If you’re looking for a place to save for a purchase or deposit for an emergency fund, you may be comparing a savings account to a money market account (MMA). These two types of accounts are more alike than different.
Money market accounts may differ from savings accounts by offering debit cards, check writing privileges or bill payment capability, but these features aren’t guaranteed.
Since each account works similarly, this guide will help you understand areas where the accounts may vary.
What is a savings account?
A savings account is a type of bank account used to hold money, generally while earning interest. Once stored in a savings account, funds may be readily accessible to accountholders. However, savings account funds typically can’t be accessed with a debit card or checks, unlike money stored in checking accounts and some money market accounts.
High-yield savings accounts (HYSAs) may also earn interest at a higher rate than traditional savings accounts, but both types may be federally insured. Additionally, some savings accounts may offer low or no minimum deposit requirements and unlimited withdrawals.
What is a money market account?
A money market account is a savings account that allows you to deposit funds and earn interest. However, money market accounts may sometimes allow you to write checks and access funds with a debit card. Like savings accounts, if the bank or credit union issuing your money market account is federally insured, so is your account.
Savings and money market accounts: pros and cons
While the features of each savings and money market account might have unique differences depending on the bank, both offer similar advantages and disadvantages.
Pros
- Both savings account and money market account deposits earn interest
- Because the Federal Deposit Insurance Commission (FDIC) and National Credit Union Association (NCUA) typically insure savings and money market account deposits up to FDIC and NCUA limits, both account types present low risk
- Many savings accounts and MMAs are accessible online and in person
- Bank policies might differ, but each account type usually charges low or no monthly fees, especially when meeting minimum balance requirements
Cons
- While some money market accounts may earn higher interest rates than savings accounts, both may offer lower rates compared to other savings accounts like certificates of deposit (CDs)
- Depending on the bank or credit union, each type of account could have a minimum balance required to avoid fees or closure
When to choose a savings account vs. a money market account
Both money market and savings accounts are low-risk bank accounts that could help you grow an emergency fund or store funds for a financial goal.
To find the best fit for you, consider:
- Balance requirements
- Your deposit size
- Your current financial goals
- Current rates, features and terms across credit unions and banks
- How much more or less competitive interest rates might be with other savings products like CDs
Disclosure: This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to completely describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.
