What Is the Difference Between a Savings Account & a Money Market Fund?

Savings accounts and money market accounts are different types of savings accounts.

A money market account is really a variation on a savings account. Both are deposit accounts that you have at a financial institution, and they are both insured deposits, backed by the United States government. They have similarities and differences.

Features

Money market accounts limit the number of times you can withdraw money from them, usually to six times per month, according to Bankrate.com. Typically, only three of those withdrawals can be by check. Savings accounts generally do not have withdrawal restrictions.

Function

You generally earn a higher interest rate on money market accounts than you do with savings accounts. You can shop around for the best deals. Bankrate.com, for example, has an online rate calculator. You usually have to open a money market account with a certain minimum balance, unlike a regular savings account.

Expert Insight

If you want to earn some interest on money that you plan to save, but would like the flexibility of some liquidity, too, a money market account is probably the best bet, according to Ron Meier, a professor at the College for Financial Planning in Colorado, writing for Bankrate.com.

References

• Bankrate.com: Money Market Accounts Reward Thrift
• Bankrate.com: Comparing Money Market Accounts, Savings
• The Simple Dollar: Personal Finance 101: Money Market Accounts Versus Normal Savings Accounts

Resources

• Bankrate.com: Compare MMA Rates