Money Market Account vs. Savings Account: What's the Difference?

Short answer: A money market account vs. a savings account isn't a choice between two very different products. A money market account is a type of savings account. It usually pays more interest than a standard savings account, but it often requires a higher minimum balance and limits checks, debit card payments and transfers. Both are insured by the FDIC (up to $250,000 per depositor, per ownership category, at each bank) or by the NCUA at credit unions.

What Is the Difference Between a Money Market Account and a Savings Account?

Both are deposit accounts at a bank or credit union, and both are built for money you aren't spending day to day. The Consumer Financial Protection Bureau (CFPB) says money market accounts usually pay higher interest rates than other savings accounts, in exchange for limits on certain transactions.

	Money market account	Standard savings account
Who offers it	Banks and credit unions	Banks and credit unions
Interest	Usually higher than standard savings	Usually lower than a money market account
Minimum balance	Often required	Often low or none, depending on the bank
Checks and debit card	Often available, but limited	Usually not available; you transfer to checking
ATM and in-person withdrawals	Usually unlimited	Set by your bank or credit union
Deposit insurance	FDIC or NCUA, up to $250,000	FDIC or NCUA, up to $250,000

Account terms vary a lot from one institution to the next. Compare the actual interest rate, the minimum balance and the fee schedule before you open either one.

Is a Money Market Account a Savings Account?

Yes. A money market account (also called a money market deposit account, or MMDA) is a kind of savings account. According to the CFPB, money market accounts usually restrict transactions made by check, debit card or electronic transfer, while withdrawals at an ATM, in person, by mail or by phone are usually unlimited. Some require a minimum deposit to open. Many banks also charge fees if your balance falls below a set minimum, so check the fee schedule.

That combination makes a money market account a middle ground. It's more flexible than a standard savings account because you may be able to write a check from it. It's less flexible than a checking account because those payments are limited.

Are Money Market Accounts and Savings Accounts FDIC Insured?

Yes, when they're held at an FDIC-insured bank. The FDIC insures deposits up to at least $250,000 per depositor, per ownership category, at each insured bank. Its list of covered deposit products includes:

• Checking accounts
• Savings accounts
• Money market deposit accounts
• Certificates of deposit (CDs)

The FDIC doesn't cover stocks, bonds, mutual funds, annuities, life insurance policies, crypto assets or the contents of safe deposit boxes, even if you buy them through a bank.

At a credit union, deposits are protected by the National Credit Union Administration (NCUA), also up to $250,000. If you keep several accounts at one institution, the CFPB suggests confirming your coverage with the bank or credit union.

Money Market Account vs. Money Market Fund: Why the Name Matters

The names sound alike, but these are different products:

	Money market account	Money market fund
What it is	A deposit account	A type of mutual fund
Where you get it	Banks and credit unions	Brokerage firms and fund companies
Government insurance	FDIC or NCUA, up to $250,000	Not FDIC insured
Can you lose money?	Not on insured balances	Yes

The SEC's Investor.gov explains that money market funds are mutual funds that invest in liquid, short-term debt securities. They're generally considered lower risk than other mutual funds, but the money "is not guaranteed by the FDIC like bank accounts are," and you could lose some or all of the money you invest. Some funds may also charge liquidity fees when many investors are pulling money out at once.

The CFPB notes that money market funds held at a brokerage are covered by the Securities Investor Protection Corporation (SIPC) in case the brokerage firm fails, not by FDIC or NCUA insurance. SIPC coverage is not deposit insurance.

If an account is described as "money market," check whether it's a deposit account at an insured bank or credit union, or a fund you're investing in.

Are There Limits on Withdrawals From Savings?

There used to be a federal limit. On April 24, 2020, the Federal Reserve announced that it was deleting the six-per-month limit on convenient transfers from the definition of a savings deposit in Regulation D. Banks were allowed to stop enforcing the limit right away, so customers could make unlimited convenient transfers and withdrawals.

