The short version
Key takeaways
- Savings accounts and money market accounts are both deposit accounts, and both are insured up to $250,000 per depositor, per insured bank, per ownership category when held at an FDIC-insured bank or NCUA-insured credit union.
- The main practical difference is access. Money market accounts often come with a debit card or checks. Savings accounts usually don't, which makes spending harder.
- Neither type reliably pays more. Rates depend on the institution, so compare the APY, minimum balance and fees on the specific accounts, not the account type.
- A money market account at a bank is not the same as a money market mutual fund. The mutual fund is an investment and isn't FDIC-insured.
If you're trying to decide where to keep cash you don't want to risk, two options show up again and again: a savings account and a money market account. They sound almost identical, they're offered by the same banks, and both pay interest. So why do two different products exist, and does it matter which one you pick?
It does matter, though perhaps less than the marketing suggests. The two accounts are close cousins. The differences come down to how easy it is to get at your money, what you must keep in the account, what fees you might pay, and how the interest rate is set. This guide walks through each one so you can match the account to what you actually need the money for.
The short answer
- Choose a savings account if you want the simplest option, a low or no minimum balance, and a bit of friction that keeps you from spending the money.
- Choose a money market account if you want easier access to your cash, such as a debit card or checks, and you can comfortably meet the minimum balance.
- Don't choose based on the label. The best savings accounts and the best money market accounts often pay similar rates. Compare the specific APY, minimums and fees.
- Use both if it helps you organize your money, for example one for an emergency fund and another for a goal you plan to spend on.
How they compare at a glance
| Savings account | Money market account | |
|---|---|---|
| What it is | A deposit account that earns interest | A deposit account that earns interest and often has some checking-like features |
| Insurance | FDIC or NCUA, up to applicable limits | FDIC or NCUA, up to applicable limits |
| Access to your money | Transfers, ATM at some banks, branch visits | Often includes a debit card or checks, plus transfers |
| Typical minimum to open | Often $0 to a few hundred dollars | Often higher, commonly $0 to a few thousand dollars |
| Minimum to avoid fees or earn the top rate | Often none | Often required |
| Interest rate | Variable, can change at any time | Variable, may be tiered by balance |
| Monthly fees | Often none at online banks | More common, especially at traditional banks |
| Best for | Emergency funds, goals, and money you don't want to touch | Cash you want to keep handy and move occasionally |
Keep in mind that this table describes typical patterns. Every bank and credit union sets its own terms, and individual accounts vary widely, so the account you are looking at may not fit the pattern.
What a savings account is
A savings account is the most basic place to store cash and earn interest. You deposit money, it earns interest, and you can withdraw it when you need to. Most savings accounts are linked to a checking account so you can move money back and forth.
Savings accounts come in a few forms:
- Traditional savings accounts at brick-and-mortar banks. These tend to pay very little interest, often far below what online banks offer.
- High-yield savings accounts, usually at online banks. These pay considerably more and typically have low or no minimums and no monthly fees.
- Credit union savings accounts, called share accounts, which are insured by the NCUA.
The defining feature is simplicity. Most savings accounts don't come with a debit card or checks. That is a feature as much as a limitation, because it adds a little friction between you and your savings. For many people, that helps.
What a money market account is
A money market account (MMA) is also a deposit account. It's offered by banks and credit unions, pays interest, and is insured just like a savings account. What sets it apart is that it traditionally blends features of savings and checking:
- It may come with a debit card or checks, so you can pay for things directly from the account.
- It often has higher minimum balance requirements than a basic savings account.
- Its rate may be tiered, meaning higher balances earn a higher rate.
- It may carry monthly fees if your balance falls below a required level.
In practice, the line between the two has blurred. Some online banks offer a money market account with no minimum and a rate close to their savings rate, and some offer savings accounts with a debit card. That is why it's best to look at each account's actual features rather than its name.
Safety: both are insured the same way
This is one of the most common worries, and the answer is simple. If your bank is insured by the FDIC, or your credit union by the NCUA, your deposits are protected up to $250,000 per depositor, per insured institution, per ownership category. This applies to both savings accounts and money market accounts. Neither one is safer than the other.
A few practical points:
- Always confirm that the institution is actually insured. The FDIC and NCUA both let you check on their websites.
