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What is a savings account?

A savings account is an account with a bank, financial institution, or credit union where you can save your money while it’s not in active use.

Savings accounts pay you interest on your balance, usually on a monthly or annual basis.

Credit unions and banks typically provide savings accounts, and there are some online banks as well. You can open a bank account at a physical location or online.

More: Find the best high-yield savings account

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Pros and cons of savings accounts


You’ll want to go with a savings account at an institution that is insured by the Federal Deposit Insurance Corporation (FDIC) so that the money you deposit is protected. Funds in a regular savings account are easy to liquidate and you can transfer funds to a checking account or other account quickly. There’s usually no account minimum, so you can open one right away and deposit funds.


The interest rates for savings accounts are usually lower than other accounts, and you usually aren’t able to write checks from a savings account. You’ll need to transfer funds to your personal checking account and write a check from there.

More: Best high-yield savings accounts

What is a money market account?

A money market account, or MMA, is like a savings account in that you can deposit money and earn interest on the balance over time. A money market account may be offered by a bank, online bank or credit union. Unlike savings accounts, these accounts offer some of the same benefits as checking accounts such as the ability to write checks and withdraw cash at an ATM.

A money market account shouldn’t be confused with a money market fund, which is a mutual fund that you could buy through an investment account.

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Pros and cons of a money market


Money market accounts offer higher interest rates compared to savings accounts. You can easily liquidate your cash, withdraw funds and write checks. Money market accounts also allow you to use a debit card to make purchases. Some money market accounts offer cash back on certain purchases or at certain stores.


Oftentimes you need a larger minimum balance for a money market account. There might also be limits on the number and frequency of transactions.

How is a money market different from a savings account?

With a money market account, it’s easier to use your money because you can write checks and buy things with a debit card. A money market account is as flexible and easy as a checking account but usually earns more interest.

Savings accounts are sometimes not as easy to use because you can't write checks or use a debit card. You can transfer savings to your checking account, but sometimes there's a limit to the number of transactions between accounts. Sometimes additional steps might be required to withdraw cash, such as when you want to do an electronic transfer.

In general, money market accounts offer higher interest rates — but require larger account minimums than traditional savings accounts.

Money market accounts vs. savings accounts

Money Market Account Savings Account
Interest Rates Higher interest rate than traditional savings accounts Typically lower interest rate than money market accounts
Minimum Balances Requires higher minimum balance to get best APY Low or no minimum balance required for most accounts
Checks and Withdrawals Can write checks, withdraw funds, use an ATM and debit card Can withdraw funds and use an ATM, but can’t write checks or use a debit card
Ease to Liquidate Relatively easy to liquidate or transfer funds Relatively easy to liquidate or transfer funds
FDIC Insured Yes Yes
Monthly Fees Typically no fees, unless you don’t meet minimum balance requirements Typically no fees, unless you don’t meet minimum balance requirements
Best Features Typically offers higher interest rate and offers the ability to write checks and use a debit card Low or no minimum deposit or balance requirements

Choosing between a money market and savings account

Choosing between a money market account or a savings account depends on your current financial situation or what you want out of a savings account.

To start, how much are you able to deposit? If you can meet the minimum requirements of a money market account, it may be the better route since the interest rates are usually higher.

But if you are not in a position to meet the minimum deposits, and would rather have an easy option that’s connected to a checking account, a traditional or high-yield savings account may be the way to go. You can compare multiple accounts to find the right one for you.

In short, money market accounts offer higher interest rates and provide more flexibility for withdrawing cash and making purchases. They tend to require a higher minimum balance amount, though.

No matter which type of account you decide on, look at the fine print and details, including the interest rate, minimum balance, any transaction limits or monthly fees.


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About the Author

Alex Denholm

Alex Denholm

Freelance Contributor

Alex Denholm was a freelance contributor to Moneywise.

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The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.