Terry Turner, Financial writer for Annuity.org
  • Written By
    Terry Turner

    Terry Turner

    Senior Financial Writer and Financial Wellness Facilitator

    Terry Turner is a senior financial writer for Annuity.org. He holds a financial wellness facilitator certificate from the Foundation for Financial Wellness and the National Wellness Institute, and he is an active member of the Association for Financial Counseling & Planning Education (AFCPE®).

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  • Edited By
    Lamia Chowdhury
    Lamia Chowdhury

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial editor at Annuity.org. Lamia carries an extensive skillset in the content marketing field, and her work as a copywriter spans industries as diverse as finance, health care, travel and restaurants.

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  • Updated: May 18, 2023
  • 9 min read time
  • This page features 5 Cited Research Articles
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How to Cite Annuity.org's Article

APA Turner, T. (2023, May 18). Money Market Accounts vs. Savings Accounts: Understanding the Benefits and Risks. Annuity.org. Retrieved June 8, 2023, from https://www.annuity.org/personal-finance/banking/money-market-account/money-market-vs-savings/

MLA Turner, Terry. "Money Market Accounts vs. Savings Accounts: Understanding the Benefits and Risks." Annuity.org, 18 May 2023, https://www.annuity.org/personal-finance/banking/money-market-account/money-market-vs-savings/.

Chicago Turner, Terry. "Money Market Accounts vs. Savings Accounts: Understanding the Benefits and Risks." Annuity.org. Last modified May 18, 2023. https://www.annuity.org/personal-finance/banking/money-market-account/money-market-vs-savings/.

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Key Takeaways

  • Money market accounts offer more flexibility than traditional savings accounts, combining some features of checking accounts.
  • Traditional savings accounts provide access to your money when needed but tend to offer modest interest.
  • Both money market and savings accounts are typically FDIC- or NCUA-insured up to $250,000.

Money Market Accounts

Money market accounts are consumer financial products that typically offer higher interest rates and easier access to your money than a traditional savings account. Money market accounts let you earn interest but allow you to write checks or use a debit card attached to the account.

You can withdraw money from a money market account any time you want to, but you may be limited to a certain number of withdrawals each month. You may also be required to maintain a minimum balance or pay certain fees with a money market account.

Interest Rates and Minimum Balance

Interest Rates
Money market accounts pay higher interest than traditional savings accounts. In May 2023, some online banks were offering rates of 4% or more, which is competitive with high-yield savings accounts.
Minimum Balance Requirements
Institutions may charge fees if your balance drops below a certain amount. The exact amount varies. While some banks or credit unions require a minimum balance of $10,000 or more, you can find institutions that require a minimum balance of less than $1,000.

Advantages of Money Market Accounts Over Savings Accounts

Money market accounts offer several advantages for people who want to earn interest on their money while still having easy access to it.

Money Market Account Advantages

Higher Interest Rates
Money market rates tend to be much higher than traditional savings account interest rates. High-yield savings accounts and CDs typically offer higher rates than money market accounts, but you usually must give up the ease of access to your money that money market accounts provide.
Compound Interest
Money market accounts earn compound interest. Interest is calculated daily and compounded monthly. Then, the interest is added to your balance, and you begin to earn interest on your interest. This allows you to grow your savings more quickly.
Bill Paying and Check Writing Privileges 
Unlike traditional savings accounts, money market accounts allow you to write checks or automatically pay bills from your account. 
Digital Tools
Most banks and credit unions offer digital tools that can help you set goals and maximize your savings through online and mobile banking applications.
Online and Mobile Banking
You can access and monitor your money market account through your mobile device or a desktop computer. This allows you to manage your money, pay bills, transfer money and conduct other banking activities digitally.
Liquid Savings
Money market accounts provide high levels of liquidity — meaning you can easily access your savings when you need money. But banking regulations can limit how many times you can withdraw money from the account each month — typically no more than six times.

Like traditional savings accounts, money market accounts are FDIC-insured or NCUA-insured if the bank or credit union where the account is located is insured through the Federal Deposit Insurance Corporation or National Credit Union Administration, respectively.

Money Market Accounts and Savings Accounts are great resources to store your money safely. Both offer different benefits, so choose the one that best fits your financial goals.

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Timothy Li, MBABusiness Finance Manager

Savings Accounts

A traditional savings account is a financial product available at local banks and credit unions. It allows you to put money away for future use while earning modest interest. High-yield savings accounts are typically available through online banks and offer much higher interest rates.

Traditional savings accounts can be a tool to put money aside for an emergency or short-term goals — such as purchasing new furniture, saving for holiday expenses or a vacation.

Because traditional savings accounts tend to earn lower interest rates, they tend to be a poor choice for long-term savings goals. However, high-yield savings accounts offer compound interest — like money market accounts — and allow you to build savings more quickly.

