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Benefits of money market accounts vs. savings accounts

What's the difference between a money market account and a savings account? If you're looking for the best way to invest your money for safe-and-sure returns, they are both viable options for you--but they're not the same.

It's important to understand the different kinds of accounts and which best suits your needs. If you're putting aside a windfall, saving for your retirement or keeping an emergency fund, you'll probably find that this kind of account wins out in the money market accounts vs. savings accounts matchup.

Similarities of money market accounts and savings accounts

Both types of accounts are offered by banks and traditional financial institutions, and both may have limits on fee-free transaction activity or require minimum balances. In either type of deposit account, your money is protected by the Federal Deposit Insurance Corporation, which guarantees that no matter what happens to the bank, your money (up to federally mandated ceilings) will still be available to you.

Beyond these similarities, however, lies a world of difference.

Money market accounts vs. savings accounts: who wins?

Money market accounts generally are considered longer-term investments than savings accounts. You aren't locked in to a specific term (as with a certificate of deposit), but the concept is that you will deposit funds that you don't need to access every day.

The bank pays you a higher interest rate on average in return for a few restrictions. If you play it right, these restrictions may not bother you at all. For instance, money market accounts usually have a required minimum deposit amount--anywhere from $100 to $1000 or more--and a minimum ongoing balance. If the funds in the account drop below that minimum, or if you withdraw more than a fixed amount or set number of times per month, you may be charged additional fees.

In contrast with savings accounts, you'll find that money market accounts:

  • Have slightly less liquidity. The transaction limitations and minimum balance requirements are small barriers to accessing your cash frequently. This is to protect the bank, which can then turn around and invest that money in slightly longer-term investments of its own. However, as long as you're not using your money market account as you would a checking account, you may find that the requirements don't limit your use of those accounts at all.
  • Offer a substantially higher rate of return. According to the FDIC, while the average savings account rate in March 2011 was 0.16 percent, average money market rates in the neighborhood of 0.22 to 0.34 percent. Though rates can fluctuate, it's a consistent pattern that consumers get higher average rates with money market accounts than with savings accounts.

All of these differences work in an investor's favor. If you're saving for your retirement or a long-term financial goal, you probably don't need the liquidity of a traditional savings account or checking account. In fact, the limits on withdrawals from a money market account are a great deterrent for anyone who has a tendency to raid the piggy bank on a whim. And the higher average interest rates makes money market accounts a clear winner in the money market accounts vs. savings accounts debate.

If you're saving a pot of money for the long run and want to earn higher interest without an increase in risk, a money market account is almost certainly a better choice than a traditional savings account.

Money Market Rates

1.29%
Rate
1.30%
APY
$1
Min to earn APY

Advertiser Comments

  • Great Rates + Safety = Peace of Mind
  • Member FDIC
1.29%
Rate
1.30%
APY
$0
Min to earn APY

Advertiser Comments

  • 100% U.S. Based Customer Service
  • No monthly minimum balance, no monthly fees
  • Open in Minutes
1.24%
Rate
1.25%
APY
$0
Min to earn APY

Advertiser Comments

  • Consistently Competitive Rates
  • 24/7 Customer Care
  • Ally Bank, Member FDIC
Ultima Bank
Minimum to earn APY $0
2.02% APY
Rates as of 2017-12-10
Advertiser Comments
SMART Savings Account - for young adults 18 yrs or younger, withdrawals prior to 18th See morebirthday may result in a penalty

Type: Savings

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Dollar Savings Direct
Minimum to earn APY $0
1.50% APY
Rates as of 2017-12-15
Advertiser Comments
Dollar Savings Account - apply online- must have a personal checking account in a US See morebank.

Type: Savings

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Salem Five Direct
Minimum to earn APY $0
1.50% APY
Rates as of 2017-12-10
Advertiser Comments
eOne Savings - APY on balances of 0.01- $1,000,000. Companion account to eOne Checking, no See moreminimum balance, no monthly fees, free ATM card, Online applicants only, who do not have existing deposit accounts with Salem Five

Type: Savings

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UFB Direct
Minimum to earn APY $0
1.41% APY
Rates as of 2017-12-10
Advertiser Comments
UFB Direct Money Market Savings Account - No monthly maintenance fee with a minimum $5,000 See moreaverage daily collected balance; otherwise, the fee is $10.00 per month - Apply online

Type: MMA

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Popular Direct
Minimum to earn APY $0
1.40% APY
Rates as of 2017-12-10
Advertiser Comments
Popular Direct Plus Savings - $4 monthly fee waived with $500 minimum daily balance

