Money Market Accounts vs. Savings: Comparing Both in 2023

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Contributor, Benzinga
August 14, 2023

A savvy saver or depositor has access to a variety of financial products to help them meet their savings goals. Some of the most popular options include money market and savings accounts. While both offer interest income and safety of principal, a few key differences are worth exploring. Understanding these differences can help you select the best account for your needs.

Here’s a breakdown of the differences between money market and savings accounts and how to choose the right one for your needs.

What is a Money Market Account?

A money market account (MMA) is a type of deposit account offered by banks and financial institutions. It is similar to a savings account but typically offers higher interest rates. Money market accounts are designed for individuals or businesses who want to earn interest on their surplus cash while maintaining access to their funds.

One of the key features of a money market account is its liquidity. Unlike certain investments or certificates of deposit (CDs), money market accounts allow account holders to make withdrawals or transfers whenever they need to access their money. This makes MMAs a flexible option for individuals or businesses who require quick access to their funds for unexpected expenses or investments.

Money market accounts are often used as a parking place for funds that are not actively needed. They provide a safe and secure way to store excess cash while earning a modest return. Interest rates on money market accounts are typically higher than traditional savings accounts, although they can vary depending on the institution and current market conditions.

What is a Savings Account?

A savings account is a basic financial tool that allows individuals to store their money in a secure place while earning a modest interest rate. Unlike a checking account, which is often used for everyday expenses, a savings account is designed for long-term goal planning and building an emergency fund.

One of the main advantages of a savings account is the ability to earn interest on the deposited funds. The interest rate varies depending on the bank and the type of savings account, but it is typically higher than the interest earned on a checking account. This means that your money can grow over time, allowing you to achieve your financial goals faster.

Another important feature of savings accounts is their safety. Most savings accounts are insured by the government up to a certain amount, typically $250,000 per depositor, ensuring that your money is protected even if the bank fails. This makes savings accounts a reliable and secure option for storing your hard-earned money.

Furthermore, savings accounts offer convenient access to your funds whenever you need them. While there might be limitations on the number of withdrawals you can make per month without incurring fees, you can easily transfer money to your checking account or withdraw cash from an ATM when necessary. This accessibility gives you the flexibility to use your savings for unexpected expenses or to reach your financial targets.

Comparing a Money Market vs Savings Accounts

Although market accounts (MMAs) and savings accounts are both types of deposit accounts offered by financial institutions, but they have some differences in terms of features, benefits, and requirements. Here's a comparison between money market accounts and savings accounts:

Interest Rates

  • MMAs: Money market accounts generally offer higher interest rates than savings accounts. Rates can vary, but MMAs tend to provide a better return on your savings.
  • Savings Accounts: Savings accounts offer lower interest rates compared to MMAs. While the rates may be lower, savings accounts still allow you to earn some interest on your funds.

Minimum Balance

  • MMAs: Money market accounts often require a higher minimum balance to open and maintain the account. Maintaining this balance is necessary to avoid fees and get the full benefits of the account.
  • Savings Accounts: Savings accounts typically have lower minimum balance requirements. Some banks even offer no minimum balance options.

Access to Funds

  • MMAs: Many MMAs offer limited check-writing capabilities, which can be useful for making occasional payments. However, there may be restrictions on the number of checks you can write per month.
  • Savings Accounts: Savings accounts usually don't offer check-writing capabilities. Transactions are primarily conducted through electronic transfers, ATM withdrawals, or visiting a bank branch.

Transaction Limits

  • MMAs and Savings Accounts: Both MMAs and savings accounts are subject to federal regulations that limit the number of certain types of transactions to six per month. These transactions include transfers and withdrawals.


  • MMAs: Some money market accounts may have monthly maintenance fees. However, these fees are often waived if you maintain the required minimum balance.
  • Savings Accounts: Many savings accounts have no monthly maintenance fees, especially if you meet specific conditions set by the bank.

