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Money market accounts vs. savings accounts

money market vs savingsMoney market accounts and traditional savings accounts are not vastly different, but there is more than one difference between money market and savings instruments.

While both usually offer excellent security and good liquidity, certain money market vs. savings account features may offer a better fit than another for your saving goals. 

What is a money market account?

A money market account (MMA) is a type of high-yield savings account insured by the Federal Deposit Insurance Corporation. Opening an MMA might require more funds from a depositor than an ordinary savings account would, but it may include a higher interest rate on deposits that a savings account can't match. A money market account may also require a higher minimum balance than a regular savings account at the same bank.

Some money market accounts may offer check-writing privileges -- up to six per month -- that can access the account's funds, whereas traditional savings accounts do not permit check-writing.

Is a money market account right for you?

Generally speaking, a money market savings account may be a good choice for someone with a relatively higher level of funds to deposit. That said, consumers should carefully review the terms of both a money market account and a savings account to determine which suits them best. At many banks, the differences between a money market account and a savings account -- including the gap in interest rates -- may not be that substantial.

Online money market rate comparisons, such as the one on MoneyRates.com's money market rates page, are a great way to search for higher rates and learn the details on specific money market accounts.

Money market account vs. savings account

A traditional savings account, may require a lower opening deposit and lower monthly minimum balance than a money market account. But the account may pay a lower yield than its money market counterpart, and checks may not be written against the account.

Traditional savings accounts have evolved over time. High-yield savings accounts, which pay higher interest rates than traditional accounts, are one example. In some cases, a high interest savings account, which is often found at online banks, may meet or exceed the rates offered by a comparable money market savings account.

A chart comparing money market accounts vs. savings accounts and what is a money market account rate compared to savings account rates
*Source for national interest rate: FDIC, updated Jan. 23, 2017

By reducing the service costs associated with traditional savings accounts -- such as maintaining multiple brick-and-mortar facilities -- many online institutions can pay higher bank interest rates and offer more convenience while still making a profit. Thankfully, these products have not changed the fundamental appeal of a traditional savings account that has FDIC insurance coverage: guaranteed interest, excellent security and good liquidity.

Choosing between money market vs. savings

Whether you are saving for retirement, college expenses or some other goal, a savings or money market account may have a place in your financial strategy. Deciding which account suits you requires that you research and determine whether or not you can comfortably meet requirements for an opening deposit. Then you need to maintain the necessary minimum balance in order to access the most attractive interest rate.

Compare current rates and terms on our savings accounts or money market accounts pages.

5 Comments
Eva 22 May 2016 at 2:13 pm

Very helpful. Simple explanation that I could understand and base a decision on without having to do further research.

kyle lieff 14 October 2015 at 9:47 am

this was vary helpful

Jean 30 November 2011 at 3:31 am

very helpful, thank you

Ian S. 10 September 2011 at 8:51 pm

Thanks for this simple comparison. Succinct and informative

Linda G. 19 August 2011 at 6:06 am

Thank You for taking your time to publish this. It helped me to a better understanding. Sincerely, Linda G..