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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

1.19%
Rate
1.20%
APY
$0
Min to earn APY

Advertiser Comments

  • 100% U.S. Based Customer Service
  • No monthly minimum balance, no monthly fees
  • Open in Minutes
1.34%
Rate
1.35%
APY
$100
Min to earn APY

Advertiser Comments

  • Earn 22x+ the national average
  • 1.35% APY on balances up to $250k
  • No account opening or maintenance fees - Member FDIC
Ultima Bank
Minimum to earn APY $0
2.02% APY
Rates as of 2017-10-14
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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UFB Direct
Minimum to earn APY $0
1.41% APY
Rates as of 2017-10-14
Advertiser Comments
UFB Direct Money Market Savings Account offers a rate of .20% APY with interest compounded See moredaily - No monthly maintenance fee with a minimum $5,000 average daily collected balance; otherwise, the fee is $10.00 per month - Apply online

Type: MMA

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Dollar Savings Direct
Minimum to earn APY $0
1.40% APY
Rates as of 2017-10-04
Advertiser Comments
Dollar Savings Account - apply online- must have a personal checking account in a US See morebank.

Type: Savings

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Popular Direct
Minimum to earn APY $0
1.40% APY
Rates as of 2017-10-13
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
1.35% APY
Rates as of 2017-10-13
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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SFGI Direct
Minimum to earn APY $1
1.31% APY
Rates as of 2017-10-13

Type: Savings

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EverBank
Minimum to earn APY $0
1.31% APY
Rates as of 2017-10-19
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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ableBanking
Minimum to earn APY $0
1.30% APY
Rates as of 2017-10-18
Advertiser Comments
Money Market Savings - up to 6 withdrawals are permitted per month - apply online See more- 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 2017-10-14
Advertiser Comments
UFB Premium Savings Account offers a rate of 1.30% APY with interest compounded daily - See moreAPY for 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 2017-10-13
Advertiser Comments
Nationwide - Apply online

Type: MMA

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Nationwide Bank
Minimum to earn APY $0
1.30% APY
Rates as of 2017-10-17
Advertiser Comments
Regular Savings - online savings account

Type: Savings

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Barclays
Minimum to earn APY $0
1.30% APY
Rates as of 2017-10-18
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 2017-10-18
Advertiser Comments
High-Yield Savings - Bank by phone or online only.

Type: Savings

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Ally Bank
Minimum to earn APY $0
1.20% APY
Rates as of 2017-10-18
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
Radius Bank
Minimum to earn APY $2,500
1.20% APY
Rates as of 2017-10-13
Advertiser Comments
Radius High-Yield Savings - APY for balances $2,500 and above - apply online

Type: Savings

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Capital One 360
Minimum to earn APY $10,000
1.20% APY
Rates as of 2017-10-18
Advertiser Comments
360 Money Market - Tier $10,000 or more

Type: MMA

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FNBO Direct
Minimum to earn APY $0
1.15% APY
Rates as of 2017-10-15
Advertiser Comments
Online Savings Act - Rated Kiplinger's Best Online Savings Account, no minimums, no monthly fees, See moremanage accounts securely online

Type: Savings

Learn More
SmartyPig
Minimum to earn APY $10,000
1.15% APY
Rates as of 2017-10-13
Advertiser Comments
SmartyPig Savings - Tier $10,000.01 - $50,000

Type: Savings

Learn More
Bank of Internet
Minimum to earn APY $1
1.05% APY
Rates as of 2017-10-18
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 2017-10-13
Advertiser Comments
SmartyPig Savings - Tier $0.01 - $2,500

Type: Savings

Learn More
Bank of Internet
Minimum to earn APY $0
1.05% APY
Rates as of 2017-10-18
Advertiser Comments
High-Yield Savings - No monthly maintenance fees - No minimum monthly balance requirements

Type: Savings

Learn More
SmartyPig
Minimum to earn APY $2,500
1.05% APY
Rates as of 2017-10-13
Advertiser Comments
SmartyPig Savings - Tier $2500.01 - $10,000

Type: Savings

Learn More
AloStar Bank of Commerce
Minimum to earn APY $0
1.05% APY
Rates as of 2017-10-18
Advertiser Comments
Limit of six transactions per month - APY for all balances - apply online

Type: Savings

Learn More
Dollar Bank Federal Savings Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-10-04
Advertiser Comments
Everything Savings - 1.00% APY on balances $20,000 and below when linked with an See moreEverything Checking Account. The rates require Everything Checking with six qualifying monthly posted payments for example: check, Online Banking bill payment, Telephone Banking bill payment, ACH debit, Point-of-Sale transactions (signature or PIN based).- Open online and mail in forms. Available in Pennsylvania, and Ohio market area. Rate collected within: 15222 (PA)

