What’s the Difference Between a Savings Account and a Money Market Account?

Money that is saved or invested in a money market account can grow in value over time. Interest is the means by which both accounts generate income. The larger the account balance and the longer the money is maintained in the account, the more interest the money earns. These profits, however, may be affected by a number of circumstances.

The term “savings account” is commonly used to refer to the interest-bearing accounts provided by financial institutions like banks and credit unions. A money market account (MMA) is quite similar to a checking account, but it comes with a few extra perks and restrictions based on the banking institution. Despite their similarities in purpose, their structures, characteristics, and interest-bearing mechanisms all vary.

When comparing savings accounts with money market accounts, what are the key differences?

Individuals and corporations can get interest on their savings or operating capital by depositing it in a savings or money market account. Deposits in banks are protected up to $250,000 by the FDIC, whereas those in credit unions are covered by the National Credit Union Administration (NCUA).

Accrued Interest

Earnings on savings and money market accounts are calculated as a percentage of the account balance each year; this is the annual percentage yield (APY). Both accounts contribute to the availability of bank money, which in turn allows banks to provide loans to borrowers. The annual percentage yield (APY) is the rate at which a bank pays interest to its account holders. These APRs are pegged to the federal funds rate but might vary by credit institution.

Money market accounts often provide greater interest rates than regular savings accounts. Most money market accounts (MMAs), also known as money market deposit accounts (MMDAs), have greater minimum deposit requirements and may provide tiered interest rates dependent on your account balance, leading to larger profits overall.1

Funding Availability

While both savings and money market accounts allow depositing cash, account holders have different withdrawal options depending on the kind of account they choose. A standard feature of savings accounts is the restrictions placed on their use. Because not all savings accounts come with debit cards, customers who need access to their money must visit a branch or make a transfer. There may be a monthly transaction cap on the amount of transfers you can make or other services you may use with some online savings accounts.2

It’s common to have additional withdrawal possibilities with a money market account. In some cases, you may even be able to write checks and use a debit card to make transfers, just as with a traditional checking account. Many MMAs provide customers with the convenience of internet banking and debit cards for use at ATMs.3


The federal government no longer requires financial institutions to cap the number of withdrawals from savings and money market accounts at six per month, although many still do.4

bare minimum

There are major distinctions between savings accounts and money market accounts, and individual banks may impose their own minimum balance restrictions. Minimum balances for savings accounts tend to be modest, often around $1,000. In order to receive interest and/or avoid monthly fees, some banks require customers to maintain a minimum savings account balance, such as $500. There may be no minimum balance on some types of savings accounts.

Unlike checking accounts, money market accounts have much higher minimum balance requirements, frequently $25,000 or more.5 Maintaining the required balance in some MMAs may not incur any costs. The minimum opening deposit for a managed money account (MMA) is often larger than the minimum opening deposit for a savings account.

What Option Suits Me Best?

Depending on your financial situation and personal preferences, you can choose between a savings account and a money market account to earn interest. Because of the high criteria for opening a money market account, those with lower savings amounts may be restricted to the savings account. In addition, a savings account’s relative ease of use makes it a viable alternative for first-time account holders.

A money market account is a good option if you want to maximize your return on investment and have a sizable cash to deposit. An MMA can help you make the most of your money with to features like bonus levels. It also gives you more ways to access your money, including a debit card and the ability to write checks, and includes convenient extras like online bill pay.


Check out the rates and fees charged by various banks, credit unions, and other lenders. Different financial institutions have varying minimum balance requirements and perks like low or no fees and convenient online bill pay are among the most sought after.

In Conclusiveness

Both savings accounts and money market accounts offer a return on deposits in the form of annual percentage yield (APY). Both accounts are suitable for those who want to save money while yet making a little profit. It’s vital to read the fine print when comparing different account types, since the terms and conditions can vary widely, from a $0 minimum balance to a $5,000 minimum balance, and the amenities provided.

Frequently Interrogated Questions

In order to open a checking account, what do I need?

You’ll need your SSN, current address, and a government-issued picture ID to start a savings or money market account, along with the minimum beginning deposit amount. While the process is easier than opening other types of bank accounts, the bank may nevertheless check your credit.

Can I have access to my money in a money market or savings account?

Withdrawals can be made from both savings and money market accounts; however, your bank may place withdrawal limits on these accounts. If you withdraw more than the bank allows, they may cut your interest rate, charge you a fee, or even terminate your account.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *