​​Money Market vs. Savings: What’s the Difference?

Eve Chin, VP Deposit Planning & Strategy, First Republic Bank
December 13, 2021

  • Money market accounts generally offer higher interest rates and more accessibility than traditional savings accounts at the price of higher required balances.
  • Both types of accounts are safely insured by the FDIC or NCUA.
  • Depending on your savings circumstances and needs, either savings product might be a great option.

Money market accounts (MMAs) and savings accounts both offer opportunities to earn interest but differ in how they work and their respective advantages. Both deposit account options include insurance from the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA), up to $250,000 per depositor, per account, per ownership category.

Their different rules and restrictions may factor into which you choose to open, however. In this article, we’ll help break down what makes them different and how those differences can impact your financial decision-making.

At a glance: Money market vs. savings

Money market accounts and savings accounts are well-known savings tools, but each has its unique benefits. The differences between a money market account and a savings account can be somewhat nuanced, but here are their key features and differences:


Money Market Account

Savings Account

Earned Interest

Yes, at generally higher rates than savings accounts

Yes, at generally lower rates than MMAs

ATM Withdrawals



Direct Deposit



Debit Card Usage



Ability to Write Checks



Balance Requirements

Yes, and generally higher than for savings accounts

Sometimes, and generally lower than for MMAs

FDIC and NCUA Insurance




These are just some of the core differences between money market and savings accounts, however. Understanding all their differences can help you make an informed decision on which to use.

Money market accounts

There are several pros and cons to money market accounts, which are also commonly known as money market deposit accounts (MMDAs).

Broadly speaking, money markets are deposit accounts that generally offer higher interest rates than traditional savings accounts. They also require you to make a larger initial deposit and maintain a higher minimum balance than a regular savings account. Some money market accounts may even impose fees if your account balance falls below a particular threshold.

Here are the major pros and cons of money market accounts:

  • Advantages: High interest rates, safety and high liquidity
  • Disadvantages: High balance requirements and transaction limits

Some banks also offer money market checking accounts. These accounts are similar to your standard checking account but may offer higher interest rates in exchange for higher account balances.

Money Market Account (MMA) vs. Money Market Fund (MMF)

Money market accounts are a type of deposit account that an individual holds at a federally backed financial institution. Money market funds, or money market mutual funds, by contrast, are investment products offered by securities institutions and brokerages and function in similar ways to mutual funds, which pool together funds to generate gains (and losses) for shareholders. MMAs earn interest in exchange for leaving your money at your bank or credit union. Meanwhile, most MMFs invest in low-risk investments and may provide you with a slightly higher interest rate than a money market or savings account. In most cases, however, MMFs don’t allow you to access funds by way of a debit card or by writing checks, and they aren’t FDIC- or NCUA-insured — all of which are emblematic of MMAs.


High interest

Higher interest rates are usually a big advantage for money market accounts, setting them apart from your typical savings account. Money market account interest rates can vary, though, based on the amount of money you deposit and the balance you keep in your account. This means more money in your pocket from compounding interest, which can play a significant role in a savvy savings strategy.

Safely store and access your money

Money market accounts are FDIC-insured at banks and NCUA-insured at credit unions. This provides you with a bit more confidence and certainty that your money is safe. The stock market and other investment vehicles don’t come with this same guarantee, making money market accounts a potentially safer way to generate interest on your money.

High liquidity

With a money market account, you can access your funds whenever you need them (although there’s often a small lag between when you execute a withdrawal and when you receive your money). Still, your money is quite accessible within a money market account, which means you can access these funds in an emergency while still earning high interest on your balance while it’s in your account.

You may even be able to write checks and use a debit card if you choose a money market account. However,  many financial institutions impose monthly transaction and withdrawal limits on the money within your account.

This flexibility differs from a certificate of deposit (CD), which is another common option for people who want to make the most out of their savings. CDs limit when you can access funds without incurring penalties, thus making them a less flexible option than money market accounts.

High balance requirements

There are, of course, potential drawbacks associated with a money market account. Chiefly, these take the form of minimum deposit and balance requirements. Compared with a savings account, you’ll likely be required to keep a larger minimum balance. However, if you can reach the required minimum, it can benefit you to set aside a large amount of funds to get a higher amount of interest.

Transaction limits

Like any savings tool, there may be limits to the amount of money you can transfer within your money market account. ​​Previously, under the Federal Reserve’s Regulation D, only six transfers were permitted monthly. However, in response to the COVID-19 pandemic, the Fed removed this limit to enable easier access to funds. Such limits are now relegated to individual financial institutions. Check with your bank or credit union to see if it limits the number of transactions you can make per month within your account.

