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Money Market Accounts vs. Savings Accounts

| MoneyRates.com Senior Financial Analyst, CFA
min read

BankingMoney market accounts and traditional savings accounts are quite similar, but there are a few differences.

While both usually offer excellent security and good liquidity, comparing money market vs. savings account features may show which better fits your needs.

>> Compare money market account rates 

What is a Money Market Account?

A money market account (MMA) is a type of deposit account insured by the Federal Deposit Insurance Corporation.

MMAs often pay higher interest than savings accounts, though yields on the best money market accounts and high-yield savings accounts tend to be pretty close.

MMAs may have different terms from savings accounts. Besides offering different interest rates, they may require a larger deposit to open and/or a higher minimum balance to maintain the account.

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 looking to earn a modest amount of interest on an account with a high level of safety and liquidity.

In those key respects, they are similar to savings accounts. That makes it worth comparing both savings and money market accounts to determine which suits you 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 allow a lower opening deposit and lower monthly minimum balance than a money market account. On the other hand, a savings 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 can often be found at online banks, may meet or exceed the rates offered by a comparable money market savings account.

Money Market AccountSavings Account
National interest Rate*0.12%0.08%
Requires minimum depositMaybe
In some cases may require larger deposit than savings
Maybe
Depends on the institution
FDIC insuranceUp to $250,000
(per depositor, per institution)
Up to $250,000
(per depositor, per institution)
Penalties for early withdrawalNoNo
Access to moneyMay have limits
on monthly transactions, but might be able to use debit card/checks
Immediate access
but limits on monthly transactions

*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 online accounts 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 is easy. You can compare current rates and terms on our savings accounts or money market accounts pages to see which offers the best deal for your needs.

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