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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 Minnesota
Minimum to earn APY $0
3.04% APY
Rates as of 2019-06-12
Advertiser Comments
SMART Savings Account - for young adults 18 years or younger - Withdrawals prior to See more18th birthday may result in a penalty

Type: Savings

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Vio Bank
Minimum to earn APY $100
2.52% APY
Rates as of 2019-06-12
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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Salem Five Direct
Minimum to earn APY $0
2.51% APY
Rates as of 2019-06-11
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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All America Bank
Minimum to earn APY $0
2.50% APY
Rates as of 2019-06-12
Advertiser Comments
Mega Money Market - Online account

Type: MMA

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WebBank
Minimum to earn APY $1,000
2.50% APY
Rates as of 2019-06-12
Advertiser Comments
Savings - APY for balances $1,000 and above - No monthly fee - Interest compounds See moredaily

Type: Savings

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Western State Bank
Minimum to earn APY $0
2.50% APY
Rates as of 2019-06-12
Advertiser Comments
High Yield Money Market - APY for balances up to $3,000,000 - Online account - See moreNo monthly fees

Type: MMA

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UFB Direct
Minimum to earn APY $25,000
2.45% APY
Rates as of 2019-06-12
Advertiser Comments
UFB Direct Premium Money Market - APY for balances $25,000 and above - $10 monthly See moremaintenance fee waived with a minimum $5,000 average daily collected balance - Apply online

Type: MMA

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MemoryBank
Minimum to earn APY $0
2.45% APY
Rates as of 2019-06-08
Advertiser Comments
Online Money Market - APY for balances $0.01 - $1,000,000

Type: MMA

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MySavingsDirect
Minimum to earn APY $0
2.40% APY
Rates as of 2019-06-08
Advertiser Comments
MySavings Account - No fees - No minimum balance

Type: Savings

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CIBC Bank USA
Minimum to earn APY $0
2.39% APY
Rates as of 2019-06-12
Advertiser Comments
CIBC Agility Savings - APY for balances up to $250,000

Type: Savings

Learn More
Popular Direct
Minimum to earn APY $0
2.36% APY
Rates as of 2019-06-10
Advertiser Comments
Popular Direct Plus Savings - $4 monthly fee waived with $500 minimum daily balance

Type: Savings

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Citizens Access
Minimum to earn APY $5,000
2.35% APY
Rates as of 2019-06-12
Advertiser Comments
Online Savings - Tier $5,000 and above - No monthly service fees

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
2.30% APY
Rates as of 2019-06-11
Advertiser Comments
Money Market Account - APY for all balances - Apply online

Type: MMA

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Northpointe Bank
Minimum to earn APY $25,000
2.30% APY
Rates as of 2019-06-09
Advertiser Comments
Ultimate Money Market - Tier $25,000 - $1,000,000 - This rate is guaranteed for at See moreleast 24 months from date of opening account

Type: MMA

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Live Oak Bank
Minimum to earn APY $0
2.30% APY
Rates as of 2019-06-08
Advertiser Comments
Personal Savings - APY for all balances - No monthly service fees

Type: Savings

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SFGI Direct
Minimum to earn APY $1
2.27% APY
Rates as of 2019-06-11
Advertiser Comments
SFGI Direct Savings - Online account

Type: Savings

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Goldman Sachs Bank USA
Minimum to earn APY $1
2.25% APY
Rates as of 2019-06-14
Advertiser Comments
Online Savings - No transaction fees - No minimum deposit to open - FDIC insurance See moreup to the maximum allowed by law

Type: Savings

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Synchrony Bank
Minimum to earn APY $25,000
2.25% APY
Rates as of 2019-06-11
Advertiser Comments
High Yield Savings - APY for balances $25,000 and above

Type: Savings

Learn More
Synchrony Bank
Minimum to earn APY $5,000
2.25% APY
Rates as of 2019-06-11
Advertiser Comments
High Yield Savings - APY for balances between $5,000- $24,999

Type: Savings

Learn More
Synchrony Bank
Minimum to earn APY $0
2.25% APY
Rates as of 2019-06-11
Advertiser Comments
High Yield Savings - APY for balances Up To $4,999

Type: Savings

Learn More
Ally Bank
Minimum to earn APY $0
2.20% APY
Rates as of 2019-06-12
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

Learn More
FNBO Direct
Minimum to earn APY $0
2.20% APY
Rates as of 2019-06-02
Advertiser Comments
Online Savings - APY for all balances - No minimums, no monthly fees, manage account See moresecurely online

Type: Savings

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Barclays
Minimum to earn APY $0
2.20% APY
Rates as of 2019-06-12
Advertiser Comments
Online Savings - APY for all balances

Type: Savings

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Beal Bank, USA
Minimum to earn APY $25,000
2.16% APY
Rates as of 2019-06-12
Advertiser Comments
Money Market - $25,000 and more

Type: MMA

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Discover Bank
Minimum to earn APY $0
2.10% APY
Rates as of 2019-06-13
Advertiser Comments
Online Savings Account - No monthly fee and no minimum required balance

Type: Savings

Learn More
Opus Bank
Minimum to earn APY $25,000
2.10% APY
Rates as of 2019-06-10
Advertiser Comments
Forte Personal Money Market - Tier $25,000-$49,999.99 - Rate collected within: 94115 (CA)

Type: MMA

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Sallie Mae Bank
Minimum to earn APY $0
2.10% APY
Rates as of 2019-06-11
Advertiser Comments
High-Yield Savings - No minimum balance and no monthly service fees - Nationwide - Apply See moreonline

Type: Savings

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Opus Bank
Minimum to earn APY $50,000
2.10% APY
Rates as of 2019-06-10
Advertiser Comments
Forte Personal Money Market - Tier $50,000-$99,999.99 - Rate collected within: 94115 (CA)

Type: MMA

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Alliant Credit Union
Minimum to earn APY $0
2.10% APY
Rates as of 2019-06-12
Advertiser Comments
Alliant Savings - APY for all balances - Must be an Alliant CU member

Type: Savings

Learn More
Wells Fargo Bank (Rate in NY)
Minimum to earn APY $25,000
2.10% APY
Rates as of 2019-06-12
Advertiser Comments
Platinum Savings (MMA) with limited check writing - This Special Interest Rate lasts for 12 See moremonths, and requires $25,000 new funds deposited to the account from sources outside of Wells Fargo Bank - Tier $25,000 and above - $12 monthly fee waived with $3,500 minimum daily balance - Rate collected within: NY 10025

Type: MMA

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E*Trade Bank
Minimum to earn APY $1,000
2.10% APY
Rates as of 2019-06-13
Advertiser Comments
Premium Savings Account - $10 monthly fee waived with an average monthly balance of $1,000 See morein this account, or $5,000 in total E*TRADE Bank deposit balances

Type: Savings

Learn More
Northpointe Bank
Minimum to earn APY $25,000
2.05% APY
Rates as of 2019-06-09
Advertiser Comments
Ultimate Savings - Tier $25,000 - $1,000,100

Type: Savings

Learn More
Radius Bank
Minimum to earn APY $25,000
2.05% APY
Rates as of 2019-06-11
Advertiser Comments
Radius High-Yield Savings - APY for balances $25,000 and above

Type: Savings

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First Internet Bank
Minimum to earn APY $0
2.02% APY
Rates as of 2019-06-17
Advertiser Comments
Money Market Savings - Rate earned on balances from $0

Type: MMA

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Beal Bank
Minimum to earn APY $25,000
2.01% APY
Rates as of 2019-06-12
Advertiser Comments
Money Market - Tier $25,000 and up - Rate collectted within 94104 (N CA) Beal See moreBank, SSB

Type: MMA

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Colorado Federal Savings Bank
Minimum to earn APY $1
2.00% APY
Rates as of 2019-06-12
Advertiser Comments
High Yield Savings - You may access your funds only through ACH (ACH fee applies)

Type: Savings

Learn More
Capital One
Minimum to earn APY $10,000
2.00% APY
Rates as of 2019-06-12
Advertiser Comments
360 Money Market - Tier $10,000 or more

Type: MMA

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Mutual of Omaha Bank
Minimum to earn APY $1,000
2.00% APY
Rates as of 2019-06-08
Advertiser Comments
Online Money Market - Rate/APY for balances from $1,000 - $1,000,000

Type: MMA

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Cadence Bank, N.A.
Minimum to earn APY $0
2.00% APY
Rates as of 2019-06-12
Advertiser Comments
Propel Savings - Tier $0 - $10,000 - Requires recurring auto-deposit from Cadence checking of See moreat least $25 in aggregate monthly

Type: Savings

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Discover Bank
Minimum to earn APY $100,000
2.00% APY
Rates as of 2019-06-13
Advertiser Comments
Money Market - Tier $100,000 and over - $10 monthly fee if balance falls below See more$2,500 after third statement cycle

Type: MMA

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Discover Bank
Minimum to earn APY $0
1.95% APY
Rates as of 2019-06-13
Advertiser Comments
Money Market - Tier $0 - $99,999.99 - $10 monthly fee if balance falls See morebelow $2,500 after third statement cycle

Type: MMA

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Quorum Federal Credit Union
Minimum to earn APY $0
1.95% APY
Rates as of 2019-06-11
Advertiser Comments
HighQ Savings - No monthly fee and no balance minimums

Type: Savings

Learn More
iGOBanking
Minimum to earn APY $0
1.90% APY
Rates as of 2019-06-05
Advertiser Comments
iGO Online Savings - APY for all balances

Type: Savings

Learn More
BankPurely
Minimum to earn APY $0
1.90% APY
Rates as of 2019-06-12
Advertiser Comments
SavingPurely - APY for all balances - Zero monthly fees - One tree will be See moreplanted for every SavingPurely account opened

Type: Savings

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ableBanking
Minimum to earn APY $0
1.85% APY
Rates as of 2019-06-12
Advertiser Comments
Money Market Savings - APY for all balances - Up to 6 withdrawals are permitted See moreper month - apply online - ableBanking is a division of Northeast Bank

Type: MMA

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CIT Bank
Minimum to earn APY $100
1.85% APY
Rates as of 2019-06-12
Advertiser Comments
CIT Bank Money Market - APY for balances $100 and above

Type: MMA

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MyBankingDirect
Minimum to earn APY $25,000
1.85% APY
Rates as of 2019-06-08
Advertiser Comments
Online Money Market - Tier $25,000 and above - No monthly account maintenance fees

Type: MMA

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Dollar Savings Direct
Minimum to earn APY $0
1.80% APY
Rates as of 2019-06-13
Advertiser Comments
Dollar Savings - No need to change your checking account, your Dollar Savings Account will See morebe linked to your current checking account

Type: Savings

Learn More
SmartyPig
Minimum to earn APY $0
1.80% APY
Rates as of 2019-06-11
Advertiser Comments
SmartyPig Savings - Tier $0.01 - $2,500

Type: Savings

Learn More
SmartyPig
Minimum to earn APY $10,000
1.80% APY
Rates as of 2019-06-11
Advertiser Comments
SmartyPig Savings - Tier $10,000.01 - $50,000

Type: Savings

Learn More