Money Market vs High Yield Savings Account

[Elementary]

Hello,

I have a question about where to put my emergency fund. Right now I have about six/seven months of living expenses stashed in a high-yield online savings account at an interest rate of 0.95%. Some advice I have seen recommends money market accounts over savings accounts, but I can't see where a money market account will return more than 0.95%.

For example, the Vanguard prime money market fund shows a compound yield of 0.61%, on top of which it charges me expenses of 0.16% for managing my money (I can't post a link but the symbol is VMMXX).

Is there something I'm not understanding about these numbers? Are yield and interest rate not comparable? If they are, why would a money market fund make more sense than my high-yield savings account?

Any explanation would be very helpful.

Thanks.

[Jluke]

I think what you need is a CapitalOne360 Money Market (1%). I've also seen Ally Bank mentioned elsewhere.

If you have a Money Market in your brokerage account there will be fees associated with it.

Also, it may be that Savings Account and Money Market account terms are used loosely.

[greenskeeper]

until rates increase (who knows when) I keep my emergency fund money in my checking account

[scfr]

A money market account is a type of savings account and is different from a money market fund.

As far as your current savings account, are you happy with it? I'm a big-time rate chaser myself, and not loyal to any bank, but I wouldn't change my account if I was happy with it and if the difference in interest rates is so small (0.95% vs 1.00%). Rates change. You could leave a bank you like for one you don't and then the rates could flip on you, and you'd just wind up regretting the decision.

[feh]

I have a question about where to put my emergency fund. Right now I have about six/seven months of living expenses stashed in a high-yield online savings account at an interest rate of 0.95%.

Leave it where it is. At the moment, anything around 1% on your EF is just fine.

[Nutria]

Hello,

I have a question about where to put my emergency fund. Right now I have about six/seven months of living expenses stashed in a high-yield online savings account at an interest rate of 0.95%. Some advice I have seen recommends money market accounts over savings accounts, but I can't see where a money market account will return more than 0.95%.

For example, the Vanguard prime money market fund shows a compound yield of 0.61%, on top of which it charges me expenses of 0.16% for managing my money (I can't post a link but the symbol is VMMXX).

Is there something I'm not understanding about these numbers? Are yield and interest rate not comparable? If they are, why would a money market fund make more sense than my high-yield savings account?

Any explanation would be very helpful.

Thanks.

No, I don't think you misunderstand at all. Which is why my "e-fund + deferred spending" pile-o-money is in a mixture of:
checking (just what I'll need that month, plus a little extra)

• Capital One 360 savings, 0.75% APR
• Ally Bank savings, 1% APR
• Various CDs at Ally, CO360 and Synchrony.