Banks and credit unions can still set their own limits and charge fees for excess transactions. With money market accounts, the CFPB says limits on checks, debit card payments and electronic transfers are common. Read the account agreement so a busy month doesn't come with a surprise fee.

Which Should You Choose?

A money market account may fit if:

• You can keep a balance above the account's minimum.
• You'd like to write the occasional check or use a debit card from savings.
• The account pays a higher rate than the savings accounts you're comparing.

A standard savings account may fit if:

• You're starting with a small balance or can't meet a minimum.
• You want to avoid minimum-balance fees.
• You'll move money to checking before spending it anyway.

Either one can hold an emergency fund. Many people keep it at the same institution as their checking account so they can move money over quickly. Our guide to checking vs. savings accounts explains how to set up the two together.

What Should You Ask Before Opening an Account?

Before you open a money market or savings account, get answers to these questions from the bank or credit union, or find them in the account disclosures:

1. What is the interest rate, and can it change? Rates on both account types are usually variable. Ask whether a higher rate only applies above a certain balance.
2. What is the minimum to open the account and to avoid fees? Find out what happens if your balance drops below it.
3. What are the monthly and per-transaction fees? Ask about fees for excess withdrawals, paper statements and closing the account early.
4. How many checks, debit card payments and transfers are allowed? Ask what counts toward the limit and what it costs to go over.
5. Is the institution federally insured? Look for FDIC membership at a bank or NCUA insurance at a credit union. You can check a bank with the FDIC and a credit union with the NCUA.
6. How fast can you move money to checking? For an emergency fund, quick access matters as much as the rate.

The Bottom Line

A money market account is a savings account with a few extras: usually a higher rate, limited check and debit access, and often a minimum balance. Both are insured up to $250,000 at an FDIC-insured bank or federally insured credit union. Don't confuse either one with a money market fund, which is an investment that can lose value. For money you plan to invest for the long term, see our investing guides, and for more on everyday accounts, visit our banking hub.

Frequently asked questions

Is a money market account a savings account?

Yes. A money market account is a type of savings (deposit) account offered by banks and credit unions. It usually pays a higher interest rate than a standard savings account, and it may come with check-writing or a debit card, a minimum balance requirement and limits on some kinds of transactions.

Is a money market account FDIC insured?

Yes, at an FDIC-insured bank. The FDIC lists money market deposit accounts among the deposit products it insures, up to $250,000 per depositor, per ownership category, at each bank. At a federally insured credit union, the NCUA provides the same $250,000 coverage.

What is the difference between a money market account and a money market fund?

A money market account is a bank or credit union deposit account with deposit insurance. A money market fund is a mutual fund that invests in short-term debt. It's offered by brokerages and fund companies, it isn't guaranteed by the FDIC, and the SEC warns you could lose some or all of your money.

Can I lose money in a money market account?

Not on insured balances. Deposits at an FDIC-insured bank are covered up to $250,000 per depositor, per ownership category, and the NCUA provides $250,000 coverage at federally insured credit unions. You can lose ground to fees, such as monthly fees if your balance falls below a required minimum, so read the account terms.

How many withdrawals can I make from a money market or savings account?

There's no federal six-per-month limit anymore. The Federal Reserve removed it from Regulation D in April 2020. Banks and credit unions can still set their own limits and fees, and money market accounts usually limit checks, debit card payments and electronic transfers.

Sources

1. CFPB: What Is a Money Market Account?
2. FDIC: Understanding Deposit Insurance
3. Investor.gov (SEC): Focus on Money Market Funds
4. Federal Reserve: Federal Reserve Board announces interim final rule to delete the six-per-month limit on convenient transfers from the savings deposit definition in Regulation D (April 24, 2020)

This guide is general information, not personal advice. Your situation may differ, so consider talking with a qualified professional, such as a fiduciary financial adviser, CPA or licensed agent, before making a decision.