high yield savings accounts that don't charge monthly fees and don't have minimum balance requirements. Money market mutual funds may charge an expense ratio, which is essentially a fee for the fund, and they may also have minimum balance requirements as Erin noted above. Next is your returns, of course.
The higher your yield or the more interest you earn in the savings account, the faster your balance can grow. And finally, you'll want to think about access to your money. With savings accounts, if you have an ATM card, you may be able to go to an ATM machine and withdraw money instantly. Or you could set up an automatic transfer that can be sent to a linked account within a day or so.
Money market deposit accounts, those savings accounts, work similarly, with some giving you the ability to write a few checks each month.
And now what about money market mutual funds? If someone does decide to put their money into one of these investment accounts, is getting your money from one of those accounts as easy as getting it from a money market deposit account or a high yield savings account?
Some money market mutual funds do let you write checks as well, but there may be a minimum withdrawal requirement. Otherwise, to access your money, you may need to sell shares and that could take a day or two to settle. I'll note that the savings accounts and money market deposit accounts with the highest rates do tend to be online accounts.
So going to a local bank branch to withdraw money usually isn't an option. So you'll want to take that into account when making a decision about which one to open.
Fortunately, our job here at NerdWallet is to make decisions like this easier, so I do want to mention that we have articles on the best high-yield savings accounts and the best money market deposit accounts on NerdWallet's website.
You can check the NerdWallet rating, the APY, and any relevant bonus offers for each account, along with some of that other information we just talked about, like minimum balances and fees. And if you want, you can also look up money market mutual funds as well. We'll put links to those articles in today's show notes.
Erin also talks about what they think is behind the differences in the rates being offered. They think it's about profitability. Could you talk us through why a bank would be marketing or offering one versus the other?
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