You work hard for your money, so why not make sure it’s working hard for you?
When it comes to saving, where you keep your money matters. Two popular savings account options—traditional savings accounts and money market accounts—can help you grow your funds, but they are traditionally used for different purposes due to their different features.
Let’s break down the key distinguishing factors so you can decide which one fits your financial goals best.
What Is a Savings Account?
A savings account is one of the simplest ways to store your money while earning a bit of interest. More than 96% of Americans have either a savings or checking account, and for good reason—they provide a safe place to keep cash for emergencies, short-term goals, or just a rainy day.
Why Choose a Savings Account?
- Easy to Open & Maintain: Many banks allow you to start with as little as $50.
- Great for Short-Term Goals: Whether you’re building an emergency fund or saving for a vacation, a savings account keeps your money accessible while earning interest.
- Limited Withdrawals: Like MMAs, savings accounts often limit the number of transactions and may charge a fee for exceeding that limit.
What Is a Money Market Account (MMA)?
First things first—don’t let the name fool you. MMAs have nothing to do with stock trading or investing. Instead, they’re a type of deposit account offered by banks and credit unions that combine features of both savings and checking accounts.
MMAs are insured by the FDIC (if held at a bank) or the NCUA (if held at a credit union), meaning your money is protected up to $250,000 per depositor, per account category. Unlike traditional savings accounts, MMAs often come with check-writing privileges or debit card access, making it easier to use your money when needed.
Why Choose a Money Market Account?
- Higher Interest Rates: MMAs typically offer better interest rates than standard savings accounts, helping your balance grow faster.
- Access to Funds: Some allow check-writing and ATM cards, making them more convenient than traditional savings accounts.
- Larger Minimum Deposits: Many banks require a higher minimum deposit to open and maintain an MMA, so they’re often best suited for long-term savings goals.
Key Differences Between Money Market and Traditional Savings Accounts
When deciding between a regular savings or money market account, consider these factors:
| Money Market Account | Savings Account | |
| Interest-Bearing | ✔ | ✔ |
| FDIC Insured | ✔ | ✔ |
| Limit on Withdrawals | Varies by institution | Varies by institution |
| Minimum Deposit | Varies by institution | Varies by institution |
| APY | 0.5% is the industry average(1), but varies by institution | 0.42% is the industry average(1), but varies by institution |
The biggest draw of MMAs is that they generally offer higher interest rates than most savings accounts. While rates fluctuate, MMAs often provide a better return on your balance—especially if you have a larger deposit.
Explore your local bank’s money market options for account details, fund access and transaction limitations, and deposit minimums.
Which Account Is a Better Strategy for Your Savings?
Choosing between a money market account and a traditional savings account depends on your financial needs, goals, and how much access you’ll want to your money. Ask yourself the following questions:
- How much money do I have to open an account? Because money market accounts usually have larger deposit minimums, you may be better off with a savings account if you only have a relatively small amount of money available to get started.
- What are my goals? Money market accounts are best for goals that are medium- to long-term. If you’re saving for a goal that you expect to accomplish in two to five years — such as buying a home or car — a money market account can make sense. For short-term goals, such as building an emergency fund or a vacation, a savings account may be a better fit.
Whichever you choose, both options can help you grow your savings safely(2).
Visit your local Southeast Bank branch for experienced assistance to learn more about our particular account options and get started.
