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Money market vs. checking accounts
The right choice depends on how often you use it and whether you want to earn interest.
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Both money market and checking accounts can help you manage your money with the help of checks and debit cards. Checking accounts offer unlimited access and more account features. Money market accounts pay interest, which can be more beneficial with a higher balance.
What’s the difference between money market and checking accounts?
| Money market | Checking | |
|---|---|---|
| About | Interest-bearing account offering flexible access to your money while you save | Unlimited access to your money, allowing you to deposit funds, write checks, pay bills, cover expenses and withdraw cash |
| Interest | Yes | Sometimes |
| Check writing | Typically | Yes |
| ATM access | Typically | Yes |
| FDIC insurance | Yes | Yes |
| Minimum deposit | Varies up to $25,000 | Low |
| Six-transaction limit | Yes | No |
What is the federal six-transaction limit?
Regulation D is a federal regulation that restricts all types of savings accounts to six “convenient” transactions per month. This includes checks, debit card payments, phone transfers and automatic transactions like bill pay.
Pros and cons of money market vs. checking account
Money market accounts
Pros
- More interest. Money market accounts generally pay more interest than checking accounts.
- Flexible access. Unlike traditional savings accounts, you’ll get a debit card and checks to access your money.
- Fewer service charges. Since these accounts are still limited to six transactions per month, you’ll likely incur less service charges than you would with a checking account.
Cons
- High minimum deposit. Money market accounts usually have higher initial deposit requirements than checking accounts.
- Limited transactions. Unlike checking accounts, these accounts are limited to six transactions per month.
- Monthly fees. Most money market accounts have monthly fees. And while they’re often avoidable, the conditions may be harder to meet than conditions on checking accounts.
Checking accounts
Pros
- Unlimited transactions. There are no limits on how many transactions you can make per month.
- Easily avoidable monthly fees. These accounts usually have low monthly fees and multiple ways to avoid them.
- Low minimum deposit. Checking accounts generally have low or no initial deposit requirements.
Cons
- Less interest. Most checking accounts don’t pay interest. The ones that do usually pay much less than money market accounts.
- Other fees. Beyond monthly fees, checking accounts also often have ATM charges, overdraft fees, transfer fees and more.
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How to compare money market accounts and traditional checking accounts
Each account type was designed for a purpose, and knowing how to compare them can help you determine which is right for you:
- Interest rates. While some checking accounts pay interest, you’ll almost certainly earn more interest with a money market account.
- Deposit requirements. Money market accounts generally have higher initial deposit requirements.
- Features. Money market accounts generally offer basic account features, but you’ll likely get more perks and benefits with a checking account.
- Fees. There’s a good chance that both accounts will have fees. Compare options to find the best rates.
- Access. Money market accounts provide some access to your money, but are still subject to the federal six-transaction limit. If you want unrestricted access, a checking account may be a better fit.
- Security. Both of these accounts are eligible for FDIC deposit insurance, but only if the issuing bank is FDIC-insured.
Bottom line
Money market and checking accounts are both designed to help you manage your money, but the best option for you will depend on your situation. Money market accounts are generally better for saving, whereas checking accounts can provide unrestricted access to your money.
Once you decide which type is right for you, compare your options to find the best account.
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