Money market accounts vs. savings accounts: What’s the difference?
Editorial staff, J.P. Morgan Wealth Management
- Money market accounts may offer higher interest rates than savings accounts, but they often require higher balances and may come with more fees.
- Savings accounts are widely available and typically have low minimum balance requirements, making them easy to open and manage – but interest rates may be lower than money market accounts.
- Both money market accounts and savings accounts are insured up to $250,000 per depositor, per insured bank or credit union, per ownership category, by the FDIC (banks) or the NCUA (credit unions).
Not all deposit accounts are created equal. Both a money market account and a traditional savings account may keep your money safe and earn you interest, but the details – including balance requirements, fees and access to your cash – can make one type of account a better fit than the other for your goals.
Below, we break down how these accounts work and what sets them apart.
Note: A money market account is a bank or credit union deposit account and differs from a money market fund, which is an investment product.
What is a money market account?
A money market account combines features of both savings and checking accounts. Money market accounts may offer higher interest rates than checking accounts and may provide limited access to your funds through a debit card or via check-writing.
Compared to standard savings accounts, money market accounts typically require higher minimum balances, and in exchange, they may offer more attractive interest rates.
Deposits in money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) up to $250,000 per depositor, per insured bank or credit union, per ownership category. The accounts are insured by the FDIC if they are held at a bank and by the NCUA if they are held at a credit union.
Interest rates on money market accounts vary by institution and can change over time.
Money market accounts may also charge monthly maintenance fees, which can reduce your earnings, especially if your balance is relatively low. Some institutions may waive fees if you meet certain conditions.
What is a savings account?
Savings accounts are one of the most widely available accounts designed to safely store your money. They’re often easy to open, typically require relatively low minimum deposits and are offered by nearly all banks and credit unions.
Like money market accounts, savings accounts are insured by the FDIC or NCUA, up to $250,000 per depositor, per insured bank or credit union, per ownership category. This coverage, along with the flexibility to deposit or withdraw funds as needed (based on your bank’s policies), makes savings accounts a particularly convenient place to store cash. Such easy access to your money, however, typically comes with lower interest rates compared to other deposit options.
Savings account interest rates also vary by institution and can change over time.
Access to funds in savings accounts is generally flexible, but some institutions limit certain withdrawals or transfers and may charge fees if limits are exceeded. Check your bank’s policies to avoid surprises.
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Key differences between money market accounts and savings accounts
Use the following side-by-side comparison of the key features of money market accounts and savings accounts to better understand their similarities and differences:
Comparison of money market accounts vs. savings accounts
Money market account | Savings account |
|---|---|
Interest rates | |
Often higher than checking accounts; can be more competitive than savings accounts depending on balance requirements. | Generally lower than money market accounts, though rates vary by institution. |
Minimum balance | |
Typically requires a higher balance to open or earn top rates. | Usually low or no minimum balance required. |
Access to funds | |
May include limited features such as check-writing or debit card access. | Withdrawals usually through an ATM, online transfer or in a branch; check-writing is usually not allowed. |
Fees | |
Monthly service fees may apply but may be waived with qualifying activities. | May charge fees if balance falls below minimum or certain withdrawal limits are exceeded. |
Deposit insurance | |
FDIC- or NCUA-insured up to $250,000 per depositor, per ownership category. | FDIC- or NCUA-insured up to $250,000 per depositor, per ownership category. |
Choosing the right account for your needs
When deciding between a money market account and a savings account, the best option depends on your goals, your planned use of the account and your preferred account features. Some factors to consider are as follows:
- Interest rates: If higher returns are a priority, a money market account may provide more competitive rates – though you may need a larger balance to qualify.
- Accessibility: If you value simple, easy access to your funds, a savings account may be a more straightforward option, especially if you don’t need check-writing or debit card features.
- Minimum balance requirements: Money market accounts often require account holders to have higher balances to avoid fees or unlock higher rates, while savings accounts usually have lower or no minimum balance thresholds.
- Fees: Consider whether monthly service fees could offset your earnings and whether your institution offers any ways to avoid them.
A money market account could be a better fit if you want to maintain a large cash balance you generally wouldn’t need for day-to-day spending that earns interest while having access to limited check-writing or debit card features. Rather than keeping that money in a checking account that pays little or no interest, a money market account can allow your balance to grow while still offering some flexibility if you need to write the occasional check or make a debit transaction.
A savings account may be preferable, though, if you’re starting with a smaller balance, want flexibility without minimum balance requirements or simply need a place to store funds for emergencies or short-term goals. For example, keeping $500 or $1,000 in a savings account as an emergency fund gives you quick access and may help you avoid monthly fees or balance thresholds.
The bottom line
Both money market accounts and savings accounts provide a relatively safe option for storing your money, and both are backed by federal insurance for added peace of mind. A money market account may appeal to those who maintain higher balances and want limited spending features. A savings account may be more practical for everyday savings, smaller balances or emergency funds.
Whether you’re leaning toward a money market account or a savings account, just know that either can help you keep your money safe while it earns interest.
Frequently asked questions about money market accounts versus savings accounts
Both accounts are considered safe, since deposits are insured by the FDIC (for banks) or the NCUA (for credit unions), up to $250,000 per depositor, per ownership category.
Typically no, traditional savings accounts don’t include check-writing privileges.
Yes, many people use both, perhaps keeping emergency funds in a savings account while using a money market account for larger balances that may benefit from higher interest rates.
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