Type: Savings

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Nationwide Bank
Minimum to earn APY $10,000
1.40% APY
Rates as of 2017-12-12
Advertiser Comments
Tiered Money Market - tier $10,000 - $24,999 - apply online

Type: MMA

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Nationwide Bank
Minimum to earn APY $25,000
1.40% APY
Rates as of 2017-12-12
Advertiser Comments
Tiered Money Market - tier $25,000 - $49,999 - apply online

Type: MMA

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Nationwide Bank
Minimum to earn APY $50,000
1.40% APY
Rates as of 2017-12-12
Advertiser Comments
Tiered Money Market - tier $50,000 - $99,999.99 - apply online

Type: MMA

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Nationwide Bank
Minimum to earn APY $100,000
1.40% APY
Rates as of 2017-12-12
Advertiser Comments
Tiered Money Market - tier $100,000 - apply online

Type: MMA

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CIT Bank
Minimum to earn APY $0
1.35% APY
Rates as of 2017-12-13
Advertiser Comments
CIT Bank Savings - Premier High Yield - Tier $0 - $250,000 - Apply online

Type: Savings

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SFGI Direct
Minimum to earn APY $1
1.31% APY
Rates as of 2017-12-10

Type: Savings

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EverBank
Minimum to earn APY $0
1.31% APY
Rates as of 2017-12-10
Advertiser Comments
Yield Pledge Money Market - APY for all balances

Type: MMA

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EverBank
Minimum to earn APY $0
1.31% APY
Rates as of 2017-12-10
Advertiser Comments
Yield Pledge Money Market - This is a 1 Year Introductory APY for balances between See more$0 - $250,000 - Must be first time money market customers with new money deposit

Type: MMA

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Radius Bank
Minimum to earn APY $2,500
1.30% APY
Rates as of 2017-12-10
Advertiser Comments
Radius High-Yield Savings - APY for balances $2,500 and above - apply online

Type: Savings

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ableBanking
Minimum to earn APY $0
1.30% APY
Rates as of 2017-12-13
Advertiser Comments
Money Market Savings - APY for all balances - Up to 6 withdrawals are permitted See moreper month - apply online - a division of Northeast Bank based in Maine

Type: MMA

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UFB Direct
Minimum to earn APY $25,000
1.30% APY
Rates as of 2017-12-10
Advertiser Comments
UFB Premium Savings offers a rate of 1.30% APY with interest compounded daily - APY See morefor balances $25,000 and above - Must be new funds to receive stated rate

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
1.30% APY
Rates as of 2017-12-10
Advertiser Comments
Nationwide - Apply online

Type: MMA

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Capital One 360
Minimum to earn APY $10,000
1.30% APY
Rates as of 2017-12-13
Advertiser Comments
360 Money Market - Tier $10,000 or more

Type: MMA

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Nationwide Bank
Minimum to earn APY $0
1.30% APY
Rates as of 2017-12-12
Advertiser Comments
Regular Savings - APY for all balances - Online savings account

Type: Savings

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Barclays
Minimum to earn APY $0
1.30% APY
Rates as of 2017-12-13
Advertiser Comments
Online Savings - APY for all balances

Type: Savings

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American Express
Minimum to earn APY $0
1.25% APY
Rates as of 2017-12-13
Advertiser Comments
High Yield Savings - APY for all balances - Apply online

Type: Savings

Learn More
FNBO Direct
Minimum to earn APY $0
1.15% APY
Rates as of 2017-12-11
Advertiser Comments
Online Savings - Rated Kiplinger's Best Online Savings Account - No minimums, no monthly fees, See moremanage account securely online

Type: Savings

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SmartyPig
Minimum to earn APY $10,000
1.15% APY
Rates as of 2017-12-10
Advertiser Comments
SmartyPig Savings - Tier $10,000.01 - $50,000

Type: Savings

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Nationwide Bank
Minimum to earn APY $0
1.15% APY
Rates as of 2017-12-12
Advertiser Comments
Tiered Money Market - APY for balances between $0-$999.99

Type: MMA

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Nationwide Bank
Minimum to earn APY $1,000
1.15% APY
Rates as of 2017-12-12
Advertiser Comments
Tiered Money Market - tier $1,000 - $9,999.99 - apply online

Type: MMA

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Bank of Internet
Minimum to earn APY $1
1.05% APY
Rates as of 2017-12-13
Advertiser Comments
Money Market Savings Account - No monthly maintenance fees - No minimum monthly balance requirements

