Money Market Account vs Savings Account- Which Is Better for You?

If savings is on your mind, you’ve got plenty of options. However, 98.6% of Americans consider any traction account like savings A/Cs to preserve their money. Let’s find out Money market account vs savings account  with this article.

These traditional accounts offer interest and full control of your money. You can access, withdraw, and increase your savings as you like. But why settle for less interest when you can earn scores of money with money market accounts?

So, who will win in the battle of Money market account vs savings account. My money is on money market accounts. The money market account interest rates are mostly higher.

Meanwhile, MMAs also have options like debit cards and check withdrawals. So, MMAs are better than savings accounts by all means.

But there are several POVs to it. Let’s explore the main views and understand what’s better, through a wide lens.

Prime Highlights from the article

• Saving accounts and money market accounts offer almost the same benefits
• You can deposit and withdraw money from both accounts at will
• You can keep your assets in your savings account for a short tenure, hence earning a moderate interest
• Banks use the savings account funds to offer loans, credit cards, and credit lines to other customers
• The Best money market accounts offer much higher interest rates
• Banks use the MMA funds in various short-term liquidated schemes
• However, there are some prominent differences between MMAs and Savings

Let’s start the Debate

What is a money market account? It is a deposit account like a savings account. So there are lots of similarities and differences between the two. Let’s start a genuine debate between the two now.

This debate about Money market account vs savings account would be very nimble. Both have their own features. Both accounts seem similar from a distance. So, we need a deep peek at some exclusive factors for a fair evaluation.

The biggest differentiator is the interest rate of both. The MMAs offer much higher interest rates than most of the deposit accounts. Meanwhile, the MMAs need you to deposit a credible entrance amount on entry. Most of them also pau out interests.

So, you must explore new ways to open a money market account. Yet. Experts say that some savings accounts offer higher-than-average returns. So, we will focus on diverse factors before indulging in the Money market account vs. savings account debate.

Does the account have Federal insurance?

Yes. The FDIC protects individual savings under each scheme. Meanwhile, Savings A/C also enjoys FDIC’s insurance. However, FDIC insures upto $250,000 every year in every savings scheme.

While there is FDIC for banks, micro-sized union companies are covered under the National Credit Union Administration.

What are the withdrawal limits of both accounts?

Both money market and savings accounts can limit users from withdrawing money on more than a stipulated number of occasions. The Federal Rules validate these limits.

Both MMA and savings accounts are for asset preservation. They are not supposed to be used for everyday transactions. Hence the limitation.

Four years ago, users could withdraw money using any means 6 times for free. Those who tried to withdraw more than 6 times had to pay fines or surge fees. However, that rule is relaxed now.

Meanwhile, you can still see the limitations in the case of a few MMAs. However, there are different ways to extract money from traction accounts. Let’s see how MMA and savings accounts limit these means:

Which one has better accessibility?

Most savings bank accounts do not offer free account handing through deceit cards and/or checks. Some accounts provide both, while others offer anyone. Again, few savings accounts offer none.

The only leverage with savings accounts is using ATM cards for withdrawals. However, there is a limitation on the number of free withdrawals. After that, banks deduct a fixed fee per transaction.

However, most MMAs offer debit cards and check-writing benefits. So, the MMAs may be easier to access and use.

However, experts say avoiding using MMAs for regular transactions is better. The debit card access is only to help you during an emergency. As you keep withdrawing, the balance reduces. So, the interest you could earn from the account also reduces.

Lower fees and better return rates

In the battle of Money market account vs savings account, the former charges higher fees than the latter.

Firstly, users must pay a monthly maintenance fee of $5 to $50, varying from one bank to another. Meanwhile, you have to pay a fixed amount to open an account. However, the range of variation is extensive.

Some banks allow users to open an account against $0.01. However, some banks and credit unions may charge up to $500 to enable users to open an account.

But, the MMAs offer much higher interest rates to users at the end of the day. In comparison, the savings accounts offer much lower interest rates. Genuine interest rates of savings accounts stretch upto 4.3% to 4.5% at the most.

However, the MMAs can quickly pay upto 5.20% APY. So, the bottom line is that MMAs charge higher but pay higher APY.

Common differences summarized

Let’s sum up the chief outcomes from the comparison of Money market account vs savings account:

Similarities between MMAs and Savings Accounts

You must remember that both these accounts are primarily deposit accounts. So there are some undeniable similarities between the two:

• You will receive the interest in both accounts by the end of the month.
• Interest rates will vary when the Federal Reserve increases or decreases them.
• The FDIC insures the users’ accounts of both Savings and MMAs (NCUA in case of the credit unions)
• You can make as many deposits as you like in both cases.
• Some accounts limit users to 6 withdrawals in both cases.

Which is a better choice for you?

We can write off saying MMAs are better as they offer higher interest rates. However, there were several comparative elements in the tussle of Money market account vs savings account. Hence, we can’t decide the winner so easily.

If you are a beginner in saving money, go for savings accounts first. With savings accounts, you can easily open an account without any minimum investment limit or minimum account balance limit.

Meanwhile, you cannot access your funds in savings accounts so quickly. You mostly don’t have access to debit cards and checks. Only a few of the banks offer these benefits. Hence, you can soon develop regular saving habits.

It’s not true that savings accounts always offer low interest. Often, online banks offer higher interest rates. People who want to earn big can consider online savings bank accounts. Several rate-comparison engines can suggest the best online banks to open an account.

In comparison the best online money market accounts do not offer comparatively higher rates than physical banks.

But most people say that earning and accessibility from MMAs are much better. And that too with a reason. Yes, some MMAs ask for a higher minimum balance. But that also ensures that your meaning is higher.

Secondly, the accessibility of MMAs is much better. Most of the accounts offer debit and check facilities. So, access to your accounts is at your fingertips.

It’s Verdict Time!

In conclusion, the debate of Money market account vs savings account has shown that MMAs are better. Firstly, beginners may stay away as they haven’t yet developed regular savings habits.

So, they may face some issues with accounts that charge around $500 to open accounts or need them to maintain an MAB.

But mature people will find sumptuous benefits from money market accounts. In the meantime, I recommend opening MMAs when you have a fixed short-term goal before you. For more detailed insights on each type of account, ping me in the comments.

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