Due to the frequent presence of transaction limits, money market accounts are often best for setting aside money for the long term  while keeping a separate checking account for daily, short-term or recurring spending needs.

Savings accounts

Odds are that you’re already familiar with what savings accounts are, how they work and what benefits they offer. In essence, they’re a form of bank account used to store money that’s secure, safe, interest-bearing and designed for long-term growth.

Here are the pros and cons of savings accounts:

  • Advantages: Safety, little or no balance requirements and some liquidity
  • Disadvantages: Low-interest rates

Safely store money for long-term savings

It’s important to store the money you’re saving in a secure, safe place for long-term growth. Savings accounts come with FDIC or NCUA insurance, just like money market accounts, which means they’re a secure way to hold onto your money even during volatile times.

No or low minimum balance requirements

Many savings accounts have low (or no) minimum balance requirements, unlike money market accounts that frequently require high balances. For this reason, savings accounts can be the right choice for savers with smaller nest eggs.

Potential for high or low liquidity

Savings accounts can be highly liquid, allowing you to access cash quickly and more often via avenues like ATM cards and electronic transfers, or they may come with low liquidity. This depends on the type of savings account you’ve opened and the financial institution where you’ve opened the account. Either way, savings accounts make it easy to transfer money between linked checking accounts, which is a net positive for savers.

It’s important to note that some banks offer withdrawal penalties for excessive transfers from savings accounts. Again, in the absence of a Federal Reserve mandate, banks and credit unions decide such regulations themselves.

Low interest

Compared with a money market account, the interest rate of savings accounts can be a downside. Interest rates are typically lower, so you earn less on the money you have tucked away. There are some exceptions, however, such as high-yield savings accounts.

Money market vs. savings account: Which is right for you?

It’s difficult to say whether a money market account or savings account is right for you. Both are great savings options, so the right choice depends mainly on your finances and how you need to access your money.

Should I have a money market account?

A money market account may be more attractive if you:

  • Want to reap the reward of high-interest rates.
  • Aren’t concerned with minimum deposit or minimum balance requirements.
  • Are risk-averse and want FDIC or NCUA insurance.
  • Need to access funds with a check or debit card through a money market checking account.
  • Don’t want to lock up funds as you would with a CD.
  • Are interested in linking a checking or savings account to your money account.

Should I have a savings account?

A savings account may be more attractive if you:

  • Don’t want to worry about minimum deposit/balance requirements, like for an emergency fund where you may need to withdraw heavily from your account
  • Are willing to have limited access to funds in favor of growing your savings
  • Want to easily move money between your savings and checking

Money market account vs. high-yield savings account

If you’re looking for an intermediate option between money market accounts and savings accounts, high-yield savings accounts offer higher annual percentage yields (APY) than regular savings accounts. Money market accounts remain the most liquid option, with high-yield savings accounts remaining similar to regular savings accounts in terms of accessibility.

As with money market accounts, however, high-yield savings accounts generally require higher balances than traditional savings accounts — although not as high as money market accounts.

Money market vs. savings account FAQ

For more information distinguishing money market accounts and savings accounts, take a look at these frequently asked questions.

Is a money market account a savings account?

A money market account is similar to an interest-bearing account offered through a bank or other financial institution. However, money market accounts differ in interest rates, liquidity and minimum balance requirements, among other factors.

Are money market accounts FDIC-insured?

Money market accounts housed in banks are FDIC-insured. When held at credit unions, they are NCUA-insured.

How is a money market account like a checking account?

Money market checking and savings accounts can blend the functionality of a checking and savings account by offering checks, debit cards and ATM access, among other common features.

Can you lose money with a money market account?

You can’t lose money with a money market account, since it’s a deposit account, but you may lose with a money market fund because it’s an investment tool that’s not FDIC-insured.

What’s the difference between money market accounts and money market funds?

Money market accounts are FDIC- or NCUA-insured deposit accounts, whereas money market funds are investments that function similarly to mutual funds, which aren’t FDIC- or NCUA-insured. This means you’re eligible to have your money returned to you with a money market account if the account issuer loses money or can no longer pay you the money in your account. A money market fund, on the other hand, is a type of investment that doesn’t come with the same FDIC or NCUA protection.

Achieve your savings goals

Your financial goals are unique to your circumstances and financial plans. No matter what these are, there are options out there to help you reach them, particularly if you partner with the right bank that’s equipped to help you along the way.

First Republic Savings Accounts Options

First Republic is uniquely suited to pay attention to your specific needs, understand your personal finances and provide you with an array of financial products, such as Money Market Savings, Money Market Checking, and Passbook Savings accounts that can help you get to where you want to be.


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