Type: MMA

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SmartyPig
Minimum to earn APY $0
1.05% APY
Rates as of 2017-12-10
Advertiser Comments
SmartyPig Savings - Tier $0.01 - $2,500

Type: Savings

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Bank of Internet
Minimum to earn APY $0
1.05% APY
Rates as of 2017-12-13
Advertiser Comments
Smart Savings - No monthly maintenance fees - No minimum monthly balance requirements

Type: Savings

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SmartyPig
Minimum to earn APY $2,500
1.05% APY
Rates as of 2017-12-10
Advertiser Comments
SmartyPig Savings - Tier $2500.01 - $10,000

Type: Savings

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AloStar Bank of Commerce
Minimum to earn APY $0
1.05% APY
Rates as of 2017-12-13
Advertiser Comments
Limit of six transactions per month - APY for all balances - apply online

Type: Savings

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Ultima Bank
Minimum to earn APY $1,000
1.01% APY
Rates as of 2017-12-10
Advertiser Comments
UBM Direct Savings Account

Type: Savings

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TIAA Direct
Minimum to earn APY $0
1.01% APY
Rates as of 2017-12-10
Advertiser Comments
Money Market - Tier 0-$2,499.99

Type: MMA

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TIAA Direct
Minimum to earn APY $2,500
1.01% APY
Rates as of 2017-12-10
Advertiser Comments
Money Market - Tier $2,500 - $24,999.99

Type: MMA

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TIAA Direct
Minimum to earn APY $25,000
1.01% APY
Rates as of 2017-12-10
Advertiser Comments
Money Market - Tier $25,000 - $49,999.99

Type: MMA

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TIAA Direct
Minimum to earn APY $50,000
1.01% APY
Rates as of 2017-12-10
Advertiser Comments
Money Market -Tier $50,000 -$99,999.99

Type: MMA

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First Internet Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-12-11
Advertiser Comments
Money Market Savings - Rate earned on balances from $0 to $250,000 - Transaction limitations See more- apply online

Type: MMA

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iGOBanking
Minimum to earn APY $0
1.00% APY
Rates as of 2017-12-12
Advertiser Comments
iGO Online Savings

Type: Savings

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Amboy Direct
Minimum to earn APY $3,000
1.00% APY
Rates as of 2017-12-13
Advertiser Comments
eSavings - Tier $3,000 - $10,000 - Apply online or by mail, offer not available See moreat branches.

Type: Savings

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Biscayne Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-12-13
Advertiser Comments
Regular Savings - APY for balances of $.01 and over

Type: Savings

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Colorado Federal Savings Bank
Minimum to earn APY $2,500
1.00% APY
Rates as of 2017-12-13
Advertiser Comments
High Yield Savings - You may access your funds only through ACH (ACH fee applies)

Type: Savings

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Main Street Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-12-12
Advertiser Comments
Kasasa Saver - Must be linked to a free Kasasa Cash or Kasasa Cash Back See morechecking account - 1.00% APY on balances up to $50,000 - No minimum balances - No monthly service fee

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-12-10
Advertiser Comments
High-Yield Savings - No minimum balance and no monthly service fees - Nationwide - Apply See moreonline

Type: Savings

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Mutual of Omaha Bank
Minimum to earn APY $1,000
1.00% APY
Rates as of 2017-12-12
Advertiser Comments
Online Money Market - Rate/APY for balances from $1,000 - $1,000,000

Type: MMA

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MySavingsDirect
Minimum to earn APY $0
1.00% APY
Rates as of 2017-12-12
Advertiser Comments
MySavings Account

Type: Savings

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Capital One 360
Minimum to earn APY $0
1.00% APY
Rates as of 2017-12-13
Advertiser Comments
360 Savings Account - APY for all balances - No fees - No minimum balance See more- Online account

Type: Savings

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UFB Direct
Minimum to earn APY $20,000
1.00% APY
Rates as of 2017-12-10
Advertiser Comments
UFB Savings - Tier $20,000 and above - No monthly maintenance fee

Type: Savings

Learn More
CIBC
Minimum to earn APY $0
0.90% APY
Rates as of 2017-12-10
Advertiser Comments
CIBC Palladian Savings - Currently there is a promotional interest rate for CIBC Palladian Savings See moreAccount which is fixed at 1.30% for the first six months. After the promotional interest rate ends, the interest rate will be the non-promotional variable interest rate that is offered for Palladian Savings Account at that time (currently 0.90%). There is a minimum initial deposit of $1,000 and maximum initial deposit of $100,000.

Type: Savings

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