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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

Ultima Bank
Minimum to earn APY $0
2.78% APY
Rates as of 2018-10-17
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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MySavingsDirect
Minimum to earn APY $0
2.25% APY
Rates as of 2018-10-18
Advertiser Comments
MySavings Account

Type: Savings

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MemoryBank
Minimum to earn APY $0
2.25% APY
Rates as of 2018-10-17
Advertiser Comments
Online Money Market - APY for balances $0.01 - $1,000,000

Type: MMA

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CIBC Bank USA
Minimum to earn APY $0
2.16% APY
Rates as of 2018-10-17
Advertiser Comments
CIBC Agility Savings - APY for balances up to $250,000

Type: Savings

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Vio Bank
Minimum to earn APY $100
2.15% APY
Rates as of 2018-10-17
Advertiser Comments
High Yield Online Savings Account - No monthly service fee - Interest is compounded daily See more- 6 free withdrawals per monthly statement cycle

Type: Savings

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Citizens Access
Minimum to earn APY $5,000
2.12% APY
Rates as of 2018-10-17
Advertiser Comments
Online Savings Account - Tier $5,000 and above - No monthly service fees

Type: Savings

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Popular Direct
Minimum to earn APY $0
2.10% APY
Rates as of 2018-10-18
Advertiser Comments
Popular Direct Plus Savings - $4 monthly fee waived with $500 minimum daily balance

Type: Savings

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Salem Five Direct
Minimum to earn APY $0
2.05% APY
Rates as of 2018-10-11
Advertiser Comments
eOne Savings - APY on balances of 0.01- $1,000,000 - Companion account to eOne Checking, See moreno minimum 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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Incredible Bank
Minimum to earn APY $25,000
2.02% APY
Rates as of 2018-10-17
Advertiser Comments
High Yield Online Savings - Tier $25,000 and above

Type: Savings

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Virtual Bank
Minimum to earn APY $0
2.01% APY
Rates as of 2018-10-17
Advertiser Comments
Promotion - eMoney Market - A fixed, 1 year introductory APY is available to clients See moreopening a new VirtualBank eMoney Market account with new money not currently held by VirtualBank - After the 1-year introductory period, interest rates and APYs will be adjusted to the standard eMoney Market rates in effect

Type: MMA

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Sallie Mae Bank
Minimum to earn APY $0
2.00% APY
Rates as of 2018-10-11
Advertiser Comments
Nationwide - Apply online

Type: MMA

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All America Bank
Minimum to earn APY $0
2.00% APY
Rates as of 2018-10-17
Advertiser Comments
Mega Money Market - Online account

Type: MMA

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Cadence Bank, N.A.
Minimum to earn APY $0
2.00% APY
Rates as of 2018-10-17
Advertiser Comments
Propel Savings - Tier $0-$5,000 - Requires recurring auto-deposit from Cadence checking of at least See more$25 in aggregate monthly

Type: Savings

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Chesapeake Bank
Minimum to earn APY $1,000
2.00% APY
Rates as of 2018-10-17
Advertiser Comments
Money Market - APY for balances $1,000 and above

Type: MMA

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Radius Bank
Minimum to earn APY $25,000
1.96% APY
Rates as of 2018-10-13
Advertiser Comments
Radius High-Yield Savings - APY for balances $25,000 and above

Type: Savings

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Goldman Sachs Bank USA
Minimum to earn APY $1
1.95% APY
Rates as of 2018-10-16
Advertiser Comments
GS Online Savings - No transaction fees - No minimum deposit to open - FDIC See moreinsurance up to the maximum allowed by law

Type: Savings

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Northpointe Bank
Minimum to earn APY $25,000
1.95% APY
Rates as of 2018-10-18
Advertiser Comments
Ultimate Savings - Tier $25,000 - $1,000,100

Type: Savings

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SFGI Direct
Minimum to earn APY $1
1.91% APY
Rates as of 2018-10-11
Advertiser Comments
SFGI Direct Savings - Online account

Type: Savings

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Beal Bank, USA
Minimum to earn APY $25,000
1.91% APY
Rates as of 2018-10-17
Advertiser Comments
Money Market - $25,000 and more

Type: MMA

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Ally Bank
Minimum to earn APY $0
1.90% APY
Rates as of 2018-10-17
Advertiser Comments
Online Savings - APY for all balances - Free online transactions, no monthly fees, no See moreminimums - Apply online - Rate collected within: CA

Type: Savings

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iGOBanking
Minimum to earn APY $0
1.90% APY
Rates as of 2018-10-17
Advertiser Comments
iGO Online Savings

Type: Savings

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Discover Bank
Minimum to earn APY $0
1.90% APY
Rates as of 2018-10-15
Advertiser Comments
Online Savings Account - No monthly fee and no minimum required balance

Type: Savings

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Barclays
Minimum to earn APY $0
1.90% APY
Rates as of 2018-10-17
Advertiser Comments
Online Savings - APY for all balances

Type: Savings

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Synchrony Bank
Minimum to earn APY $0
1.90% APY
Rates as of 2018-10-12
Advertiser Comments
High Yield Savings - APY for balances up to $4,999.

Type: Savings

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Synchrony Bank
Minimum to earn APY $5,000
1.90% APY
Rates as of 2018-10-12
Advertiser Comments
High Yield Savings - APY for balances between $5,000- $24,999.

