What's Best for You: Money Market Account vs. Savings Account?
Either Way, Earn a Great Rate With No Monthly Maintenance Fees.
When people have some cash on hand, they may consider either a money market savings account or a more traditional savings account. These two types of accounts are quite similar, but understanding some slight differences can help you decide which is right for you.
Both types of accounts pay interest on deposits, and your funds in both are insured by the Federal Deposit Insurance Corporation (FDIC) to the maximum amount allowed by law. In addition, both allow you to make as many deposits as you want. However, for both accounts there is a limit of six withdrawals or transfers per statement cycle—a limit set by federal law.
The primary difference between a money market account and a savings account is how you can access your funds. Today, it's not uncommon to find money market accounts that allow you to write checks, make electronic transfers and use ATM and debit cards. With a savings account, on the other hand, you may need to take money out via electronic transfer or by calling the bank. Also, there may be differences in interest rates on each type of account. Sometimes savings accounts offer a slightly higher rate than money market accounts—a tradeoff for the greater flexibility of access you get with money market accounts.
Which account is best for which goals?
With all of that in mind, then, a savings account might be appropriate when you want to put cash away for larger emergencies or future major purchases—when you don’t need to access your money regularly. A money market account might make sense when you want to write checks on an account, but not too many. "I had a client who put their money in an online money market account to save when they were buying a house," said Erin Baehr, president of Baehr Financial in Stroudsburg, Pennsylvania. She added, "They were able to just write the check with their offer when they wanted to, right from their account—without having to worry about transferring money."
Consider Ally Bank.
With an Ally Bank Money Market Account, your money earns a variable rate that's consistently among the most competitive in the country according to Bankrate.com, and you can open and fund your account with any amount. You get free standard checks and a debit card for convenient access to your money. You can also use any Allpoint no-fee ATM—plus receive up to $10 reimbursement for fees charged at other ATMs nationwide each statement cycle. The Ally Bank Online Savings Account is a simple, safe and easy way to put money to work. The Ally Bank Online Savings Account pays a competitive rate of interest without the monthly maintenance fees and minimum opening deposit requirements you'll find at other banks. Learn more at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559).