The difference between money market accounts and savings account

There are a lot of people who are quite convinced that there is a big difference between a savings account and a money market account. Most people say that money market accounts can be a good investment because of its high interest rates. Although this is true, there are some factors that can also affect money market interest rates and cause them to be at a low. These factors can be found in the market. If the rates are high, the money market rate is also high, but if it drops, the money market rate also drops. The same process goes with a savings account. To differentiate these two, here are some facts that are worth mentioning for people to know what they can use.

A savings account has the most basic process in banking. It has a low minimum balance or the amount needed to be in the account every month to maintain it. The average minimum balance on a savings account is $100. This is essentially the maximum amount that the bank can use to finance its ventures. Because of this, savings account usually ffer lower interest rates simply because there is very little money that the bank can borrow from your deposits. A savings account can be linked to an ATM card or a debit card so you can easily access your account. You can withdraw several times in a month provided that you don’t go over your balance because if you do, you will be charged for it.

A money market account on the other hand works much like a savings account but on steroids. It has additional perks. It has a high minimum balance usually ranging from $1000 to $2000 depending on the institution that provides it. And because of a high maintaining balance, this can generate bigger profits for banks and that is the reason why it can provide customers with higher interest rates. Money market accounts also enable the customers to write checks if they want to access their deposits whereas savings accounts that can only use a passbook or an ATM card. Money market accounts can use both. Although it also charges some fees, you can find money market accounts that do not have fees. The only thing disadvantageous about it is that some accounts post a limit to the number of times and the maximum withdrawal per month.

With these differences provided, hopefully these accounts can bring the right impressions so that they will be used properly according to their features. This way, we are able to manage our money better according to our needs.