Money Market vs. Savings Account
In this guide you’ll learn the differences of a money market account and a savings account. You’ll learn the pro’s and con’s of each to better understand why each account is important and why many people have both to spread out there money.
Ready to get started? Let’s first learn about the money market account.
What is a Money Market Account?
A money market account is an interest-bearing account available at a bank of a credit union. In a way, a money market account is a type of savings account but with higher interest. Money market accounts are not the same thing as money market mutual funds. Money market accounts at banks are FDIC insured while money market accounts at credit unions are NCUA insured. There is no such insurance available with mutual funds.
So, money market accounts are more like savings accounts than money market mutual funds. While they offer a higher interest rate, money market accounts also have higher minimum opening balances. One generally has to put up a few thousand dollars to get started.
Money market accounts allow a fixed number of check payments every month. They also have monthly caps on electronic transfers and debit card purchases. So, money market accounts are more restrictive than conventional bank accounts. They are designed to get you to save more rather than spend frequently.
What is a Savings Account?
A savings account allows the account holder to deposit money and save for the future. They are a lot mor