Updated
Fact Checked
Ashley Maready
You probably know that savings are a crucial part of building financial security. But where should you store your money? Ideally, you want to earn interest. You also need to be able to access your cash when you need it.
Money market accounts and savings accounts both offer decent interest rates and relative liquidity. The two have a lot in common, as well as a few differences that you need to be aware of. Let's take a look at money market accounts vs. savings accounts to see which is the right choice for you.
How do money market accounts work?
A money market account (MMA) is a deposit account available from most financial institutions. The best money market accounts typically offer higher (or at the very least, the same) interest rates as high-yield savings accounts. This helps you grow your hard-earned cash. One perk is that you can often get check-writing privileges and even a debit card, giving you easy access to your money.
Since these are deposit accounts, the Federal Reserve's Regulation D limits the number of withdrawals or transfers to six per month (though the Fed has temporarily withdrawn these restrictions due to COVID-19, though banks can still impose their own restrictions). The good news is that withdrawals in person and through ATMs technically don't count.
How do savings accounts work?
A savings account is also a deposit account offered by credit unions and banks. Interest rates vary depending on which financial institution you go with. You'll tend to find the best rates with online-only institutions.
Like money market accounts, savings accounts are also governed by Regulation D. However, you typically won't get a debit card or check-writing privileges with a savings account. If you need to move money around, you can make an online transfer or head to your nearest branch. You'll need to link the account to a checking account and transfer cash to it if you want to write checks.
Compare savings rates
Make sure you're getting the best account for you by comparing savings rates and promotions. Here are some of our favorite high-yield savings accounts to consider.
| Account | APY | Promotion | Next Steps |
|---|---|---|---|
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
up to 4.60%
Rate info
You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.
Min. to earn: $0
|
New customers can earn up to a $300 bonus with qualifying direct deposits!
|
|
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
5.00% APY for balances of $5,000 or more
Rate info
5.00% APY for balances of $5,000 or more; otherwise, 0.25% APY
Min. to earn: $100 to open account, $5,000 for max APY
|
N/A
|
|
Rating image, 4.00 out of 5 stars.
4.00/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
5.25%
Rate info
To ensure you keep getting the highest rate at UFB, you'll need to keep an eye on their rates. Occasionally, the bank launches new accounts with higher rates. Existing accounts need to contact the bank to request being moved to one of these new accounts.
Min. to earn: $0
|
N/A
|
Savings vs. money market accounts
A crucial difference between a money market account and a savings account is the way you can access your funds. Money market accounts offer a debit or ATM card and the ability to write checks. Savings accounts generally don't. Some financial institutions offer savings account holders an ATM card, but it's not that common.
Another difference is the minimum deposit requirement. Savings accounts typically require lower minimum balances and initial deposit amounts. That's not to say that all money market accounts require high deposits, but many do -- we're talking about a few hundred to several thousand dollars to qualify for the best rates. In return, you can usually earn much better APYs compared to those of savings accounts.
Otherwise, both savings accounts and money market accounts offer similar features. Both types of accounts are FDIC or NCUA insured, meaning your cash is protected up to $250,000 in the event your bank or credit union goes belly up. And you'll find the same transaction restrictions on savings accounts and MMAs.
It's important to consider how you want to use your new bank account before opening one. For instance, if you only have a small amount of money you want to keep in savings, then a money market account may not be for you. That's especially true if you can't meet the minimum opening deposit requirements.
However, if you can afford it and are after the best rates, then a money market account may be your best choice. Plus, money market accounts usually make it easier for you to get at your money. That may be useful, for example, if it's where you are keeping your emergency fund. What if you're the type of person who would be tempted by easier access to your cash? Then, a savings account -- with its lack of ATM and check-writing access -- may be the smarter choice.
| Feature | Money Market | Savings |
|---|---|---|
| FDIC or NCUA insured | Yes | Yes |
| Earns interest | Yes | Yes |
| ATM access | Yes | Varies |
| Check-writing privileges | Yes | No |
| Requires a high minimum deposit | Varies | No |
How to open a money market account or savings account
Before opening either a money market or savings account, it's a good idea to shop around and choose the one that best suits your needs. Think about what's most important to you: online or mobile access, check-writing privileges, or even a financial institution that offers a wide range of accounts.
Check out our picks of the best money market accounts if you think an MMA is the right choice for you. And you'll find plenty of options on our best savings accounts page if you think that would be a better fit.
Once you've decided on the best account for you, opening a new account can be as simple as filling out an online application form. You'll be required to provide personal details to get started. That might include your full name, mailing address, email address, phone number, and Social Security number.
The financial institution will also ask you to provide information on how you'll make your initial deposit amount. Depending on the bank, you can either conduct a bank transfer, wire the funds, or mail a check. Once complete, your bank will mail you a debit card and checks if you opened a money market account that offers these features.
Whichever type of bank account you choose, the most important thing is to make regular contributions to it. Prioritize saving money, even if it's only a small amount each month. Not only can you earn interest on it, but you'll be able to use it if you ever face a financial emergency.
Still have questions?
Here are some of the other questions we've answered:
FAQs
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As of Sept. 14, 2023, money market accounts at some of the top banks are offering APYs of over 5.2%. So, if you deposit $10,000 and leave it in the MMA, you can expect to earn $520 before fees for simply not spending your money.
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Savings accounts have yields that are kind of all over the place, but as of Sept. 14, 2023, you can expect to see rates of up to 4.5% to 5.0% at most institutions with these options. If you put $10,000 in these accounts, you'll see a return of $450 to $500 before account fees are considered.
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Choosing a savings vehicle can be challenging, but it's important to carefully review the terms of the account, including under what conditions you'll earn interest, which can include minimum balances that must be maintained. Also be sure to check the fee schedule to make sure it's actually worth the effort for the amount you have to tuck away.
If your bank gives you 5% on savings, but charges $10 a month for your account, your initial deposit of $100 will be eaten up faster than you might think if you're not actively working on growing it. You'll not even see a month where the interest will balance out the fee until your balance reaches $200, which can be very discouraging for a new saver.
Our Banking Experts
Sarah Li Cain has been writing financial advice and reviewing financial products since 2015. She has contributed to outlets including LendingTree, Business Insider, Redbook, Bankrate, and the Financial Planning Association.
Kristi Waterworth has been a writer since 1995, when words were on paper and card catalogs were cool. She's owned and operated a number of small businesses and developed expertise in digital (and paper) marketing, personal finance, and a hundred other things SMB owners have to know to survive. When she's not banging the keys, Kristi hangs out in her kitchen with her dogs, dropping cheese randomly on the floor.
Fact Checked
Ashley Maready
Ashley Maready is a former history museum professional who made the leap to digital content writing and editing in 2021. She has a BA in History and Philosophy from Hood College and an MA in Applied History from Shippensburg University. Ashley loves creating content for the public and learning new things so she can teach others, whether it's information about salt mining, canal mules, or personal finance.
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