Money Market vs. Savings Account: Which is Better?

Male hand putting coin into a piggy bank

You’re doing the hard work and squirreling away money for savings. The money should also work for you while it’s sitting in the account. So, where should you put the money to earn the most interest?

Money market and savings accounts are two options that offer more interest than your average checking account. There are a few distinct similarities and differences between the two that may make one better for you than the other.

Similarities Between Money Market & Savings Accounts

Both money market accounts and savings accounts are FDIC insured, a characteristic you need to look for in any financial institution with which you have an account. FDIC insurance means if the bank folds your money is insured up to at least $250,000. If you’re hesitant to bank online (where the best interest rates usually are), knowing an online bank is FDIC insured can give you some peace of mind.

Now, let’s talk interest. Both types of accounts offer high interest (high being a relative term), which is the main reason you should stash your cash in either one instead of your checking account. After all, you want to see your money grow. In addition, both accounts allow you to make as many deposits as you want. Some accounts even let you deposit checks straight from your phone by taking a picture with a mobile deposit app.

Lastly, both money market and savings accounts restrict you to six transactions per statement cycle. Transactions include online or phone transfers, checks and debit card transactions at the store.

Differences Between Money Market & Savings Accounts

So, what differentiates the two? A money market account gives you more flexibility to withdraw money. Although some accounts require you to keep a minimum balance, you’re still given a debit card and you can make unlimited withdrawals at the ATM. You’re also given checks and you can make transfers online up to six per month.

On the other hand, a savings account limits your access to funds. Most often, you don’t get a debit card or checks. You can make online transfers, call the bank or go to the bank in person to make a withdrawal.

When a Money Market Account Makes More Sense

If you want easier access to your money, a money market account is the way to go.

For an example, the Ally Bank Money Market Account gives you a debit card and you can use it at the ATM as many times as you want and there’s no minimum account balance required. So, if you’re stockpiling cash for emergencies, a money market account is more convenient.

Say you’re saving for a big purchase like a new home or car, the money market account gives you checks and you can write one directly from the account. You don’t have to transfer funds from your savings to your checking first.

However, if you worry that having a debit card or easy access to your cash will make you more likely to dip into your savings, then nix the Money Market Account and go for a traditional Savings Account – with a high interest rate of course.

Although online banks typically have the best interest rates, you still have money market options if you feel more comfortable using a brick-and-mortar bank.

For example, Bank of America has a tiered money market account that offers the following interest:

  • Less than $20,000 makes 0.03% interest
  • $20,000 and over makes 0.04% interest
  • $50,000 and over makes 0.05% interest
  • $100,000 and over makes 0.06% interest

Money Market Account Rate Comparisons

Now that you know the difference between the two accounts, we’ve put together some money market options for you to consider with the most competitive interest.

Ally Money Market: 0.85% APY vs High Yield Savings: 1.00% APY

Currently, the Ally Bank Money Market Account offers 0.85% APY for all balances and provides you with a debit card and checks. There’s no monthly maintenance fee.

The Ally Bank High Yield Savings Account offers 1.00% APY for all balance tiers. You don’t get an ATM card to make withdrawals. You can either transfer funds to your Ally or non-Ally bank checking account or request a check.

EverBank Money Market: 1st Year 1.11% APY

The EverBank Money Market account makes 1.11% APY for the first year and then an ongoing 0.61% APY afterwards. You need to deposit at least $1,500 to open an account. You get unlimited ATM access and there’s no annual fee.

Bank of Internet USA Money Market: 0.75% APY vs High-Yield Savings: 0.61% APY

The Bank of Internet USA requires $100 to open the Money Market Account and has 0.75% APY. There’s no monthly maintenance fee or minimum balance required. You can ask for a free Visa debit card to make withdrawals.

In comparison, the High Yield Savings Account offered by Bank of Internet USA has 0.61% APY. It requires $100 to open and has no fees or minimum balance. With this account, you can request an ATM card.

ableBanking Money Market: 1.00% APY

ableBanking offers a Money Market Account with 1.00% APY. You need to deposit at least $250 to open it and ableBanking also gives you regular access to cash.

Synchrony Bank Money Market: 0.85% vs High Yield Savings: 1.05%

Synchrony Bank has two account options. The Money Market account offers 0.85% APY. There’s a $5 monthly finance charge if your balance goes below $30. You can get access to your money through ATM, online or over the phone.

The High Yield Savings Account makes 1.05% APY and happens to have pretty similar terms. You need to keep at least $30 in it to avoid the maintenance fee, but there’s flexibility to withdraw your money using an ATM card.

Final Thought

Before you set up a money market or savings account, think about the amount of transfers you plan to make from your savings to your checking account. If you move money more than six times a month you risk being charged a fee. For instance, Synchrony Bank charges $20 per transaction if you go over six within a statement cycle. And your account can be closed altogether if you consistently go over the limit.



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