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Money market vs. traditional savings accounts

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Compare savings options, interest rates and balance requirements.

Money market accounts combine the benefits of savings and checking accounts, but with the benefits of a high APY. In exchange you’ll have to maintain a higher daily balance.

What’s the difference between money market and traditional traditional savings accounts?

The main differences between money market and traditional savings accounts are the interest your account earns, checking-writing privileges, ATM access and your minimum balance:

Money market Traditional savings
About An interest-bearing account that comes with checks and a debit card to provide flexible access to your money while you save. An interest-bearing account that usually doesn’t have a minimum deposit or monthly balance.
Interest Averages 0.85% to 2.35% Averages 0.01% to 2.51%
Check writing Yes No
ATM access Yes Varies by account
FDIC insurance Yes Yes
Minimum deposit $1,000+ $0–$1,000
Six-transaction limit Yes Yes

Why might money market accounts pay more interest than traditional traditional savings accounts?

When you deposit money in a traditional savings account, the bank is allowed to loan your money to other institutions or customers and will pay you interest in exchange. With a money market account, the bank has more freedom to invest your money in ways that could produce higher returns, so it’s willing to pay you a higher interest rate.

Which is better for me, a money market or traditional savings account?

Money market and traditional savings accounts are both effective ways to save, but the best option for you depends on your situation:

Money Market Logo

Pick a money market account if …

  • You can meet higher deposit requirements.
  • You need more flexible access to your money.

Read more

Savings Logo

Pick a traditional savings account if …

  • You have trouble limiting your spending.
  • You’re just starting to save.

Read more

Pros and cons of money market vs. traditional savings accounts

The interest and the access to your money are the two main ways these accounts are different. Weigh the pros and cons:

Money market accounts

Pros
  • Flexible access. With a debit card and check writing abilities, you can cover expenses, pay bills and more — as long as you keep it to less than six transactions.
  • Potentially higher rates. Money market accounts often have slighter higher interest rates than traditional savings accounts, so you could save more money.
Cons
  • Higher deposit requirements. Money market accounts often have higher deposit requirements than traditional savings accounts.
  • Easier to overspend. With such easy access to your money, it could be tempting to spend money instead of leaving it to earn interest.
  • More fees. Watch out for overdraft fees, transfer charges and other fees.

Traditional savings accounts

Pros
  • Encourages saving.You won’t get a debit card or check writing abilities, so it’s harder to dip into your savings.
  • Lower deposit requirements.Traditional savings accounts generally have lower deposit requirements than money market accounts, making it easier to start saving.
Cons
  • Potentially lower interest rates. Interest rates on traditional savings accounts are often slightly lower than money market accounts.

Compare money market and savings accounts

Name Product Interest rate (APY) Fee Minimum deposit to open
2.20%
$0
$100
A super-high interest rate if you're in the habit of saving at least $100 per month or have $25K in the bank.
2.15%
$10 per month
(can be waived)
$5,000
Enjoy the security and earning potential of a savings account while maintaining the flexibility to write checks.
2.00%
$15 per month
(can be waived)
$25
Earn one of the highest annual percentage yields (APYs) if you live in one of 42 eligible states, and access your money by ATM, check or bill pay.
2.02%
$25 per month
(can be waived)
$25,000
Earn 2.02% APY for 6 months on an MMA. Conditions apply.
2.00%
$0
$0
A high-interest, fee-free online bank account that helps you save.
1.85%
$0
$100
Reach your savings goals with a CIT Bank Money Market account. $100 minimum opening deposit.

Compare up to 4 providers

Name Product Interest rate (APY) Fee Minimum deposit to open
1.90%
$0
$0
Enjoy no monthly fees and a competitive APY with this online-only savings account.
2.00%
$0
$0
Earn 20x the national savings account average with no fees or minimums.
0.01%
$5 per month
(can be waived)
$0
Get a $150 bonus when you open a new Chase Savings account, deposit a total of $10,000 or more in new money within 10 business days and maintain a $10,000 balance for 90 days.
2.20%
$0
$100
A super-high interest rate if you're in the habit of saving at least $100 per month or have $25K in the bank.
Betterment Everyday Savings
Betterment Everyday Savings
2.44%
$0
$10
At a 2.44% APY if you join the waitlist for Betterment Everyday Checking or 2.19% if you don't, this is a high-interest FDIC-insured savings account seamlessly tied into Betterment's investment robo-advisor.
2.15%
$0
$0
Earn one of the highest interest rates without the fees.

Compare up to 4 providers

How to compare money market accounts and traditional savings accounts

Consider these features when trying to decide between a money market and traditional savings account:

  • Interest rates. Generally money market accounts pay a higher APY — but that usually depends on a higher opening deposit.
  • Deposit requirements. Money market accounts usually require a high opening deposit of at least $2,500. If you don’t have significant savings, you might want to consider a traditional savings account.
  • Features. Explore and compare account features like reward programs, mobile banking and budgeting tools.
  • Fees. Look out for service fees for balance minimums, withdrawing funds and outgoing wires.
  • Access. Consider how much you want access to your money. Federal regulation limits both accounts to six withdrawals, but some traditional savings accounts make it difficult to access your money.
  • Security. Regardless of which account you choose, find out if it’s covered by FDIC deposit insurance or any other security features.

Compare money market vs. CDs

Bottom line

Money market accounts provide flexible access and higher interest rates, but often have higher deposit requirements. Traditional savings accounts, on the other hand, can limit spending and have lower deposit requirements, making it easy to start saving. Compare your options for traditional savings accounts and money market accounts to find out which one is right for you.

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