Money Market Account vs. Savings Account: Choose Wisely
A money market account sounds a lot fancier than a savings account, but in reality, these two financial cousins are more similar than different. Let’s take a look at when opening a money market account really makes sense, as opposed to sticking with a savings account.
On the Money? Savings vs Money Market Accounts
If you’re like most people, you have heard about money market accounts but don’t really know what makes them different from a regular deposit account, such as a savings account.
Savings and money market accounts are considered separate products with many similarities and some significant differences. Here’s how these two account types work and when you might want to choose one over the other.
Comparing Savings and Money Market Accounts
Savings and money market accounts are both widely available deposit accounts you can open at almost any bank or credit union.
Unlike your checking account, savings and money market accounts are both intended as places to hold money for a period of time (even a short one), rather than be used for regular, daily expenses.
Minimum Opening Deposit
Minimum deposits are typically lower for savings accounts than money market accounts. That often makes them a better choice for younger individuals or families who may not have substantial savings yet.
You usually need to deposit around $1,000 to open a money market account, while many savings accounts can be opened with as little as $5.
Fees
Similarly, savings accounts tend to have lower or no fees, especially if you ensure you always have the required minimum balance in your account. Money market accounts on the other hand could tend to have higher maintenance fees or low-balance charges.
Interest
Both savings and money market accounts offer a variable rate of interest on deposits, meaning that your interest payments (at banks) or dividend yields (at credit unions) will vary over time.
Rates are based on current market conditions and your financial institution’s investment policies. In general, money market accounts may offer slightly more interest than savings accounts, but overall rates are usually low compared with other investment options.
However, while savings accounts usually offer a flat interest rate or dividend yield no matter how much you have in your account, most money market accounts pay interest on a tiered scale, meaning balances above certain thresholds will garner more interest.
Access to Funds
At some banks and credit unions, both savings and money market accounts come with limits on the number of transactions you can carry out each month.
Jeanne D’Arc, however, does not have transaction limits on our savings or money market accounts which means you can make deposits, withdrawals, or transfers as often as you like without any penalties.
Online and Mobile Banking
Money market and savings accounts are usually linked to your online banking profile in the same way as your checking account, letting you transfer money between accounts as you wish.
ATM Services
While you can usually withdraw money from either your checking or savings account using your debit card, not all money market accounts allow you to withdraw money using an ATM.
Check Writing
Money market and savings accounts are intended as places to keep, rather than manage, money. This means that check writing services that usually come standard with your checking account are rarer for money market accounts and almost never seen for savings accounts.
Security
Savings and money market accounts are both conventional deposit accounts. That means both types of accounts are fully insured by the FDIC (for banks) and the NCUA (for credit unions) up to a maximum of $250,000 per account, including both your deposits and any interest paid out.
These federal guarantees keep your money safe in the event of a bank or credit union collapsing and therefore make these accounts a risk-free place to keep your money.
What’s more, if you have an account with a balance over $250,000, Jeanne D’Arc provides insurance through Massachusetts Share Insurance Corporation (MSIC).
| Savings Account | Money Market Account | |
|---|---|---|
| Account Type | Deposit | Deposit |
| Minimum Balance | Low | Higher |
| Fees | Lower | Slightly higher |
| Interest type | Variable | Variable |
| Interest/Dividend rate | Competitive | Slightly higher |
| Tiered or Non-Tiered Interest | Non-tiered | Usually tiered |
| Mobile Access | Yes | Yes |
| Security | Up to $250,000 (FDIC/NCUA)
Over $250,000 (Through MSIC for Jeanne D’Arc accounts) |
Up to $250,000 (FDIC/NCUA)
Over $250,000 (Through MSIC for Jeanne D’Arc accounts) |
When to Choose a Savings Account
With much lower minimum opening deposits, low fees, and seamless integration with your checking account, savings accounts are a great place to start saving money you do not need immediately for your daily expenses.
Your money is separate yet immediately available if you need it, which makes your savings account a great place to begin your financial journey. Savings accounts are a great choice for people who are:
- Getting started on savings by setting aside money from their monthly budget
- Building an emergency fund to cover a major unexpected expense or loss of income
- Putting money aside for a short-term savings goal, like a Christmas fund
- Teaching their kids good financial skills by opening a children’s savings account
When to Choose a Money Market Account
The significantly higher opening deposit you will need to open most money market accounts makes them useful for a different type of cash stash.
While some people use money markets to take advantage of slightly higher interest rates, especially if they have a significant amount to deposit, they are mostly used for keeping a lump sum of money “on call” and easily accessible for specific needs.
That makes money market accounts a good choice for:
- An “opportunity fund” for money you want to invest as market conditions dictate
- Holding larger lump sum amounts to use for insurance, loan payouts, or legal settlements
- Storing working cash for a business or large project
If you are considering a money market account as a place to store and grow a significant amount of cash, you should consider the relative benefits of high-yield savings accounts vs money market accounts.
Smart Saving Choices With Jeanne D’Arc Credit Union
Of course, you don’t have to choose between a money market and a savings account. There is nothing to stop you from opening both and in many cases, the different features of these products complement each other.
Whether you choose a savings or money market account, or both, Jeanne D’Arc offers an unbeatable combination of service and selection.
Jeanne D’Arc members enjoy a choice of three high-performing savings accounts, including our generous Statement Savings, youth-focused M3 Money Club, or balance-building WinStrong accounts.
In each case, members get:
- Unlimited regular withdrawals
- Upt to 8 withdrawals via an ATM per month
- Easy access to online and mobile banking
- ACH and direct deposit payments up to 1 day sooner
- Access to our Member Perks rewards program
- No monthly fees
At the same time, you can open a Jeanne D’Arc Money Market account and continue to earn interest dividends with a deposit of as little as $1,000. And, our tiered interest rates mean you’ll earn more the more you deposit.
Our money market accounts also feature:
- Unlimited regular withdrawals
- Up to 8 withdrawals via an ATM per month
- Easy access to online and mobile banking
- ACH and direct deposit payments up to 1 day sooner
- Access to our Member Perks rewards program
- No Monthly Fees
Contact us today to find out more about how a Jeanne D’Arc savings or money market account can meet your financial needs, or click below to learn: