Money Market vs. Savings Accounts: Which Is Best for You?

What is a savings account?

• Building an emergency fund
• Saving for short-term goals
• Keeping funds separate from daily spending

Savings accounts typically offer a steady interest rate, easy online access and minimal fees—making them a great entry point for new savers or those who want to keep their funds easily accessible. You can learn more about how savings accounts work and the different types of saving accounts from the U.S. Securities and Exchange Commission’s resource.

What is a money market account?

A money market account is a type of savings account that combines features of both savings and checking accounts. These accounts are typically associated with higher interest rates (scaling with larger balances) and usually receive check writing or debit card privileges. That being said, money market accounts often have a few key differences from standard checking and savings accounts:

• Higher minimum balance requirements
• Limited withdrawals (usually up to six per month)
• Tiered interest rates that reward higher balances

Money market accounts can be an excellent next step once you’ve built a solid foundation for your savings account and want your savings to work harder. For more details, visit the Consumer Financial Protection Bureau (CFPB) to learn more about how money market accounts work.

Primary differences between money market and savings accounts

When comparing money market and savings accounts, the main differences come down to interest rates, access and balance requirements. A savings account generally offers a fixed or variable interest rate that’s typically lower than a money market account. Savings accounts provide easy access to your funds through online or in-branch withdrawals and typically have little to no minimum balance requirement. A money market account, on the other hand, often earns a higher interest rate that may increase with your balance. It typically comes with a higher minimum balance requirement and allows limited access through checks or debit transactions. Both account types are FDIC insured and offer the same level of protection on deposits. In summary, savings accounts are best for building emergency funds and short-term goals, while money market accounts are designed for earning higher yields on larger balances.

Interest and earning potential

While savings accounts provide consistent returns, money market accounts often feature tiered rates that grow with your balance. This makes them more rewarding for savers who maintain larger amounts. Savings accounts are designed for simplicity, allowing you to move money online or in-branch as needed. On the other hand, money market accounts usually allow limited check writing or debit use, adding flexibility for occasional access. In practice, this means that money market accounts have more restrictions when compared to savings accounts but higher potential earnings. Money market accounts also frequently require a minimum daily balance to avoid monthly fees or maintain higher interest rates. If you’re unable to keep your balance above that threshold, a traditional savings account may make more sense. 

When to choose a savings account

When deciding between a money market and savings account, a few signs that a savings account may be the better option include:

• You’re just starting your financial journey and have limited funds.
• Your goal is to build an emergency fund or other savings fund that needs accessibility.
• You prefer a low or no-minimum balance requirement.

Savings accounts are flexible, reliable and ideal for short-term goals, like starting your savings journey, planning home repairs or building everyday financial stability.

Tip: Pair your savings account with automatic transfers from checking. Even small, consistent contributions can grow faster than you think.

When to choose a money market account

A money market account might be a better option than a savings account when:

• You’ve built up a larger balance.
• You want to earn higher interest without locking funds in a Certificate of Deposit (CD).
• You want to maintain limited check or debit access.

• You plan to hold funds for mid-term goals (like a down payment or tuition).

Money market accounts reward you increasingly for keeping more in savings. With competitive rates and the same FDIC protection, your balance can grow faster while remaining accessible.

Can you have a savings account and money market account?

Yes. Many savers use a savings account for short-term needs and a money market account for higher-balance reserves. Starting with a savings account and opening a money market account when you have enough savings can be a smart entry strategy for those just starting to save. A combination of both account types can provide flexibility and growth, giving you more control over how your money works for you.

Balanced strategy:

• Use your savings account for recurring goals or unexpected expenses.
• Use your money market account for larger balances you don’t plan to touch often but would still like limited access to.

Making the right choice

When deciding between a savings account and a money market account, start by thinking about how you plan to use your funds. If you need frequent access to your money or prefer an account with little to no minimum balance, a savings account may be the better fit. If you maintain a larger balance and want to earn a higher interest rate without giving up accessibility, a money market account could be a smarter option. Before opening any account, it can help to review the CFPB’s checklist for opening a bank account to understand what information and documents you’ll need.

Either way, Associated Bank makes it easy to compare current rates and open the account that aligns with your goals—so your money works where it matters most. Visit Associated Bank’s Savings and Investing page for more information on account types and rates, or schedule an appointment to open an account.