Account Flexibility

  • MMAs: Money market accounts may offer slightly more flexibility due to check-writing capabilities. However, they still have limitations on the number of certain transactions you can make each month.
  • Savings Accounts: Savings accounts are simpler and straightforward, but they may offer fewer features compared to MMAs.

Security and Accessibility

  • MMAs and Savings Accounts: Both types of accounts are generally considered safe and secure, as they are typically insured by the FDIC (for banks) or the NCUA (for credit unions) up to the maximum limits.

Who Should Use a Money Market Account?

Money market accounts are best suited for savers trying to earn interest while still desiring some of the features and flexibility seen in checking accounts. Examples include:

  • Students: A money market account is a great place to hold future tuition payments as you can earn interest and write checks or conduct online banking transfers from it.
  • Spenders: If you plan on writing cheques or using a debit card frequently, a money market account can be a great way to complement your regular checking account while earning higher interest.
  • Homebuyers: A money market account can be a good way to store a down payment for a home with no risk while earning interest. Savers who don’t want their money locked up in a certificate of deposit (CD) can use the flexibility of a money market account.

Who Should Use a Savings Account?

Savings accounts are a great one-size-fits-all, general option suitable for a variety of savers thanks to their liquidity and accessibility. They can be a great place to sweep leftover cash. Examples include:

  • Workers: A savings account can be a great place to start an emergency fund with three to six months of cash. Unlike a CD, you can withdraw the funds in your savings account at any time.
  • Retirees: A savings account can be a good way to hold enough cash for a year or two of living expenses in case of a market downturn that results in your retirement portfolio suffering losses.
  • New bank customers: A savings account is a necessity for people opening their first bank account. Alongside a checking account, having a savings account can encourage good personal finance practices like setting aside cash and learning how interest works.

Drawbacks of Money Market and Savings Accounts

Despite their advantages, money market and savings accounts aren’t suitable for everyone. Each type of account has its own disadvantages, which depending on your objectives may be a deal-breaker. 

Drawbacks of a Money Market Account

  • Requirements: Some money market accounts have minimum deposit or ongoing account balance requirements.
  • Fees: Some money market accounts charge higher annual or monthly maintenance fees or fees for additional transactions and check and debit card services.

Drawbacks of a Savings Account

  • Lower yields: Savings accounts generally pay a lower interest rate compared to money market accounts or CDs.
  • Fewer features: Savings accounts don’t give you the ability to write checks or pay bills from them as they are intended for holding cash only.

Weighing Your Options

Money market accounts and savings accounts have different advantages and considerations for savers. Money market accounts offer higher APY rates and checking account features, while savings accounts offer liquidity and accessibility. Factors such as minimum requirements, fees, interest rates and desired features should be considered when choosing between the two. The right account choice depends on individual financial goals and preferences.

Compare Money Market and Savings Accounts

Money market and savings accounts can be researched and compared via various platforms. Investors looking for further insights and reviews of money market rates and online savings accounts can use Benzinga to compare the best rates for each. Here is a list of institutions that currently offer money market and savings accounts. 

Frequently Asked Questions


Is a money market account better than a savings account?


The choice between a money market account and a savings account depends on your financial goals. If you want high-interest rates and the ability to write checks and use a debit card, a money market account is ideal. If you want a safe place to store cash without the temptation to spend it, a savings account might be better, especially for beginners with small accounts.


Is a money market or savings account safer?


Both money market and savings accounts are equally safe. Both are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) for up to $250,000 per account holder per bank. If you’re planning on depositing more than $250,000 in a savings or money market account, consider spreading the amount over accounts at several banks to not exceed the insured limit.


Which account should I choose?


The choice between money market accounts and savings accounts depends on financial goals and preferences. Money market accounts offer higher interest rates and more flexibility, while savings accounts have lower interest rates but fewer fees and restrictions. Factors such as interest rates, fees, minimum balance requirements and financial needs should be considered before making a decision.