Comparing the money market accounts and the savings accounts

The money market and the savings accounts are two types of deposit accounts that are more profitable for the person who owns them, compared with the checking account. Why are they more profitable? This is simple: they both pay higher rates than the ones paid by the checking account. However, the benefits are restricted by certain limits that are imposed when it comes to accessing the money; the rules imposed for accessing the money represent the features that make the difference between the money market accounts and the savings accounts. This is the reason why it is very important to become aware of these differences; by becoming aware of them, it is easier for a person interested in one of these two types of accounts to make a wise choice.

When it comes to the interest rates, the money market accounts represent a better investment; these accounts pay higher rates than the ones paid by the savings accounts thanks to the fact that the bank has more flexibility in investing the money deposited by the owner. The interest rate differs from one money market account to another, as it depends on the amount of money deposited in the account. In which concerns the withdrawals, the savings account is more flexible and it represents a better choice in emergency cases, as the bank allows more monthly withdrawals than it allows for the money market account. The minimum balance is another feature that makes a clear distinction between the money market accounts and the savings accounts; the minimum balance for a money market account is much lower than for a savings account. This is the result of the way in which the bank invests the money deposited in a money market account. The problem is that in case the balance falls too low, the owner of the account is forced to pay a fee. Last but not least, differences between the two types of accounts appear when it comes to insurance. The FDIC (Federal Deposit Insurance Corporation) insures the balance of a money market account, but only to a certain limit; this limit is imposed by the government. The deposits that are higher of this limit don’t have a full insurance, which might be a disadvantage in case the bank has problems.

Now that you know the differences between these two types of accounts, it becomes easier for you to make the choice that best suits your needs.

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ONLINE SAVINGS ACCOUNT

  • No minimum balance
  • Competitive rates, No risk

MONEY MARKET ACCOUNT

  • High rates, Access to money
  • FDIC Insured