Money Market vs Savings Account: What are the differences?

Published March 26, 2024

Money market and savings accounts are deposit accounts offered by banks and credit unions that help you save and grow your money. But what are the differences and why might you choose one over the other? We’ve laid it out for you to help you decide.


Savings account definition

A savings account is a type of deposit account meant for storing money. It does not come with a debit card or checks, but may come with an ATM card for withdrawals. It earns a flat interest or dividend rate that is typically low.


Money market account definition

A money market account is a type of deposit account offered by banks and credit unions that earns higher interest or dividends than a savings account. The rate it earns is based on the amount of money you have stored in the account. These types of rates are called “tiered.”


Money market vs savings account differences

Interest or dividend rates

The biggest notable difference in your basic savings and money market accounts is the rate they earn. A money market account is like an upgraded savings. You earn tiered interest or, in the credit union’s case, dividends based on how much you have deposited. Whereas a basic savings like our Primary Share account earns the same rate no matter how much is in the account. Some financial institutions, like Webster First, give you the option to earn even higher rates in an upgraded version of the money market account. For us, that would be our Money Market Plus. However, these upgraded accounts have more requirements that need to be met in order to earn those rates.

Account requirements and withdrawal restrictions

Basic savings accounts typically have no requirements. Some have minimum balance requirements, others don’t. Besides that, you can deposit and withdraw as you please with no restrictions, and likely aren’t required to have anything like direct deposit or eStatements set up. Money market accounts, however, may require higher minimum balances to open, or have monthly withdrawal limits. At Webster First, our money market accounts have unlimited withdrawals in branch but a limit of six withdrawals per month at an ATM.

Our money market has a minimum opening balance requirement of $5. But if you want the upgraded experience of our money market plus, you will need to have:

  • A minimum balance of at least $1,000
  • A Webster First checking account
  • At least one direct deposit into that checking account per month
  • 10 debit card transactions per month to earn the highest rates available

You will find other institutions have similar requirements.


What to consider when choosing

  • Monthly maintenance fees: It is typical for banks to charge maintenance on both basic savings and money market accounts with higher charges on money market accounts because of the added benefits. At Webster First, you’ll find $0 in maintenance fees on all of our accounts, even our money market.
  • Deposit insurance: Deposits in federally insured credit unions are insured by NCUA up to $250,000 per individual depositor. As a member of MSIC, a separate entity from NCUA, all shares and deposits in excess of NCUA limits are fully insured by MSIC in your Webster First accounts – something not all financial institutions can offer. Learn more about deposit insurance here.
  • How much you can deposit: If you have a large amount of cash to store in your savings account, then you may opt to complete all the requirements for the money market plus to earn the highest yield. However, if you have between $1,000 and $25,000 you would earn the same rate on our regular money market, so you may consider the account with less requirements. You can always upgrade your money market to a money market plus if the money in your account grows.

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