Savings Accounts vs. Money Market Accounts

Savings Accounts vs. Money Market Accounts

By Amy Braun-Bostich

When you want to stash away some of your money, it’s likely you’ll turn to the account options provided by local banks and credit unions. While it’s common to open a checking and savings account for easy access to your cash, it’s important to consider all of your options – including money market accounts (MMA). Below we’ll outline what your options are and the important considerations to make as you decide which is right for you.

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What Is a Savings Account?

Just as it sounds, a savings account is a bank account specifically used for saving money. Because these accounts are designed to house money on a more medium or long-term basis, they typically offer a better interest rate than checking accounts. For many, a savings account is used to cover unexpected expenses such as a job loss or sudden home repair. In addition, savings accounts can be used to save for short-term goals, such as holiday expenses, upcoming vacations or house renovations.

To access the money in your savings account, you will typically need to visit a bank teller or utilize your online banking system. Savings accounts are not accessed through the use of checks or debit and ATM cards. Instead, it is common to link a savings account to a checking account, where these methods of withdrawal are easily used. In fact, the Securities and Exchange Commission (SEC) limits users from withdrawing money from their savings accounts to no more than six times per month.1 Attempting to withdrawal more than six times could result in penalty fees or account suspensions.

What Is a Money Market Account?

Think of a money market account as a hybrid between a checking and savings account. It is designed for medium or long-term savings, but it offers easier access and withdrawal capabilities than a savings account would. When using an MMA, the bank actually invests the funds you deposit into the marketplace.

While MMAs are under the same regulation by the SEC in regard to withdrawal limits, most money market accounts can be accessed using checks or ATM cards.

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

The biggest difference between these two types of accounts, aside from the ability to withdraw, is the interest rate. Generally speaking, MMAs will offer a higher interest rate than a savings account. In turn, however, many MMAs will require a minimum amount to open and remain in the account at all times.

Key Takeaways

While they’re similar in nature, there are a few key differences to consider as you decide which bank account type is right for you. While the higher interest rates of an MMA may be appealing, you want to be sure you’re able to make and keep the minimum required amount in the account. And if savings is your biggest concern, will the ability to access your money easily deter your efforts? If so, you may want to set aside what you have in a savings account instead.

As you look to accrue savings and interest, it’s important to weigh all of your options. Remember to consider the interest rates, minimum requirements and accessibility differences of your savings and MMA account options to find what works best for you and your savings goal.


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Braun-Bostich & Associates Inc. a registered investment advisor. This information is being provided only as a general source of information and is not intended to be used as a primary basis for investment decisions, nor should it be construed as advice designed to meet the particular needs of an individual investor. Please seek the advice of your advisor regarding your particular financial concerns. While the information is believed to be accurate, distribution of this material should not be considered an endorsement of any particular investment strategy, product or service described therein.

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