A savings account is (still) better than the mattress

Stacks of coins

It's fashionable in these meager-return days to label and dismiss all savings accounts as the lamest refuge of last resort for your accumulated liquidity.

You might see little difference between a savings account, a high-yield savings account, a money market deposit account and your Sealy Posturepedic as a worthy place to stash your cash.

While I feel your frustration with our current zero-interest environment, these three brow-beaten savings accounts can still work for you if you understand, rather than dismiss, the differences between them, even with savings account rates at a dismal national average of 0.19%.

To look on the cup-half-full side, simple savings:

Also, through the miracle of compound interest, you earn interest on your interest.

High-yield savings accounts have generated some buzz of late, notably at online banks. Ally currently tops the nationals with a guaranteed high-yield everyday rate of 1%. Teaser introductory rates of 3% to 4% are not unheard of.

As their name implies, these deposit accounts pay above-average interest on your money while still being FDIC insured to the maximum limit of $250,000 individual, $500,000 joint. That said, many restrict the number of transactions per billing cycle, delay transfers from the account by four or five days, and may revert to a variable rate once you make your initial deposit, as is the case with Ally.

Money market deposit accounts, or MMDAs, traditionally lead the savings pack for interest paid, in large part because of the expanded investments the banks make with your money. Not surprisingly, MMDA rates currently run neck-and-neck with high-yield rates. Better times will change that equilibrium however.

The upside to money market accounts is, they give you some limited market exposure while protecting your principle. The downside is, you may have to give your bank up to seven days notice before you can access your funds.

Are you going to get rich with your money in any of these accounts today? Hardly.

But let's revisit this lesson when interest rates rise of 5% to 6% and see who goes to the head of the class.

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