Money Market Accounts vs. Savings Accounts
Money 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.
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.
Which Banks Have the Best Savings Account Rates?
Finding the bank with the best savings account to meet your needs is as simple as using our search tool. Try it now and find your high-interest savings account.
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’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 Accounts vs. Savings Accounts
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.
*Source for national interest rate: FDIC, updated January 2024
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.
Are There Fees for Money Market and Savings Accounts?
When it comes to bank fees, find out about all potential fees before you open an account.
As for where to look for those fees, checking accounts are the most likely place you’ll find them, but don’t assume that savings accounts and money market accounts are free of fees.
Charges on those types of accounts may be a little more obscure, but they can exist.
For example, savings and money market accounts may be subject to an inactivity fee. This is a monthly fee that is assessed once you’ve gone a long time (such as three years) without any activity in the account.
The irony is this: a withdrawal would count as activity, so basically the bank is indicating that they would rather have you take your money away from them than leave it alone.
In any event, be aware of any inactivity fees that may apply to your accounts, and if you haven’t made any withdrawals or deposits in the normal course of things, consider putting in or taking out a token amount just to steer clear of inactivity fees.
Also, be aware that if you sign up for a savings account or money market account that offers a special interest rate if you keep a certain minimum balance, a fee may apply if you drop below that balance.
How to Compare Rates for Savings and Money Market Accounts When They Change All the Time
Shopping for the best CD rates is more of a sure thing than shopping for rates on savings accounts or money market accounts.
That’s because when you find a good CD rate, you can lock it in for a period of months or years, while your savings and money market rates are subject to change from day to day.
Even so, shopping for savings and money market rates can be worthwhile if you follow a couple of rules:
Don’t Get Distracted by Teaser Rates
These are special rates offered for a set initial period. Unless the terms of those teaser rates are especially compelling – e.g., an exceptionally high rate that is locked in for several months – you should make your decision more on the ongoing rate of interest offered than on any short-lived promotion.
Focus on Banks That Consistently Offer High Rates
Yes, savings and money market rates can change from day to day, but the fact is that some banks consistently offer high rates. Every quarter, MoneyRates identifies the banks that have offered the highest rates on average over the preceding three months. This feature, called America’s Best Rates, is a good place to start when shopping for rates.
There’s nothing you can do to lock in savings and money market rates over the long term, but if you follow the above rules you should increase your chances of getting consistently competitive rates.
Plus, in a low interest rate environment, the flexibility of savings and money market rates can be an advantage. Should rates start to rise, you’ll benefit from the fact that these rates can be more responsive to those changes than CD rates.
What Determines Whether You Should Use a Savings Account or an MMA?
A money market account is a form of savings account, but generally, there are two things that distinguish a money market account.
The first is that money market accounts usually have more strings attached than savings accounts, in the form of higher minimum balance requirements or more limitations on how frequently you can access your money.
The second thing that distinguishes money market accounts from savings accounts is that money market rates are generally higher than savings account rates. On average these days, money market rates are running about 8 basis points higher than savings account rates, though the gap is larger for so-called “jumbo” deposits, which are accounts of $100,000 or more.
If you put those two distinguishing characteristics together, the picture that emerges is that money market accounts are right for large chunks of money that you plan on depositing and leaving alone.
If you have a relatively modest sum of money or plan to have money going in and out of the account several times a month, then a money market account might not be right for you.
However, if this is money you view primarily as long-term savings but which you want to maintain access to just in case, then a money market account sounds like a good fit.
Those generalizations should give you some general guidelines to work with, but ultimately, every account is a little different.
You need to shop around, compare money market rates from different banks, and check on the specific restrictions for each account.
Assuming you can live with the restrictions, your goal should be to find the highest money market rates you can.
After all, the best money market rates these days are running well over a point more than the national average, so shopping around really can pay off.
When a CD Matures, Should You Put the Funds in Savings or MMA While You Consider Buying Another CD?
In this context, the two are virtually interchangeable, and it is worth looking at and comparing both kinds of rates.
Terms and conditions about how often you can access different types of accounts may vary, but in the case where you are trying to park one lump sum of money until you find a better home for it, that shouldn’t matter much. The decision really comes down to interest rates.
