Business money market accounts (MMAs) and high-yield savings accounts are two interest-bearing deposit accounts businesses can use to earn passive revenue on a company’s reserve funds. They are very similar, and the terms are often used interchangeably, even though there are slight differences between business money market vs high-yield savings accounts.
Business MMAs often allow you to write checks, while many savings accounts don’t offer checks. In addition, MMAs typically earn a slightly higher interest yield than a regular business savings account but often require a higher minimum balance.
Both are Federal Deposit Insurance Corp. (FDIC)-insured for up to $250,000 per account holder, usually have monthly fees that are often waivable if minimum balances are met, and may have monthly transaction limits, with excess transactions resulting in fees. These limits aren’t federally required by the FDIC anymore, but many banks still enforce those limits. Some accounts with consistent excess transactions may be reclassified to non-interest-bearing accounts.
If you’re interested in opening a business MMA, U.S. Bank is an excellent choice. It has a Platinum Business MMA, which gives out an annual percentage yield (APY) of anywhere from 0.05% to 5.75% Opening a new U.S. Bank Platinum Business Money Market account until Dec. 5, 2023, entitles you to a 4.50% bonus interest rate if your account balance ranges from $25,000 to $2,999,999.99. Both bonus and standard rates may change at any time without prior notice and may vary depending on your location. , depending on your daily balance.
If you prefer to open a high-yield savings account, we recommend Live Oak Bank. It offers an APY of 4.0% Live Oak Bank's APY rate is valid as of 3/23/2023. The rate may change at any time without notice. without a monthly maintenance fee. You only need to maintain a 1-cent minimum balance to start earning interest. Our Live Oak Bank business savings review provides detailed information on the account.
Comparing Business Money Market Accounts, CDs, and Business Savings Accounts
Three types of business bank accounts allow you to earn interest on reserve business funds. In addition to business MMAs and high-yield savings accounts, you could choose to open a business certificate of deposit (CD). Read our comparison guide between business MMA vs CD to learn their pros and cons and decide which account suits you.
The table below compares some of the differences among the three account types.
Business CD | |||
|---|---|---|---|
Best for | Businesses with large reserves they don’t need to access regularly | Businesses with very large reserves they won’t need to access for months or years | Businesses with smaller reserves they might need to access regularly |
Interest Rate Offered | Similar to, but usually higher than, savings; lower than CD | Highest of the three | Similar to, but usually lower than, money market; lower than CD |
Liquidity of Funds | Can withdraw funds anytime, subject to monthly transaction limits | Unable to withdraw money for a fixed period; early withdrawal penalties are very high | Can withdraw funds anytime, subject to monthly transaction limits |
Check Writing Capabilities | Yes | No | Usually no |
Relative Minimum Deposit | Highest of the three | Similar to money market, but higher than savings | Often the lowest |
Sample Business Money Market vs High-yield Savings Overview
U.S. Bank Platinum Business Money Market | Live Oak Bank Business Savings | |
|---|---|---|
Required Opening Deposit | $100 | None |
Monthly Maintenance Fee | None | |
Required Minimum Balance to Earn Interest | $50,000 to $249,999.99 daily balance | 1 cent |
Deposit Flexibility | Can deposit anytime | |
APY Earnings | ||
Benefits | Interest accrued daily and paid monthly | Interest compounded daily and credited monthly |
Up to $250,000 | ||
Your needs determine your choice to open a business MMA or a high-yield savings account. U.S. Bank’s Platinum Business MMA requires a minimum opening deposit of $100, whereas Live Oak Bank’s high-yield business savings account has no initial deposit.
U.S. Bank’s Platinum Business MMA provides a 4.85% With a daily balance of $50,000 to $249,999.99, U.S. Bank's Platinum Business MMA earns a total of 4.85% (0.25% standard APY + 4.60% bonus APY) APY, but you need to pay a $15 monthly maintenance fee Maintain a $10,000 minimum daily ledger balance to waive the monthly maintenance fee. and maintain a minimum $50,000 daily balance. Meanwhile, Live Oak’s high-yield savings account delivers a strong 4.0% APY without monthly fees. It also requires a negligible 1-cent balance to earn interest, a common advantage of business savings vs MMA accounts.
