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A money market account is a deposit account offered by banks and credit unions that combines the best features of both savings and checking accounts. A savings account is a regular account that typically pays a modest interest rate. Every individual adult has at least one savings account, but it is also true that a significant number of investors' savings are held in money market accounts. Although both sound similar, there are some differences between money market accounts and savings accounts.

Interest rates

The similarity of both accounts is that the interest is compounded on a daily basis, and at the end of the month, the interest is credited to the account. But in terms of the rate offered, money market accounts offer slightly better rates. This is because they have a little more choice in the investments they are allowed to make and can therefore attempt to generate a better return on investment. Also, the interest rate is generally tiered, with higher interest being given for higher balances kept in the account.

Minimum balance

The funds kept in a money market account are invested in a slightly different way as compared to the funds kept in a savings account, which is why they have higher monthly minimum balance requirements. If you fall below that balance, it can cost you fees or interest rates.

Access to funds

With a money market account, you'll have a debit card or a checkbook you can use to draw on your funds. Banks often try to limit your access to your funds so that they can invest in short-term, low-risk securities that are highly liquid. They do this by putting a cap on the number of withdrawals you can make from your money market fund in a month. Comparatively, you typically won't get a debit card or check-writing privileges with a savings account. If you need money, you can make an online transfer or visit your nearest branch.


Many people erroneously think of the money market fund as a checking account, but actually it is closer in nature to a low-transaction savings account since it pays interest, unlike a checking account. Therefore, most cash and non-cash transactions in a money market account are as restricted as in a savings account. This limit could either be in terms of volume of transactions per month or number of transactions per month, and if these limits are exceeded, then charges are deducted from the account in the subsequent month.