NerdWallet's Smart Money Podcast
Rising Insurance Costs and Choosing the Best Savings Account for Your Money
Mon, 27 Jan 2025
Learn how rising climate risks impact home insurance costs and compare high-yield savings against money market accounts. How can you protect your home and finances as climate disasters increase? Should you choose a high-yield savings account or a money market account? Hosts Sean Pyles and Sara Rathner discuss rising home insurance costs and how to evaluate savings options to make informed financial decisions. First, they welcome home insurance Nerd, Caitlin Constantine, to discuss skyrocketing home insurance premiums in the wake of climate-related disasters, and share tips on shopping for competitive rates, raising deductibles responsibly, and understanding your policy’s exclusions and limitations. Then, savings expert Margarette Burnette joins Sean and Sara to break down the differences between high-yield savings accounts and money market accounts. She explains key distinctions, compares pros and cons, and shares practical tips on maximizing your savings. Compare homeowners insurance quotes using NerdWallet’s free tool: https://www.nerdwallet.com/article/insurance/home-insurance-quotes NerdWallet's list of the best high-yield savings accounts: https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts NerdWallet's list of the best money market accounts: https://www.nerdwallet.com/best/banking/money-market-accounts In their conversation, the Nerds discuss: home insurance costs, rising insurance premiums, climate disasters insurance, lowering home insurance premiums, high-yield savings accounts, money market accounts, money market vs high yield, flood insurance, insurance in wildfire zones, climate change impact on insurance, California home insurance, savings account tips, saving for emergencies, insurance deductibles, renters insurance costs, homeowners insurance increases, how to shop for insurance, emergency fund accounts, FDIC insurance, money market mutual funds, savings accounts explained, financial preparedness for disasters, best savings accounts 2024, smart insurance tips, financial impact of climate change, how to reduce insurance costs, flood insurance necessity, investment vs savings, interest rates on savings accounts, climate change financial impact, practical savings advice, emergency savings strategies, comparing savings products, pros and cons of money market accounts, and home insurance in high-risk areas. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend.
How are rising climate risks affecting home insurance costs?
Here are a few things to think about. First, fees and minimum balances. You can find high yield savings accounts that don't charge monthly fees and don't have minimum balance requirements. Money market mutual funds may charge an expense ratio, which is essentially a fee for the fund, and they may also have minimum balance requirements as Erin noted above. Next is your returns, of course.
The higher your yield or the more interest you earn in the savings account, the faster your balance can grow. And finally, you'll want to think about access to your money. With savings accounts, if you have an ATM card, you may be able to go to an ATM machine and withdraw money instantly. Or you could set up an automatic transfer that can be sent to a linked account within a day or so.
Money market deposit accounts, those savings accounts, work similarly, with some giving you the ability to write a few checks each month.
And now what about money market mutual funds? If someone does decide to put their money into one of these investment accounts, is getting your money from one of those accounts as easy as getting it from a money market deposit account or a high yield savings account?
Some money market mutual funds do let you write checks as well, but there may be a minimum withdrawal requirement. Otherwise, to access your money, you may need to sell shares and that could take a day or two to settle. I'll note that the savings accounts and money market deposit accounts with the highest rates do tend to be online accounts.
So going to a local bank branch to withdraw money usually isn't an option. So you'll want to take that into account when making a decision about which one to open.
Fortunately, our job here at NerdWallet is to make decisions like this easier, so I do want to mention that we have articles on the best high-yield savings accounts and the best money market deposit accounts on NerdWallet's website.
You can check the NerdWallet rating, the APY, and any relevant bonus offers for each account, along with some of that other information we just talked about, like minimum balances and fees. And if you want, you can also look up money market mutual funds as well. We'll put links to those articles in today's show notes.
Erin also talks about what they think is behind the differences in the rates being offered. They think it's about profitability. Could you talk us through why a bank would be marketing or offering one versus the other?
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