Not long ago, there were very distinct differences between savings accounts and money market accounts. And although the distinctions have blurred considerably since the days of passbook savings, there still are some important things to consider.
Both savings accounts and money market accounts are:
- Secure. Your deposits are insured by the Federal Deposit Insurance Corporation (FDIC) to the maximum allowed by law when you choose an account from an FDIC-member bank (like Ally Bank).
- Easy to open. Most banks require only a few simple steps, and you can open an online account from just about anywhere.
- User-friendly. You can access your money at your convenience, without early withdrawal penalties.
- Interest-bearing. The interest rates you'll find at online banks such as Ally Bank are generally more competitive than those offered by traditional brick-and-mortar banks.
But, in fact, savings accounts and money market accounts still are different tools that do different jobs. And the differences between a savings account and a money market account vary from bank to bank.
Some differences between savings and money market accounts may include:
- Restrictions. Be sure to study the account agreement to see what restrictions there are for each account and bank you consider.
- Access. Often, a money market account will give you flexibility by allowing you access to your money with debit cards and checks.
- Interest rates. Sometimes a bank will offer a higher interest rate on one type of account or another.
With an Ally Bank Money Market Account, you get a variable rate that's consistently among the most competitive in the country, and there's no minimum balance to open. Also, Ally Bank doesn't charge monthly maintenance fees or ATM fees nationwide. We even reimburse ATM fees charged by other banks nationwide, and give you free standard checks and a debit card.
The Ally Bank Online Savings Account also pays a competitive interest rate, has no minimum opening balance requirement and because it doesn't have the same level of access (you can't access your funds via ATM or check), it helps reinforce good savings habits.
Benefits of having both
Finally, many experts say money market account-versus-savings account selection doesn't have to be an either/or decision. It may help to have several types of accounts—perhaps a savings, a money market, and a certificate of deposit (CD)—for different goals. Often referred to as the "bucket approach," this strategy helps many people feel more focused with separate accounts designated for separate purposes. For instance, some people might like to have one account for a three-month emergency fund; a second for saving for a house; and a third for a child's education or wedding.
At Ally Bank, we offer great rates to everybody, regardless of your deposit amount. We also don't charge you hidden fees that can chip away at your return. So, no matter what your savings goals are, it's worthwhile to explore your options at Allybank.com or call live, 24/7 customer support at 877-247-ALLY (2559) today.