Interest Rates and Minimum Balance

Interest Rates
Traditional savings accounts offer modest interest rates — ranging from 0.01% to about 1% in March 2023. Meanwhile, high-yield savings accounts can offer above 4%.
Minimum Balance Requirements
Some traditional savings accounts do not require a minimum balance, though many require account holders to keep up to $500 in the account to avoid a monthly fee. You can find high-yield savings accounts that don’t require a minimum balance, but those that do may be higher than the minimum balance for traditional accounts.

Advantages of Savings Accounts Over Money Market Accounts

Traditional savings accounts are easy to open at local banks and credit unions. They are one of the most widely used financial products in the United States and an easy way to save money for short-term goals or unexpected expenses.

Savings Account Advantages

Highly Liquid
Traditional savings accounts are easy to access if you need money quickly. You may be limited on how many times you can withdraw money in a month.
Good Choice for Emergency Funds
Because they are easy to access, savings accounts are a convenient way to build an emergency fund. These funds are typically six months’ worth or more of expenses that you can tap into in the event you become unable to work or have a major expense such as an auto or home repair.
Interest Bearing
Traditional savings accounts earn interest — though at a modest rate. If you are going to park money for a short time, this is an added benefit. Keep in mind, high-yield savings accounts build earnings faster through higher interest rates and compound interest.

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Comparison Between Money Market and Savings Accounts

Money market accounts and saving accounts have a lot of similarities. Primarily, both can play a role in your personal finance strategy.

A money market account is more flexible — allowing you to use an ATM card for withdrawals or to pay bills directly from the account.

A savings account is designed for stability — putting money away and not touching it until it’s needed for a future goal.

 Money Market vs. Savings Account Features

Feature Money Market Account Savings Account
ATM Access Yes Yes
Bill Pay or Check Writing Yes ❌ No
Direct Deposits  Yes Yes
FDIC or NCUA Insured Yes Yes
Interest Yes Yes
Unlimited Withdrawals ❌ No ❌ No

Factors To Consider When Choosing an Account

Choosing between a money market account and a savings account depends on your financial goals. You may even want to consider opening one or more of each.

There are several factors to consider when choosing a money market account or a savings account — including liquidity, safety and interest earnings.

Factors in Choosing a Money Market or Savings Account

Financial Goals
Different goals can help you decide which account is a better choice for you. For instance, money market accounts tend to have a higher minimum balance requirement. They may also have a tiered interest rate — the lower your balance, the lower your interest. If you’re going to keep the balance low, it may not be the better choice. 
Interest Rates and Fees
You want to maximize your savings by getting the highest interest rates with the lowest fees. That means comparing the APY — annual percentage yield — from different accounts. At the same time, be aware of all fees that can eat into your savings and interest earnings.
If you want your account in a bank or credit union you can easily visit, you can have more personal attention. But you may get better rates and options with an online bank or even another bank across town.
If you want easy access to your money — or want to pay bills from the account — a money market account is the better option. If you want limited access to let your savings grow faster — a savings account will make it somewhat more difficult for you to access your funds.
With either account, make sure your institution is FDIC or NCUA insured. This will protect your savings — up to $250,000 — if the institution fails.

Money Market Account vs. Savings Account FAQs

What is the difference between money market mutual funds and money market accounts?

Money market funds, or money market mutual funds, are an investment product, whereas, money market accounts are a consumer savings product. Money market funds are mutual funds that pool money from investors into different investments. They tend to provide greater returns than money market accounts, but are not insured by the FDIC or NCUA.

Which account is more suitable for individuals with a higher net worth?

Money market funds tend to offer greater returns than either money market accounts or savings accounts. Money market funds are not insured like money market accounts or savings accounts but tend to be relatively low-risk investments.

What are the risks associated with investing in money market accounts compared to savings accounts?

Money market accounts typically pay higher interest rates than traditional savings accounts, making them able to keep pace with inflation better. But both money market accounts and savings accounts may lose value against inflation in the long run.

Editor Malori Malone contributed to this article.


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Last Modified: May 18, 2023

5 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Zinn, D. and Husbands, T. (2023, March 13). Money Market Accounts, Savings Accounts and CDs: Which One Is the Best? Retrieved from https://www.cnet.com/personal-finance/banking/savings/money-market-accounts-savings-accounts-and-cds/
  2. Napoletano, E. (2023, February 13). Interest Rate Isn’t Everything: How to Compare Money Market vs. Savings Accounts. Retrieved from https://fortune.com/recommends/banking/money-market-vs-savings-accounts/
  3. Napoletano, E. (2022, November 17). Money Market Account vs. Savings Account. Retrieved from https://www.forbes.com/advisor/banking/money-market-account-vs-savings-account/
  4. U.S. Consumer Financial Protection Bureau. (2020, August 27). What Is a Money Market Account? Retrieved from https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-market-account-en-915/
  5. Michigan Department of Insurance and Financial Services. (n.d.). Savings Account. Retrieved from https://www.michigan.gov/reinventretirement/education/tools/savings-account