Updated May 5, 2020

Money Market vs Savings

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Savings and money market accounts are both FDIC insured bank accounts. So what's the difference? Learn the pros and cons and find out which is best for you.

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Money Market and Savings Accounts Overview

Having a savings account is an important part of personal finance management. It's a risk-free place to store your money for things like an emergency fund and short term goals.

When you open a savings account at a bank, you usually have 2 options:

  1. a traditional savings accounts or
  2. a money market account (MMA)

They are very similar with some differences in their use. Here are some common features of both :

  • Offer interest to help grow your savings
  • Limited to 6 withdrawals or transfers per month
  • No limit to number of deposits you can make
  • FDIC insured (up to $250,000 per depositor per bank)

Now let's take a look at each one in more detail and how they are different.

If you've got a chunk of money you don't mind putting away for a while, consider a Certificate of Deposit. CD terms range from three months to several years. The longer the term, the higher the interest rate. Check out our top picks.

Comparison Chart

Here's a money market account vs savings comparison chart to understand the main differences:

Savings AccountMoney Market Account
Use ForSaving money for emergencies and goalsSaving money, but also freer access to funds
Monthly FeesVaries by bankVaries by bank
Minimum BalanceVaries by bankMay require higher balance
RestrictionsLimited to 6 withdrawals per monthLimited to 6 withdrawals per month
InterestVaries by bankMay offer higher interest, but varies
Bill payNoSometimes
ATM/Debit CardGenerally no (but some may offer ATM card)Sometimes
FDIC InsuredYesYes

The average APY for a money market account is 0.15%, according to the FDIC. Savings accounts have an average interest rate of 0.08%.

What is a Savings Account

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A savings account is a secure place to park your money and let them grow over time. Unlike a checking account, it's intended as a place to save money you don't need in the immediate future, so you shouldn't be always touching your funds. Some banks will require a minimum balance (or else there's a monthly service charge).

Often, savings accounts offer interest to help your money grow. The rate will vary by each financial institution. Online savings accounts usually give the highest rates.

Since you're supposed to be saving money, you're limited to only 6 withdrawals or transfers each month. If you exceed that amount, a penalty will apply.

A savings account makes a great partner to a checking account. It can be used for overdraft protection in case you accidentally overdraw your checking.

What is a Money Market Account

A money market account is like a hybrid savings and checking account. You're still limited to 6 withdrawals a months, however, you get a little more flexibility and easier access to your money.

A lot of money market accounts allow for checkwriting and online bill pay (which is not allowed in in traditional savings accounts). Some even come with a debit card you can use for purchases and withdrawing money at ATMs. This makes your funds more liquid. You'll have to check what features your MMA offers.

MMAs may offer higher interest rates than savings accounts. However, in exchange, some banks will have bigger account balance and/or minimum deposit requirements. Again, rates and requirements will vary. Check out the best money market rates.

Can you lose your money in a money market account?
No. A money market account is a bank account. If it's at a bank, it's covered by federal FDIC insurance. And if it's a credit union, it's insured by NCUA. Both insure your funds up to $250,000.

Don't confuse a money market account with a money market fund. Money market funds are invested in securities. Though they're usually low-risk, they're still subjected to market risk, and therefore loss of value. They're also not insured by the FDIC.

Is a Money Market Account Better Than a Savings Account

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Both are good options for saving money. The right type of account for you depends on what you're looking for and your financial situation.

A money market account offers the best of both worlds with more flexibility and higher interest rates. However, the minimum balance may be higher too. So if you're just starting out to save and can't maintain the required balance, it won't be the best choice for you.

Also because of the freer access to your funds, it makes it all too convenient to spend the money in your account. So if your primary goal is to SAVE money, you may want to remove those temptations by going with a traditional savings account. Instead, choose a high-yield savings account if you want similarly high interest rates.

But remember - both accounts only allow up to 6 withdrawals and transfers per month. Both are not meant to be used as an everyday banking account for your daily needs.

A money market account is best if you:

  • Have a bigger amount of money to deposit
  • Want easier access, like debit cards and checkwriting
  • Want better interest rates in exchange for bigger balance

A traditional savings account is best if you:

  • Are just starting to save or don't have a lot to deposit
  • Are focused on saving money

Hear from an Expert

CreditDonkey asked JP Krahel from Loyola University Maryland for his expert opinion on money market accounts vs savings accounts.

Here's what he had to say:

Best Savings Accounts

Member FDIC

HSBC Direct Savings - 0.15% APY

  • Earn 0.15% APY on all balance tiers
  • No monthly maintenance fee
  • Minimum balance to open account is $1
  • Member FDIC

HSBC Direct's online savings account offers one of the currently highest APYs on the market. Only $1 to open and there is no service charge.

CIT Bank
Member FDIC

CIT Savings Builder - Earn 0.40% APY

Earn up to 0.40% APY. Here's how it works: Maintain a minimum balance of $25k OR make at least a $100 minimum deposit every month. Member FDIC

CIT Bank's Savings Builder account encourages you to save money by rewarding active savers with a better interest rate. To receive the top-tier APY, you need to open the account with $100 initial deposit, and deposit at least $100 every month (which is reasonable to meet). There is no service fee.

High Yield Savings - 0.50% APY

$0 minimum opening deposit. No minimum balance requirement. No fees to open or maintain account.

Synchrony's High-Yield Savings offers an ATM card for withdrawing money. There is no minimum deposit and no service charge.

Ally Bank

Online Savings Account - 0.50% APY

$0 minimum opening deposit. No minimum balance requirement. No fees to open or maintain account.

Ally Bank gets very high satisfaction ratings with a user-friendly interface and live 24/7 customer service, It's a full-service online bank with a wide ATM network, free checking, multiple savings options, and investment services. No opening minimum or service fees.

Best Money Market Accounts

CIT Bank
Member FDIC

CIT Bank Money Market Account - 0.45% APY

  • 0.45% APY
  • $100 minimum opening deposit
  • No monthly maintenance fee

CIT Bank offers a high rate on the Money Market Account no matter how much you have. However it doesn't come with an ATM card.

  • Set up direct deposit
  • People Pay account to account or through PayPal
  • Remote check deposits via mobile app
  • (Online bill pay coming soon)

Discover Bank
Member FDIC

Money Market Account

  • Earn 0.30% APY for balances under $100,000
  • Earn 0.35% APY for balances $100,000 and over

Discover Bank's Money Market Account provides free access to your funds via ATMs.

  • Free debit card and checks
  • Over 60,000 fee-free Allpoint® or MoneyPass® ATMs
  • No limits on ATM cash withdrawals
  • Remote deposits and online bill pay
  • No deposited item returned or insufficient funds fees

UFB Direct

UFB Premium Money Market - Earn 0.20%

  • Earn 0.20% APY on balances of $25,000 and above
  • Member FDIC

UFB Direct's Premium Money Market Account has a high rate, but only on accounts with $25,000 or more.

  • $5,000 to open
  • Complimentary Visa debit card
  • Check writing privileges
  • Mobile check deposits

Bottom Line

Both money market accounts and savings accounts are excellent—and safe—deposit accounts to save your money.

The main difference between a money market account and savings account is how you access your funds. Some money market accounts offer increased flexibility by allowing for checkwriting or debit card use. They also may have higher interest rates, but may also require higher account minimums.

Remember: Rates and features vary by bank. Take some time to research the best place for your money.

Write to Kevin L at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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CIT Bank
Member FDIC

CIT Bank Money Market Account - 0.45% APY

  • 0.45% APY
  • $100 minimum opening deposit
  • No monthly maintenance fee
Discover Savings Bonus: $150 or $200 Promotion

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Why Do Checking Accounts Have Fees

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Citi Accelerate High-Yield Savings Account Review

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