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Personal Finances

The Difference Between a Savings Account and a Money Market Account

When it comes to saving and growing money, it’s important to select an account that aligns with one’s financial planning and goals. Yet with so many available options, choosing the right kind of account can be confusing!

Two popular options to consider are a savings account and a money market account, but it’s vital to understand the differences between them to make an informed decision. While both offer advantages and disadvantages, they have distinct features that can have a major effect on overall financial goals.

So, the question is, what are the differences between these two types of accounts? We’ll explore the unique features of both money market accounts and savings accounts. We’ll dive into the pros and cons of each account, the key differences that distinguish one account from the other, and factors to guide which account is selected.

What is a Money Market Account?

Let’s start at the top. A money market account is a kind of savings account that offers a high-interest rate to help grow finances quickly. Money market accounts are offered through banks and other financial institutions and typically provide account holders with features of both checking and savings accounts.

Pros of a Money Market Account

Depending on the provider, money market accounts will slightly differ in their offerings. However, most account holders enjoy a variety of advantages, including:

  • High-interest rates that promote fast monetary growth.
  • Easy access to funds with check-writing abilities and debit card privileges.
  • Financial security with FDIC insurance up to $250,000 per depositor, per institution.

What are the Downsides of a Money Market Account?

Even though there are definite advantages, money market accounts also present account holders with potential drawbacks, such as:

  • A required higher minimum balance to open and maintain compared to other accounts.
  • Monthly restrictions and limitations on the number of transactions that can be made, including withdrawals and transfers.
  • Maintenance fees that reduce overall earnings.

What is a Savings Account?

A savings account is a simple deposit account offered through banks and other financial institutions that allows account holders to save money while earning interest on their deposits.

Benefits of a Savings Account

Savings accounts can provide account holders with several advantages, including:

Low minimum balance requirements.

Consistent interest rates.

FDIC-insured financial security up to $250,000 per depositor, per institution.

Disadvantages of a Savings Account

Conversely, savings accounts also present account holders with possible drawbacks, such as:

  • Lower interest rates with slower monetary growth.
  • Lack of check-writing capabilities.
  • Potential fees for exceeding monthly withdrawals.

Key Differences Between a Money Market Account and a Savings Account

The essential differences between a money market account and a savings account are their interest rates and accessibility of funds. However, there are additional differences and overlapping features that are important to recognize and understand.

FDIC Insurance

A money market account and a savings account are both FDIC-insured up to $250,000 per depositor, per institution, providing a level of savings protection and security.

Ease of Access

Savings accounts generally promote a hands-off mentality for account holders. There are limited ways to access their funds. While it’s possible to withdraw money from savings accounts, account holders are typically subject to monthly withdrawal limits.

On the other hand, money market accounts offer greater levels of flexibility in accessing the money in the account. Account holders also benefit from check-writing capabilities and debit card privileges.

Interest and APY

APY, the acronym for the term annual percentage yield, refers to the rate of interest earned on the funds in the account and its compounded interest. Money market accounts tend to provide higher interest rates than savings accounts, which means money has the potential to grow faster in a money market account.

Is a Money Market Account Safer Than a Savings Account?

Both banks and financial institutions usually insure money market accounts and savings accounts up to $250,000 per depositor, per institution. It’s important to verify that the bank or financial institution providing the accounts have FDIC-insurance. Money market accounts and savings accounts are equally safe options for saving.

Choosing a Savings Account or a Money Market Account

When deciding between a savings account and a money market account, it’s essential to consider how each account aligns with both current and future financial goals and needs. Some important factors to consider include:

Savings Goals

For specific savings goals, such as an emergency fund, a down payment on a home, or a vacation fund, it may be wise to consider a money market account that offers higher interest rates to help savings grow faster.

Access to Funds

A money market account may be a better option if you need more flexibility in accessing funds because it has limited check-writing capabilities. On the other hand, if you want to restrict spending and withdrawals, a savings account without a debit card and check-writing capabilities might be a better fit.

Minimum Balance Requirements

Money market accounts often require higher minimum balance requirements as compared to savings accounts. A savings account with lower minimum balance requirements may be more feasible for those starting with a small amount of money.


It’s important to compare and understand any fees associated with both money market accounts and savings accounts, such as monthly maintenance fees or possible transaction fees. These will vary slightly depending on the institution, so make sure you read all the fine print before signing up for either kind of account to make sure you’re aware of—and okay with—any fees they have.

They might not seem like much at the outset, but these fees can have a great impact on overall savings. As a result, it’s necessary to consider them when making a decision.

When people are looking to open a new account to save their funds, they can consider both savings accounts and money market accounts. Although these accounts are usually safe options for saving and insured by FDIC, there are other aspects of the accounts to consider.

We encourage you to take the time to carefully review and reflect on the information provided in this guide to facilitate the decision-making process.

Remember, it’s always wise to consult with a financial advisor for additional guidance and support. Learn more at amerantbank.com and follow Amerant on Facebook, Twitter, Instagram, and LinkedIn @AmerantBank.

Amerant Editorial Team
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