Keep in mind that savings accounts APYs can fluctuate. They don't offer fixed interest rates like CDs. And over long periods of time, the stock market tends to offer much higher returns than savings accounts, online and offline.
During a recession, many investors put money in savings accounts to keep money handy and earn interest on savings. Consider investing in a savings account if you're building an emergency fund or prefer stable returns (right now, the top accounts offer rates around 4%-5%).
Pros
- Easy access to funds
- Open at any bank
- High APYs through online banks
- FDIC insured
Cons
- Low APYs at brick-and-mortar banks
- Withdrawing funds usually requires transfers
- APY can drop at any time
Invest in a money market account
Money market accounts combine features of savings and checking accounts. It's easy to access money kept in a money market account, plus they offer interest rates comparable with savings accounts. They may offer debit cards or check-writing capabilities, and like savings accounts, may have withdrawal limits.
The best money market accounts offer a winning combination of high APYs and easy access to your money.
The downside to money market accounts is their minimum balance requirements. You may need a minimum deposit to open the account and/or avoid monthly maintenance fees. That is problematic when you must drain your savings to cover an emergency expense -– you could be charged for doing so.
During a recession, many investors put money in money market accounts to keep money handy and earn higher-than-average bank rates. Consider investing in a money market account if you can afford the down payment and want easy access to most of your savings.
Pros
- Direct access to funds
- High APYs
- Open at any bank
- FDIC insured
Cons
- Potentially high minimum balance requirements
- APY can drop at any time
Here are a few examples of top money market accounts: