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Money Market Accounts Vs. Saving Accounts: The Differences

Written by Banks Editorial Team

Updated April 21, 2021​

2 min. read​

Debating between opening money market accounts vs. savings accounts? While the two have a lot in common, certain features and restrictions might make one a better choice for you over the other. The differences between money market accounts and savings accounts lie in terms of your potential interest earnings, required minimum balance, and the different ways you can access the money.

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Money Market Accounts vs. Savings Accounts: Key Differences

Customers have several choices when it comes to earning interest on their hard-earned money. Both money market accounts and savings accounts are two options offered by your bank that can safely grow your money without limiting your access to funds. When it comes to choosing money market accounts vs. savings accounts, both can be opened online and offer a safe place for your money to grow, protected by FDIC insurance. The five biggest differences between the two accounts are (1) potential interest earnings; (2) requirements for an initial deposit; (3) using an ATM card for withdrawals from the account; (4) the ability to write checks from the account; and (5) what the account is typically used for. View the best savings account options for you:

When deciding between money market accounts vs. savings accounts, first assess your financial needs.

Difference #1:

Money market accounts typically earn more interest than a savings account but often require a higher initial deposit. As of September 2018, savings accounts averaged a 0.08% Annual Percentage Yield (APY) at most, while money market accounts could offer an average APY somewhere between 0.08% and 0.11%. Certain banks may offer a high-yielding savings account with comparable rates to a money market account. This doesn’t, however, mean that the two accounts are equal.

Difference #2:

When it comes to money market accounts vs. savings accounts, money market accounts typically require a higher initial deposit and may charge regular fees. As these accounts are often considered by a bank to be “more sophisticated”, they may try to limit their customers to money market accounts by adding these stipulations.

When deciding between money market accounts vs. savings accounts, next assess your needs in terms of accessibility: Do you need to write checks from the account? Do you need an ATM card to withdraw funds? If the answer to the above questions is “yes”, a money-market account may be the right path for earning a high-interest rate on your money.

Difference #3:

Unlike savings accounts, which often do not allow direct ATM withdrawals, money market accounts give you unfettered access to the money (up to six transactions a month, in accordance with federal law). Savings accounts can often only be withdrawn by going to a physical bank or conducting an electronic transfer.

Difference #4:

Money markets accounts vs. savings accounts also differ in regards to writing checks. Most banks offer check-books to money market account holders, and this is usually not available for customers with savings accounts.

Difference #5:

In terms of utility, money market accounts are preferable for occasional expenses such as household maintenance. However, the more transactions made from this account, the less interest your money will earn over time. If you get into the habit of making withdrawals, you may also risk overdrawing the account and incurring additional fees. Due to the nature of a savings account, you may be less tempted to access the money, thereby earning more interest over time and avoiding maintenance fees.

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