Money Market Accounts vs. Savings Accounts: Pros, Cons and Key Differences

Money Market Accounts vs. Savings Accounts What Are Money Market Accounts? Money market accounts are like savings accounts but usually have higher interest rates and allow easier access to your money. They let you earn interest and use a debit card or write checks. However, there may be limits on the number of withdrawals you can make each month and you might need to maintain a minimum balance or pay fees. What Are Savings Accounts? A traditional savings account is offered at local banks and credit unions, allowing you to save money while earning modest interest. Traditional Savings Accounts vs. High-Yield Savings Accounts? Traditional Savings Accounts Can be a tool to put money aside for an emergency or short-term goals such as buying new furniture or saving for holiday expenses. High-Yield Savings Accounts These accounts offer compound interest - like money market accounts - and allow you to build savings more quickly. Factors To Consider When Choosing an Account 1. Your Financial Goals 2. Interest Rates & Fees 3. Convenience 4. Access 5. Safety Financial Goals Consider your goals to make the best choice. Money market accounts may have a high minimum balance requirement and tiered interest rates. If your balance is low, it may not be the best option. 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. Convenience 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. Access If you want easy access to your money or want to pay bills from the account a money market account may be the better option. If you want limited access to allow your savings to grow faster - a savings account will make it somewhat more difficult for you to access your savings. If you want easy access to your money or want to pay bills from the account a money market An account may be the better option. If you want limited access to allow your savings to grow faster - a savings account will make it somewhat more difficult for you to access your savings. Safety Make sure your institution is FDIC or NCUA insured. This will protect your savings - up to $250,000 - if the institution fails.