Forget Savings Accounts for Emergencies. Open This Account Instead

Got emergency savings? A lot of your fellow Americans don't -- according to research by The Motley Fool Motley Fool Money, just 45% of us could cover a $400 emergency from our savings or checking accounts. Even if you're among that 45%, you would likely sleep better with even more money saved for emergencies -- and you need that money in the right bank account.

Your emergency fund needs to be accessible at all times so it can get you out of jams like an unexpected medical or auto repair bill, or even a period of joblessness. While you want some kind of dedicated bank account for this money, a savings account may not be your best option.

In fact, a money market account (MMA) could be an even better fit. They're like a cross between checking and savings accounts, with the features of both. Let's take a closer look at MMAs -- and see when the humble savings account may be a better place for your emergency fund.

Enjoy easier cash access

When you need to access your emergency savings, every minute counts. With a savings account, you'll likely need to transfer the money to another account to take it out. But money market accounts come with debit cards and often check-writing privileges, just like checking accounts do.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of December 29, 2024. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of December 29, 2024. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

This one-step money access can make a money market account an excellent place to keep your emergency fund. If your car's at the mechanic and you have to pay for new coil springs (keep a car for 15 years and see what breaks -- you'll be surprised), covering the bill can be a piece of cake when you whip out a debit card.

Grow your money with a high APY

Remember when I said that money market accounts are like a cross between a checking and a savings account? Well, here's where the savings account features come into play. Namely, money market accounts pay comparable APYs to high-yield savings accounts, especially if you open one with an online bank.

The best money market accounts on our radar all pay more than 4% APY (with one exception). You can enjoy that easier cash access while watching your money grow with interest. It's like the best of both worlds!

When is a savings account the better option?

All of these features sound great, right? Well, not so fast. If the money market account you've got your eye on has a high required minimum balance, you might not have enough cash on hand to open it.

Plus, some money market accounts might also offer different APYs for different balances, which could be a problem if you're starting with a small amount of money. If the advertised 4.30% APY on a money market account is only for balances over $50,000, but you can open a high-yield savings account paying 4.30% even with an opening balance of $0, opting for the savings account is a smart move.

Another point in favor of high-yield savings accounts is that some of them come with cool features like savings buckets. This lets you create separate sub-accounts to save for different goals. If you're hoping to build not just an emergency fund but also a vacation fund and a new car fund, managing these separate goals within a money market account might be difficult.

Ultimately, the choice is yours -- it's your money, after all. But if getting easier access to your emergency fund while also enjoying a high APY sounds good to you, consider opening a money market account.