Bank Money Market Account vs Savings Account

A bank money market account is very similar to a savings account because it protects funds you do not need for day to day expenses and helps you save that money. Most banks offer both savings and money market accounts as ways to manage your finances. You can add these accounts onto the same general account that holds your checking account or credit card, providing a well-balanced mix of spending money, savings and debt. There are a few key differences between money market accounts and savings accounts that will help you choose which method is preferable to help you save more money faster.

Money Market Account

  • Higher interest rates - The main advantage of electing a money market accounts over traditional savings accounts. You will be able to grow your funds faster at these higher rates, making it the better option to generate returns each year.
  • FDIC insured - Money market accounts are FDIC insured. This means even if the bank or depository goes out of business, you will not lose your money. The Federal Depository will repay you in full for funds lost up to $250,000.
  • Higher minimum balance - The minimum balance for this type of account is typically higher than a savings account. It may run anywhere from $5,000 to $25,000 depending on the interest rate you are seeking.
  • Less monthly withdrawals - You will be given a maximum amount of withdrawals or checks you can write each month. This is typically limited to less than five.
  • Money market fund - A fund is different than an account. With a money market fund, you are investing in a low-risk type of mutual fund regulated by the Federal Government.

Savings Account

  • Lower interest rates - Savings accounts do not typically generate much money through interest. Most of these accounts have less than 1 to 2 percent growth, although the growth depends on the business cycle.
  • FDIC insured - Like money market accounts, savings accounts are insured up to $250,000 by the Federal Depository.  
  • Lower minimum balance - There is a much lower balance to establish a savings account. In some banks, the balance is as low as $50 to $100 for current checking account holders. Higher balances typically max out around $500.
  • More withdrawals per month - Savings accounts offer unlimited transfers and withdrawals. They are yours to use to move your money as you please, as long as you maintain the minimum account balance.

Which is Best?

Deciding whether to use a money market or traditional savings account depends on the purpose of the account. If you are building up your savings account for unforeseen circumstances such as; financial hardships due to medical bills or car insurance payments, a savings account is best. This allows you to set money aside specifically for dipping into when cash is tight. However, if you are looking to save for years in the future, a money market account is the way to go. You will see higher returns on your investment and be less likely to access the cash for day to day expenses.


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