- The limit applies to the total across your accounts at the same institution in the same ownership category, not to each account individually. If you keep more than $250,000 in one bank, consider spreading it out or using other ownership categories, such as a joint account.
- Insurance covers the bank failing. It does not cover you losing money to fraud on your own account or mistakes in how you manage it.
Access: the biggest practical difference
If one factor decides between the two, it is probably this one.
Money market accounts often let you:
- Pay with a debit card
- Write checks
- Make electronic transfers and bill payments
Savings accounts usually let you:
- Transfer money to a linked checking account
- Make deposits online or at a branch
- Sometimes use an ATM card, depending on the bank
Easier access is convenient, but it also makes it easier to spend. If your goal is to build an emergency fund or save for something specific, a savings account that you can only reach by transferring money can quietly help you stay on track. If you want a place to park a lump sum, such as a tax payment or a down payment, while keeping the option to write a check, a money market account may fit better.
What happened to the six-withdrawal limit
You may have read that savings and money market accounts limit you to six withdrawals per month. That rule came from a federal regulation known as Regulation D. In April 2020, the Federal Reserve removed the six-per-month limit from the rules, so banks are no longer required to enforce it.
However, many banks and credit unions kept their own limits. Some still restrict certain withdrawals and transfers, charge a fee when you go over, or can even convert or close an account if you repeatedly exceed the limit. So check your account's terms rather than assuming either way.
Minimums, fees and tiers
This is where money market accounts are most likely to cost you.
Minimum balances. Some money market accounts require a higher opening deposit, and some require you to keep a certain balance to avoid a monthly fee or to earn the advertised rate. Many online savings accounts have no such requirements.
Monthly fees. A fee can quietly wipe out your interest. For example, a $12 monthly fee costs $144 a year. On a balance of $3,000 earning 4%, your annual interest is about $120, so the fee would leave you losing money.
Tiered rates. Some accounts pay different rates for different balance ranges. The rate you see in an advertisement is often the top tier, which may require a large balance. At a lower balance, you could earn much less.
Interest rates: what to expect
Both types of accounts pay variable rates. That means the bank can raise or lower the rate at any time, usually following the broader interest rate environment, including the Federal Reserve's decisions.
A few things to know:
- Online banks and credit unions usually pay much more than large traditional banks, for both account types.
- The label doesn't predict the rate. A savings account at one bank may pay more than a money market account at another, and the reverse is also true.
- Promotional rates may apply for a limited time or require conditions such as direct deposit.
- Rates change. The APY you open with may not be the APY you have six months later.
To see current rates and compare accounts, use the filters in our banking comparison, and see our list of the best high-yield savings accounts. Each account shows the date we last reviewed it. Rates move quickly, so confirm the current figure on the bank's website before you open an account.
Taxes
Interest you earn in either account is taxable income at the federal level, and possibly at the state level too. Banks generally send a Form 1099-INT if you earned $10 or more in interest during the year. You owe tax on the interest even if you don't receive the form. Interest is taxed as ordinary income, so your tax rate depends on your income bracket.
This matters most for larger balances. If you hold a large amount of cash, factor taxes into your comparison of options such as a savings account, a money market account, a CD or even short-term Treasury bills, whose interest is exempt from state and local income tax.
Which one fits your situation?
A savings account is usually the better fit if:
- You're building an emergency fund and want it separate from spending money. Our guide to building an emergency fund explains how much to save.
- You have a small balance and don't want to worry about minimums or fees.
- You want the simplest account with the least chance of surprise fees.
- You're saving for a specific goal and don't want easy access to tempt you.
A money market account may be the better fit if:
- You want to be able to pay directly from the account with a debit card or checks.
- You have a larger balance and can comfortably meet the minimum.
- You found an account with a competitive rate, low or no fees and features you will really use.
- You want a place to hold money for something like a tax payment or home purchase while keeping flexible access.
Consider using both if:
- You want to separate different goals with different rules, for example a savings account for emergencies and a money market account for short-term spending money.
- You're spreading a large balance across different institutions to stay under the insurance limit.
How to choose a specific account
Whichever type you pick, the details matter more than the label. Before you open an account, check:
- The APY and whether it's a standard rate or a promotion.
- The minimum balance to open the account and to avoid fees.
- Monthly fees and any other charges, such as excess withdrawal or transfer fees.
