Money Market Account vs. Savings Account

Let’s zoom in on two great saving methods: a money market account vs savings account.

You’re trying to as much money as you can. With so many different accounts and methods, what’s the best way to save money?

Keep reading to find out what’s the better choice for your personal finance goals and the differences in money market accounts and savings accounts.

What is a Savings Account?

A savings account is the most common way to store your money. You can do this at any brick and mortar bank or using an online banking service.

How Does a Savings Account Work?

You choose a bank and open a savings account with them. You’ll deposit money, and withdraw when you need.

Unlike a checking account, you won’t have a debit card to your savings account or write checks from it. Instead, you’ll just transfer cash to your debit account or withdraw from an ATM when you need the money.

You can earn interest with some traditional savings accounts.

The interest rate tends to be very small, usually somewhere between 0.01% to 1%. Though you can earn more interest with a high yield savings account. High yield savings accounts often require a minimum balance and/or opening.

If you’re interested in growing your savings and in it for the long haul, a certificate of deposit might be a great choice for you.

Savings Account Pros & Cons

Pros

  • Lower fees
  • Good for short-term safekeeping
  • FDIC-insured
  • Low risk

Cons

  • Low interest rates, yields lower returns
  • Limited withdrawals & transfers

Best Savings Account

Our Pick

DISCOVER Online Savings Account

This high yield savings account offers competitive rates and accessibility features.

  • 2.00% APY
  • No monthly maintenance fees or account minimums.
  • Easy sign up process and little requirements to open your savings account.

What is a Money Market Account?

Money market accounts are similar to savings accounts but your deposit are invested into financial markets. So, you have the potential to earn more than what you would with a savings account.

What’s the difference between a money market account and a money market fund?

Money market accounts are not the same as money market funds. A money market account is an interest-bearing savings account. Money market funds are mutual funds that invest in cash and short-term debt securities.

Money Market Account Pros & Cons

Pros

  • Higher interest rates
  • Good for medium-term goals
  • FDIC insured
  • Check-writing privileges

Cons

  • Minimum balance requirements
  • Limited withdrawals & transfers

Conclusion

You can weigh out both money market accounts and savings accounts by the banks and what they offer. Maybe you decide to put some in a high yield MMA and some in a savings account with no minimum requirements or fees.

For more saving options, check out our article on the best short term investments.

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