Money Market vs Savings Account: Which is Better for Your Money?

Published: May 27, 2024 | Updated: May 27, 2024

Key Differences Between Money Market and Savings Accounts

When deciding where to park your cash, understanding the differences between money market and savings accounts is crucial. Both offer FDIC insurance and interest earnings, but they serve different purposes and have distinct features.

Interest Rates and APY

Money market accounts typically offer higher interest rates than traditional savings accounts. This is because they often require higher minimum balances and may have more restrictions on transactions. The difference in rates can be significant, especially in today's rising interest rate environment.

Minimum Balance Requirements

Money market accounts usually require higher minimum balances, often starting at $1,000 or more. Savings accounts typically have lower minimum balance requirements, sometimes as low as $25 or even $0.

Transaction Limits and Access

Both account types are subject to Regulation D, which limits certain types of withdrawals to six per month. However, money market accounts often come with check-writing privileges and debit card access, while savings accounts typically don't.

When to Choose a Money Market Account

• You have a larger balance to deposit
• You want check-writing privileges
• You're looking for higher interest rates
• You need FDIC insurance for larger amounts

When to Choose a Savings Account

• You're starting with a smaller balance
• You want simpler account management
• You need fewer transaction options
• You're building an emergency fund

Making the Right Choice

Consider your financial goals, balance, and how you plan to use the account. Use our Money Market Calculator to compare potential returns between different account types and interest rates.