- Balance tiers, and what you'd earn at your actual balance.
- Insurance: confirm the bank is FDIC-insured or the credit union is NCUA-insured.
- How you can access the money, including transfer speed, a debit card, checks and ATM access.
- Withdrawal limits and what happens if you exceed them.
- The bank's reputation for customer service and how easy its app and website are to use. Our guide on how online banks differ covers what to look for.
If you're also weighing a certificate of deposit, our article on high-yield savings accounts vs. CDs shows when locking in a rate makes sense. And if you're still sorting out what each of your accounts is for, our guide on checking vs. savings accounts is a good starting point.
Common mistakes to avoid
Chasing the headline rate. A high advertised rate that applies only to a large balance, or only for a few months, may not be what you actually earn.
Ignoring fees. A small monthly fee can cancel out a year of interest on a modest balance.
Keeping too much in one bank. Amounts above the insurance limit aren't covered, so spread large balances around.
Leaving money in a low-rate account out of habit. If your savings account pays close to nothing, moving the money to a better account can add meaningful interest with no extra risk.
Using your emergency fund as spending money. If a money market account's debit card makes it too easy to dip into savings, a plain savings account may serve you better.
Frequently asked follow-ups
Can I have both a savings account and a money market account? Yes. Many people do, and there's no rule against holding several deposit accounts, as long as you track the balances and stay within the insurance limits at each bank.
Do money market accounts affect my credit score? No. Neither account type is reported as credit, and opening one usually involves a bank account screening, not a credit check that affects your score. Some banks may check your credit, so ask if you're not sure.
Is it hard to switch from one to the other? Usually not. Many banks let you open a new account and move money online within a few days. Before you switch, check for any early closure fees and make sure automatic deposits and payments are redirected.
What if my bank lowers the rate? Because rates are variable, a bank can lower them at any time. If your rate drops well below what other institutions are paying, it may be worth moving the money.
The bottom line
Savings accounts and money market accounts are more alike than different. Both are insured, both pay interest, and both are low-risk places to keep cash. The real differences are practical: a money market account can offer easier access and sometimes tiered rates, while a savings account is simpler and often has lower minimums and fewer fees.
So decide first what the money is for. If it's an emergency fund or a goal you don't want to touch, a savings account is hard to beat. If you want the flexibility of a debit card or checks and you can meet the balance requirements, a money market account can be a good fit. Then compare the actual APY, fees and minimums. You can start with our banking comparison to see accounts side by side.
Sources and further reading
- FDIC, Deposit insurance (opens in a new tab) and the BankFind tool (opens in a new tab) to check that a bank is insured
- NCUA, Share insurance coverage (opens in a new tab) and the credit union lookup tool
- Federal Reserve, Regulation D (opens in a new tab) and its April 2020 announcement removing the six-per-month transfer limit
- Consumer Financial Protection Bureau, Consumer resources on bank accounts (opens in a new tab)
- Internal Revenue Service, Form 1099-INT information (opens in a new tab)
Rates, fees and account features change often and differ by institution. This article is general information, not financial advice. Confirm current details with the bank or credit union before opening an account.
Quick answers
Frequently asked questions
Is a money market account safer than a savings account?
No. When held at an FDIC-insured bank or an NCUA-insured credit union, both are insured up to the standard limit of $250,000 per depositor, per insured institution, per ownership category. The type of account doesn't change the protection. What matters is that the institution is insured and that your balance stays within the limit.
Which pays more, a savings account or a money market account?
Neither type consistently pays more. Rates are set by each bank or credit union, and the best online savings accounts and the best money market accounts often pay similar rates. Money market accounts sometimes use balance tiers, where a higher balance earns a higher rate, so check the rate you would actually earn at your balance.
Is there still a limit of six withdrawals per month on savings?
Not under federal rules. The Federal Reserve removed the six-per-month limit on savings and money market withdrawals in April 2020. But many banks and credit unions still set their own limits and may charge a fee or convert or close an account if you exceed them, so check your account's terms.
Is a money market account the same as a money market fund?
No, and the difference matters. A money market account is a bank deposit account that is insured. A money market fund is a type of mutual fund sold through brokerages. It invests in short-term debt, is not FDIC-insured, and can lose value, though losses have been rare.