Saving money is one of the best financial habits you can build, right up there with paying your bills on time and living within your means. Whether you’re putting aside cash for an emergency fund or a dream vacation—or you just want an extra financial cushion—where you stash your savings matters.
Two of the most common places are savings accounts and money market accounts. While similar in many respects, there are some key differences to understand so you can make the best decisions for your money.
What Is a Savings Account?
A savings account is a basic deposit account that earns interest, helping you grow your money slowly but surely. You can open one at most banks, credit unions and online-only financial institutions, and it’s often linked to your checking account to make transfers easy.
Think of savings accounts as the reliable workhorse of the banking world—not flashy, but they get the job done.
Key features
- Earn interest on your balance
- Typically no (or low) minimum balance requirements
- Easy access via transfers and ATMs, though not meant for frequent use
- Usually insured by the FDIC (or NCUA for credit unions) up to $250,000 per depositor, per insured bank, for each account ownership category
- Best for emergency funds, short-term goals and people just starting to save
READ MORE: What is a Savings Account? Different Types & How They Work
What Is a Money Market Account (MMA)?
A money market account is like an enhanced savings account with a few perks from the checking side of the family. Your deposits earn interest, often at a higher rate than a standard savings account offers. And many MMAs come with check-writing privileges or, in some cases, a debit card.
So if a savings account is the reliable workhorse, a money market account is the fancy farm equipment: It gets more done in less time (in the form of increased interest income) and has a few more bells and whistles to play with.
Key features
- Earn interest—often higher than that of a regular savings account, though rates vary by institution
- May require a higher minimum balance to open an account or avoid fees
- Access funds through transfers, ATMs and sometimes checks or a debit card (availability depends on the financial institution)
- Usually federally insured up to $250,000 per depositor, per insured bank or credit union, for each account ownership category
- Best for people saving larger balances, such as for a car or home down payment, who want to earn more interest while keeping money accessible
READ MORE: What is a Money Market Account and How Does it Work
Differences Between Savings and MMAs
Let’s zoom in on the areas where these accounts really part ways.
Interest rates
One of the main differences is in the annual percentage yield (APY)—the rate of interest you can earn on your deposits in a year (once you account for compound interest).
While APYs can vary greatly between financial institutions, MMAs typically offer higher APYs than traditional savings accounts do. Also, some MMAs use tiered interest rates based on your balance, meaning the more you deposit, the higher the rate you may qualify for.
That said, some high yield savings accounts can rival or beat MMA rates, especially from online banks—so it pays to compare.
Accessibility
Both account types offer reasonable access to your money, but with different features.
Traditional savings accounts typically allow access via online transfers, phone banking or in-person transactions. Some also offer ATM withdrawals, but they’re not designed for everyday spending.
MMAs may offer added flexibility, such as check writing and debit card access, though this depends on the financial institution and isn’t guaranteed.
Note: Even though the Federal Reserve has lifted the old rule restricting savings and money market accounts to six withdrawals per month, many banks still enforce similar limits on savings and MMAs. Exceeding those limits could result in fees or account conversion, so it’s important to check your bank’s specific policies.
Minimum balance requirements
The main difference comes down to how much money you need to open and keep in the account.
MMAs often have higher minimum balance requirements, which can range from $500 to $10,000 or more, depending on the financial institution. Synchrony Bank’s Money Market Account has no minimum deposit requirement and no minimum balance requirements.
Savings accounts tend to be more flexible. You can often open one with as little as $1, making them perfect for beginning savers or those who want to start small.
Fees and penalties
Both account types can come with fees—like monthly maintenance fees or penalties for falling below the minimum balance—though MMAs are more likely to charge fees if you don’t maintain a higher balance. In addition, you could face fees on either type of account if it has a monthly transaction limit and you exceed the maximum, so be sure to check the fine print.
It’s important to note that not all accounts follow these patterns. Always review the specific terms and fee structures before opening an account. For example, the Synchrony Bank Money Market Account has no monthly fees and no minimum deposit or balance requirements, offering a more flexible option compared to many MMAs.
Pros and Cons of Savings and MMAs
Sometimes it helps to see it all laid out. Here’s a side-by-side look at the good and not-so-good aspects of each account type.
| Money market account |
Savings account |
|
|---|---|---|
| FDIC or NCUA insurance |
Yes |
Yes |
| Earn interest |
Yes, generally higher than regular savings account |
Yes, generally lower than MMA |
| ATM access |
Yes |
Sometimes |
| Write checks |
Yes |
No |
| Debit card spending |
Sometimes |
No |
| Minimum opening and monthly balance requirements |
Generally higher than a savings account |
Generally lower than a money market account |
| Limits on withdrawals or other transactions |
Varies by financial institution |
Varies by financial institution |
Alternatives Accounts To Consider
If neither of these options hit the sweet spot for you, here are a few other places to stash your savings.
High yield savings accounts
These are like regular savings accounts but with an adrenaline boost in the form of better APYs—often even higher than on MMAs. If you’re looking for safety and growth but need only limited access to your savings, a high yield savings account could fit the bill.
Certificates of deposit (CDs)
Interest rates on savings accounts and MMAs aren’t locked in—they typically fluctuate with market conditions. If you’re counting on consistent returns, a certificate of deposit account could be a better choice for you. Just keep in mind that your funds will typically be locked in for a fixed term, and early withdrawals may come with penalties.
Investment accounts
If you’re saving for something farther down the road—like retirement or your child’s college tuition—investment accounts might be a better fit. These accounts offer the potential for higher returns through stocks, bonds, mutual funds and other securities. But investments can also lose value, so you need to have enough time to weather the market’s ups and downs.
READ MORE: 10 Lessons You Should Learn Before Investing
Choosing What’s Right for You
Savings accounts and money market accounts are both good, safe options for your savings. The choice comes down to your priorities. For example, writing checks or using a debit card are only benefits if you want easy access to your money. But if you tend to make impulse purchases, you might prefer an account that makes it more difficult to spend your savings.
Remember, you don’t have to pick just one. Many people use multiple accounts to help them reach various financial goals.
Find out more about Synchrony’s Money Market, High Yield Savings and CD accounts.