Type: Savings

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iGOBanking
Minimum to earn APY $0
1.00% APY
Rates as of 2017-10-16
Advertiser Comments
iGO Online Savings

Type: Savings

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Ultima Bank
Minimum to earn APY $1,000
1.00% APY
Rates as of 2017-10-14
Advertiser Comments
UBM Direct Savings Account

Type: Savings

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Biscayne Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-10-18
Advertiser Comments
Regular Savings - Maintain $1,000 balance each day and avoid a $25 monthly maintenance fee See more- Miami-Dade County, Florida market area only

Type: Savings

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Main Street Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-10-17
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 2017-10-13
Advertiser Comments
High-Yield Savings - No minimum balance and no monthly service fees - Nationwide - Apply See moreonline

Type: Savings

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MySavingsDirect
Minimum to earn APY $0
1.00% APY
Rates as of 2017-10-17
Advertiser Comments
MySavings Account

Type: Savings

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UFB Direct
Minimum to earn APY $20,000
1.00% APY
Rates as of 2017-10-14
Advertiser Comments
UFB Direct High-Interest Savings - Tier $20,000 and above - No monthly maintenance fee

Type: Savings

Learn More
TIAA Direct
Minimum to earn APY $50,000
0.91% APY
Rates as of 2017-10-14
Advertiser Comments
Money Market -Tier $50,000 -$99,999.99

Type: MMA

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First Internet Bank
Minimum to earn APY $0
0.90% APY
Rates as of 2017-10-15
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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Amboy Direct
Minimum to earn APY $3,000
0.90% APY
Rates as of 2017-10-18
Advertiser Comments
eSavings - Apply online or by mail, offer not available at branches.

Type: Savings

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The Palladian Private Bank
Minimum to earn APY $0
0.90% APY
Rates as of 2017-10-14
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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Ally Bank
Minimum to earn APY $0
0.90% APY
Rates as of 2017-10-18
Advertiser Comments
Money Market Savings Account - APY for all balances - No monthly fees - See moreApply online - Rate collected within: CA

Type: MMA

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Chesapeake Bank
Minimum to earn APY $1
0.90% APY
Rates as of 2017-08-02
Advertiser Comments
Clear Sky Savings - Tier $1 - $249,999

Type: Savings

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EverBank
Minimum to earn APY $0
0.86% APY
Rates as of 2017-10-04
Advertiser Comments
Yield Pledge Money Market - APY for all balances

Type: MMA

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TIAA Direct
Minimum to earn APY $0
0.86% APY
Rates as of 2017-10-14
Advertiser Comments
Money Market - Tier 0-$2,499.99

Type: MMA

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TIAA Direct
Minimum to earn APY $2,500
0.86% APY
Rates as of 2017-10-14
Advertiser Comments
Money Market - Tier $2,500 - $24,999.99

Type: MMA

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TIAA Direct
Minimum to earn APY $25,000
0.86% APY
Rates as of 2017-10-14
Advertiser Comments
Money Market - Tier $25,000 - $49,999.99

Type: MMA

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Colorado Federal Savings Bank
Minimum to earn APY $2,500
0.85% APY
Rates as of 2017-10-18
Advertiser Comments
High Yield Savings - You may access your funds only through ACH (ACH fee applies)

Type: Savings

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Virtual Bank
Minimum to earn APY $0
0.80% APY
Rates as of 2017-10-14
Advertiser Comments
eMoney Market online account

Type: MMA

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Virtual Bank
Minimum to earn APY $10,000
0.80% APY
Rates as of 2017-10-14
Advertiser Comments
eMoney Market online account

Type: MMA

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Virtual Bank
Minimum to earn APY $25,000
0.80% APY
Rates as of 2017-10-14
Advertiser Comments
eMoney Market online account

Type: MMA

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Mutual of Omaha Bank
Minimum to earn APY $1,000
0.77% APY
Rates as of 2017-10-17
Advertiser Comments
Online Money Market - Rate/APY for balances from $1,000 - $1,000,000

Type: MMA

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California First National Bank
Minimum to earn APY $0
0.75% APY
Rates as of 2017-10-18
Advertiser Comments
Money Market Checking - Tier Up to $14,999.99

Type: MMA

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Workers' Credit Union
Minimum to earn APY $50
0.75% APY
Rates as of 2017-10-18
Advertiser Comments
cuSave - Online Savings - Membership is limited to residents of Massachusetts or New Hampshire See moreor those who work for a company that is based in Massachusetts

Type: Savings

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