Money market account vs. savings account: What's the difference?

As you look to grow your savings, you’ll come across a few options. Money market accounts and savings accounts are two options available at most banks and credit unions, offering safe ways to earn interest while being insured by the FDIC or NCUA. Each one serves slightly different purposes, so which one is better depends on your needs and goals. We explore the differences to help you decide.

What is a savings account?

A savings account is a deposit account that earns interest. It’s separate from a checking account, so it usually doesn’t come with the ability to write checks or use a debit card. Savers commonly use it to set aside money for short-term goals, build their emergency fund, or maintain smaller balances for a variety of needs. 

Pros: Savings accounts are generally convenient and straightforward to use, especially if they’re at the same bank or credit union as your checking account. They often require a low or no minimum balance and are available at most financial institutions.

Cons: In terms of savings options, they typically offer low interest rates and have limited features. 

What is a money market account?

A money market account can be viewed as a hybrid between checking and savings, offering features from both types of accounts. These accounts typically offer higher interest rates than a savings account with tiers for maintaining higher balances, and they often also come with a debit card and the ability to write checks. 

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Pros: Money market accounts may offer higher interest rates than traditional savings accounts and come with more features to use and access your money.

Cons: They often have a higher minimum balance and may require you to pay a monthly fee to maintain the account, which could eat into the higher interest rates, depending on how much you plan to save. 

Key differences between savings and money market accounts

Interest rates

• Savings accounts: Typically have low interest rates.

• Money market accounts: Typically offer higher interest rates than savings accounts and may offer tiered rates, which allow you to earn more if you save more. 

Access to funds

• Savings accounts: Usually only allow transfers to your checking account or withdrawals from an ATM.

• Money market accounts: May also offer checks and debit card access.

Minimum balances and fees

• Savings accounts: Often come with low or no minimum balance requirements and no or minimal fees.

• Money market accounts: Require higher balances and may charge monthly fees for maintaining the account.

How to decide which account is best

Deciding which account is best depends on your personal and family finance goals, but here are a few things to consider when making the decision.

When to choose a savings account

Savings accounts are typically better for holding smaller balances, either for short-term savings goals, a small emergency fund, or for those just getting started with their savings. If you prefer low or no fees and don’t need check-writing or debit card access, this could be a good option for you. 

When to choose a money market account

If you plan to set aside larger balances and have no challenges meeting minimum balance requirements, money market accounts could be a better option (even better if you plan to meet higher interest tiers). If you need flexibility and access, consider check-writing and debit card options for added convenience. 

Using both accounts strategically

In some situations, it may be beneficial to use both types of accounts. You could spli funds between the two if you prefer a smaller savings account for short-term goals and a money market account for larger balances with flexible access when big expenditures pop up. 

Comparison table: Money market account vs. savings

Here’s a quick snapshot comparison between the two accounts:

Greenlight’s saving features

Greenlight gives families another way to save alongside traditional bank* accounts. While savings and money market accounts are useful, Greenlight’s customizable savings “buckets” let kids and parents set money aside for specific goals, both short-term or long-term. You can also earn up to 6% interest** on your savings and track your savings goals while your money grows. Greenlight is a great standalone or complementary savings option. 

Safe options for building your savings

Both accounts are safe, insured, and help hold and build your savings. Decide which features are most beneficial to you and review the options at your current bank or credit union to find the best fit for your goals.

Teach smart saving habits. From rounding up purchases to setting savings goals — Greenlight's award-winning money app helps families save. Try Greenlight, one month, risk-free.†

*Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC.

**Greenlight Core families can earn 2% per annum, Greenlight Max families can earn 3% per annum, Greenlight Infinity families can earn 5% per annum, and Greenlight Family Shield families can earn 6% per annum on an average daily savings balance of up to $5,000 per family. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.