When To Use a Business Money Market Account
Between business money market vs high-yield savings, choose the former when:
- You need to occasionally write checks from the account
- You can meet the usually higher minimum balance requirement with a business MMA
- Your business has a large amount of excess cash in your business checking account
Business Money Market Account Pros & Cons
| PROS | CONS |
|---|---|
| Strong interest returns on business reserves | Limited interest earnings or potential monthly fees from high minimum balance requirements for some accounts |
| Low-risk investments, with FDIC-insured funds up to $250,000 | Potential fees or account reclassification penalties for exceeding six monthly transactions |
| Slightly more liquid than high-yield savings due to check-writing ability | Inflated introductory rates with some banks can lead to seeking a new account after the intro period ends and APY drops |
When To Use a Business High-yield Savings Account
When comparing business savings vs MMA accounts, go with the former when you
- Might not have enough reserve funds to meet the higher minimum requirements of business MMAs
- Want to build an emergency fund for your business and don’t need frequent access to withdraw funds
- Don’t need to write checks to move money out of the account
Business High-yield Savings Account Pros & Cons
| PROS | CONS |
|---|---|
| Solid interest returns on business reserves | Often lower interest yield than business MMAs |
| Low-risk investments, with FDIC-insured funds up to $250,000 | Potential fees or account reclassification penalties for exceeding six monthly transactions |
| Likely lower minimum balance requirements than business MMAs | Inflated introductory rates with some banks can lead to seeking a new account after the intro period ends and APY drops |
When To Consider an Alternative
There may be times when a business CD or an interest-bearing business checking account is a better option.
- Go with a business CD when you:
- Have financial reserves that you can leave untouched for several months or years
- Want to earn higher interest returns and are willing to sacrifice liquidity of reserve funds
- Are OK with potentially paying a penalty if you have to withdraw the money early
- Have other reserve funds in a traditional savings or MMA that can be used for unexpected expenses
- We recommend Live Oak Bank, which offers 5.40% Live Oak Bank's APY rate is valid as of 9/22/2023. The rate may change at any time without notice. APY for its business CD product under a 1-year term. The required opening deposit is $2,500 without monthly maintenance fees. To learn more, visit Live Oak Bank or check out our Live Oak Bank business savings review.
- Choose interest-earning business checking accounts when you:
- Need your funds completely liquid with no transaction limits
- Are willing to earn less interest to keep your funds liquid
- Want largely fee-free banking
- Our recommendation is Bluevine. It has an interest-earning business checking account, which is largely fee-free and earns 2.0% Bluevine's APY rate is valid as of 10/10/2023. The rate may change at any time without notice. APY on all qualifying balances up to $250,000. You can head over to Bluevine or read our review of Bluevine business checking to learn about its features.
Frequently Asked Questions (FAQs)
Typically, a business MMA will pay a higher return. However, some high-yield business savings accounts can have a similar rate to an MMA.
Yes, a business can use an MMA, but it should open a business-specific MMA. A business MMA will allow companies to earn a high interest yield from reserve funds with a higher degree of liquidity than a business CD.
There aren’t many differences between a business MMA and a regular business savings account. Business MMAs typically have a higher yield than traditional business savings accounts, and a business MMA generally allows you to write checks, while business savings accounts often don’t offer check-writing capabilities.
Bottom Line
When comparing the features of business money market vs high-yield savings accounts, both are very similar. With business accounts, when a bank is talking about a high-yield business savings account, they’re often referring to a business MMA. There are only slight differences between the two accounts.
If you occasionally need to write checks from your account or want to earn a slightly higher yield, a business MMA is the best choice. If you might not have enough reserves to meet the higher minimum balance requirements of an MMA, choose a business high-yield savings account instead.
