Money market accounts vs. savings accounts: What’s the difference?
Editorial staff, J.P. Morgan Wealth Management
- Money market accounts may pay higher interest rates than savings accounts, but they may require larger balances and may come with more fees.
- Savings accounts are widely available, typically require low minimum balances and are likely easy to open and manage. They generally offer lower interest rates than money market accounts, however.
- Both money market accounts and savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) up to $250,000 per depositor, per ownership category. The FDIC provides this insurance for accounts held at banks while the NCUA provides this insurance for accounts held at credit unions.
Not all savings vehicles 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 over the other a better option for your goals.
Keep reading as we dive into details about these two accounts, and what differentiates them.
What’s 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 these more attractive interest rates.
Deposits in money market accounts are insured by the FDIC or NCUA up to $250,000 per depositor, per ownership category. The accounts are insured by the FDIC if they are held at a bank and by NCUA if they are held at a credit union.
Interest rates on money market accounts tend to follow changes in the federal funds rate set by the Federal Reserve. The actual rates, however, are determined by individual banks or credit unions and can vary according to institutional policies and market conditions. As of August 2025, the national average money market interest rate is 0.59%, although some accounts offer rates of 4% or more.
Money market accounts may also charge monthly maintenance fees, which can reduce your earnings, especially if your balance is relatively low. Some institutions waive them if you meet certain conditions, such as maintaining a minimum balance or setting up direct deposit.
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What’s 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 ownership category. This coverage, along with the flexibility to deposit or withdraw funds as needed, 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 are also influenced by the federal funds rate, though each institution sets its own rates. As of August 2025, the average savings account interest rate is 0.39%, but actual rates can vary.
Access to funds in savings accounts is generally unrestricted, but many banks place limits on certain types of withdrawals – often referred to as “convenient” transactions. These may include online transfers, electronic payments or debit card usage. Some institutions charge fees or take other actions if account holders exceed the limit.
To help avoid unexpected charges or changes to your account, it’s a good idea to check your bank’s withdrawal policies. In some cases, repeated excess transactions could result in additional fees, an account conversion or even the closure of the account.
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:
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 ATM, online transfer or in branch; check writing is usually not allowed. |
Withdrawal limits | |
No federal limit, but banks may still restrict certain withdrawals to six per month. | Similar restrictions may apply, with some banks setting a limit of six per month. |
Fees | |
Monthly service fees may apply but may be waived with qualifying activities. | May charge fees if balance falls below minimum or 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. |
Pros and cons of money market accounts
Money market accounts can be appealing for those who want to earn higher interest while maintaining some level of access to their funds.
There are several advantages to money market accounts, including the potential for higher interest rates compared to standard savings accounts. Money market accounts may also provide limited spending features, such as debit card access or check writing, and deposits are insured by the FDIC or NCUA.
On the flip side, money market accounts have several disadvantages that consumers should know about. For example, they typically require higher minimum balances than savings accounts. Interest rates will vary by institution and are not guaranteed. Monthly service fees can reduce earnings, and withdrawals and transfers are limited by federal rules.
Pros and cons of savings accounts
Savings accounts remain one of the most common deposit account options, offering security and flexibility for everyday saving.
The advantages of savings accounts are numerous: They are often easy to open, are widely available and require low minimum deposits. Savings account deposits are insured by the FDIC or NCUA, and account holders benefit from immediate access to their funds through branches, ATMs and online banking.
Among the drawbacks of savings accounts are their generally lower interest rates compared to money market accounts or certificates of deposit (CDs). Their rates can vary widely by institution. Some banks and credit unions may limit certain types of withdrawals or transfers from savings accounts. Minimum balance requirements may also apply, and falling below them may trigger fees.
Money market accounts and savings accounts: 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 balances held in the account typically need to be larger to qualify.
- Accessibility: If you value simple, anytime 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 without having to worry about 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 grows at its own pace.
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.
Yes, most money market and savings accounts calculate interest on a compound basis – daily, monthly or quarterly – though the frequency can vary by institution.
Typically no, traditional savings accounts don’t include check-writing privileges.
Savings accounts tend to pay lower rates because they have fewer restrictions and lower balance requirements than money market accounts. Money market accounts often pay higher interest rates in exchange for higher minimum balance thresholds.
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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Editorial staff, J.P. Morgan Wealth Management
