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Money Market Accounts vs Savings Accounts

How is a money market account different?

Everyone needs a savings account. It helps your money grow, and it’s there in case of emergency.

A money market account is one type of savings account to consider for your money. To determine if it’s the right fit for you, it’s worth considering some of its unique features.

  • How a money market account differs from traditional savings
  • Benefits of a money market account
  • How a money market account works
  • How it’s different than a money market fund
  • How to open a money market account

How a money market account is different than traditional savings

Like traditional savings accounts, money market accounts earn interest — but usually at a higher rate.

Money markets also give you different rates for different balance amounts. These rates are separated into tiers. As you put more money into a money market account, you can reach higher tiers that earn higher dividends.

While you still have easy access to your funds, in some cases money market accounts will have higher minimum balances or fewer allowable transactions than traditional savings accounts. It’s smart to do your homework and compare options to find the best account for your goals.  For example, Numerica money market accounts do not have minimum balance or transaction restrictions.

Benefits of a money market account

The most notable benefits of a money market account include:

  • Higher APY* than a traditional savings account
  • Flexibility to withdraw or transfer funds
  • A good option to diversify your portfolio risk
  • Unlike stocks, not at risk to losses from uncertain market fluctuations

How does a money market account work?

A money market account is like a hybrid savings and checking account.

For example, you can use Numerica money markets to:

  • Spend directly from the account
  • Transfer funds to other accounts
  • Make automated loan payments
  • Use the account for overdraft protection.

Pro tip: As you take advantage of these flexible options, be careful that your spending doesn’t bump down your tiered balance.

Money market account vs. money market fund

It’s easy to confuse a money market account with a money market fund. A money market fund is an investment that could lose value with market fluctuations. It doesn’t offer the same flexibility where you can spend or transfer funds without penalties. As a type of mutual fund, it isn’t a federally insured savings account.

A money market account is a great option for adding a no-risk, easy-to-access savings account to your overall investment portfolio.

How do I set up a money market account?

Numerica’s Bonus Money Market and Peak Money Market accounts can help you level up your savings while retaining easy access to your money. To learn more about finding the best savings options for you, discuss current rates, or open an account:  

Here’s the legal stuff: APY = Annual Percentage Yield.

This article is provided for educational purposes only and is not intended to replace the advice of a financial advisor, loan representative, or similar professional. The examples provided within the article are for example only and may not apply to your situation. Since every situation is different, we recommend speaking to a professional you trust regarding your specific needs.

Today's Rates

November 29, 2022