Type: Savings

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Synchrony Bank
Minimum to earn APY $25,000
1.90% APY
Rates as of 2018-10-12
Advertiser Comments
High Yield Savings - APY for balances $25,000 and above.

Type: Savings

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BankPurely
Minimum to earn APY $0
1.90% APY
Rates as of 2018-10-17
Advertiser Comments
SavingPurely - Zero monthly fees - One tree will be planted for every SavingPurely account See moreopened

Type: Savings

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Alliant Credit Union
Minimum to earn APY $0
1.90% APY
Rates as of 2018-10-17
Advertiser Comments
Alliant Savings - APY for all balances - Must be an Alliant CU member

Type: Savings

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ableBanking
Minimum to earn APY $0
1.85% APY
Rates as of 2018-10-17
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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Sallie Mae Bank
Minimum to earn APY $0
1.85% APY
Rates as of 2018-10-11
Advertiser Comments
High-Yield Savings - No minimum balance and no monthly service fees - Nationwide - Apply See moreonline

Type: Savings

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Capital One
Minimum to earn APY $10,000
1.85% APY
Rates as of 2018-10-17
Advertiser Comments
360 Money Market - Tier $10,000 or more

Type: MMA

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CIT Bank
Minimum to earn APY $100
1.85% APY
Rates as of 2018-10-17
Advertiser Comments
CIT Bank Money Market - APY for balances $100 and above

Type: MMA

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First Internet Bank
Minimum to earn APY $0
1.81% APY
Rates as of 2018-10-15
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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Dollar Savings Direct
Minimum to earn APY $0
1.80% APY
Rates as of 2018-10-15
Advertiser Comments
Dollar Savings Account - apply online- must have a personal checking account in a US See morebank.

Type: Savings

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Discover Bank
Minimum to earn APY $0
1.75% APY
Rates as of 2018-10-15
Advertiser Comments
Money Market Tier $0 - $99,999.99 - $10 montly fee if average daily balance is See moreless than $2,500

Type: MMA

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SmartyPig
Minimum to earn APY $0
1.75% APY
Rates as of 2018-10-11
Advertiser Comments
SmartyPig Savings - Tier $0.01 - $2,500

Type: Savings

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SmartyPig
Minimum to earn APY $10,000
1.75% APY
Rates as of 2018-10-11
Advertiser Comments
SmartyPig Savings - Tier $10,000.01 - $50,000

Type: Savings

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SmartyPig
Minimum to earn APY $2,500
1.75% APY
Rates as of 2018-10-11
Advertiser Comments
SmartyPig Savings - Tier $2500.01 - $10,000

Type: Savings

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MyBankingDirect
Minimum to earn APY $25,000
1.75% APY
Rates as of 2018-10-18
Advertiser Comments
Online Money Market - Tier $25,000 and above - No monthly account maintenance fees

Type: MMA

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Quorum Federal Credit Union
Minimum to earn APY $0
1.75% APY
Rates as of 2018-10-11
Advertiser Comments
HighQ Savings - No monthly fee and no balance minimums

Type: Savings

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Green Bank
Minimum to earn APY $0
1.70% APY
Rates as of 2018-10-16
Advertiser Comments
Personal Money Market Promotion - Limited-time offer - Available to personal accounts only - Funds See morenot currently on deposit with Green Bank required - After the one-year fixed rate period, your APY will revert to the APY in effect for Green Money Market account - $5,000 minimum daily balance required to avoid $15 monthly service charge

Type: MMA

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Beal Bank
Minimum to earn APY $25,000
1.70% APY
Rates as of 2018-10-17
Advertiser Comments
Money Market - $25,000 and up - Rate collectted within 94104 (N CA) Beal Bank, See moreSSB

Type: MMA

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UFB Direct
Minimum to earn APY $0
1.60% APY
Rates as of 2018-10-17
Advertiser Comments
UFB Direct High-Yield Money Market - APY for all balances - $10 monthly maintenance fee See morewaived with a minimum $5,000 average daily collected balance - Apply online

Type: MMA

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Amalgamated Bank
Minimum to earn APY $0
1.60% APY
Rates as of 2018-10-17
Advertiser Comments
Online Savings Promotion - No monthly maintenance fees

Type: Savings

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East Boston Savings Bank
Minimum to earn APY $10,000
1.57% APY
Rates as of 2018-10-15
Advertiser Comments
Money Market Special 3 - Tier $10,000 to less than $2,000,000

Type: MMA

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Ultima Bank
Minimum to earn APY $1,000
1.55% APY
Rates as of 2018-10-17
Advertiser Comments
UBM Direct Savings Account

Type: Savings

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CIT Bank
Minimum to earn APY $0
1.55% APY
Rates as of 2018-10-17
Advertiser Comments
CIT Bank Savings - Premier High Yield - Tier $0 - $250,000 - Apply online

Type: Savings

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Nationwide Bank
Minimum to earn APY $10,000
1.55% APY
Rates as of 2018-10-18
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
1.55% APY
Rates as of 2018-10-18
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
1.55% APY
Rates as of 2018-10-18
Advertiser Comments
Tiered Money Market - tier $50,000 - $99,999.99 - apply online

Type: MMA

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