Which Account is Best for You: Money Market Account or Savings Account?

People who are able to set money aside are faced with a number of different options to choose from, regarding where to put their money. Two of the most popular options are opening a money market account or a savings account. Here is an in-depth look at these two finance options.

Savings Account

This type of account allows you to set aside your cash in a safe place while you earn interest on your money. These accounts are normally federally insured. This account allows you to have space between your regular spending money and cash that you can use at a later date.

The primary goal of this type of account is to help your assets grow. You can put down a small deposit to open this account and you will not have to worry about any maintenance fees. However, the maximum number of transfers or withdrawals that you can make to your account in a given month is six.

Money Market Account

This type of account allows your money to build up interest. You’ll receive a high interest rate on your account, but you’ll also likely be required to put down a larger deposit to open the account. Assets in these accounts are normally invested into short term securities. Banks look at investing your assets into Certificates Of Deposit, government securities, and commercial paper. This type of account offers you the opportunity to receive higher finance yields compared to other types of accounts.

Comparing The Two Accounts

Both types of accounts are insured by The Federal Deposit Insurance Corporation. There is a difference in regards to how you will be able to access your funds. With most market accounts, you will be able to use an ATM or debit card in addition to using checks. With a savings account, you’ll have to take out your money through electronic transfer.

Your savings help the banks by giving them money to lend. Your savings can be used to help with credit card lending. The money market account allows banks to buy short term commercial paper. The investments vary, but the interest rate is low.

Each of these accounts has it’s own unique advantage. Evaluate your finances to see which account makes the most sense for you to open.