What's the Difference Between a Money Market and a Savings Account?

While both accounts are intended to help you save and essentially work the same way, there are a few fundamental differences between a money market and a savings account.

What is a Savings Account?

This helps you…wait for it…save your money! Savings accounts tend to offer lower interest rates than a money market, and it is a safe, and easy access option to help you set aside cash for your financial goals. There may be a monthly fee for a savings account, but in most cases that fee is waived if you keep a certain amount in your account. Check with your bank to ask if there are any fees or balance requirements.

What is a Money Market Account?

This is a type of account meant for saving but works a bit like a checking account. Typically money market accounts offer a higher interest rate and balance requirements than savings accounts. You also have the ability to write checks from a money market account, which could come in handy depending on your needs. These accounts usually have a monthly maintenance fee, but check with your bank to ask how you can get it waived.

Similarities

Both are low-cost accounts with relative flexibility, designed to help people save money. Unlike other money-saving products, like a certificate of deposit (CD) or an investment account, savings and money market accounts allow you to add, use, or withdraw your funds without much restriction. Most institutions also allow a savings or money market account to be tied to a checking account to transfer funds in case you overdraw your checking account. You also have the option in some cases to get a debit card that is connected to either account type if you're interested.

Although federally these accounts are no longer limited to six transactions every month, your bank or credit union might still have a rule in effect, so double check before you start moving your money so you don't get charged any potential fees.

Key Differences

Money market accounts offer higher interest rates, the ability to write checks from the account, transfer funds automatically for overdraft protection, and have higher balance requirements compared to savings accounts.

Savings accounts have lower balance requirements, offer lower interest rates, the ability to withdraw cash using an ATM card, and the ability to link to your checking account to transfer funds for overdraft protection.

WaFd Bank Is Here to Help

No question is too small for our friendly and knowledgeable bankers, and with WaFd Bank you also have access to tools and services to help you manage your finances and get the most from your money. Visit us at your local branch, give us a call at 800-324-9375, or check out what WaFd Online Banking has to offer.