Money Market Account vs. Savings Account: Which one will work best for you?

In banking, not all accounts are equal. For example, some accounts help you spend your money (a checking account) others help you save it. Savings and Money Market accounts are two examples of accounts that can help you save your money, whether for a rainy day or for a future investment. Admit it, we could all use a little help saving a buck or two!

Savings accounts -

Make money (called interest) while you save

Safe way to save money FDIC insured

Accessible

Secure

If you're the type of person who has a hard time holding on to money (mine seems to be gone as soon as payday rolls around…or sooner), then a savings account is for you. A savings account provides you with a simple, no fuss way to make money as you save it (So whose brainchild is that…you're going to pay me to save my money!?)! You get the benefits without the work! It doesn't take a genius to figure that one out. Once you open the account, your money starts to accrue interest. Interest rates vary depending on the bank you use, the current rates available, and the amount of money you deposit. All you have to do is sit back and wait for the bank to mail you a statement each month (by 'snail mail' or email) that tells you how much interest they paid you. You'll start feeling like a kid in a candy shop!

Another great thing about Savings accounts is that you can put your money into the account and, unlike a checking account, you can't use checks or a debit card to access it, so your money stays put! In effect, you put your money in a sealed envelope. Don't worry, that doesn't mean that you'll never see it again. It is available for withdrawal when you need to access it, but the number of withdrawals per month are usually limited to six.

If you are the cautious type who doesn't like to stick your head out to the bulls, a savings account is also safe and dependable. Savings accounts are backed by the Federal Deposit Insurance Corporation or the FDIC. Which means that they guarantee your money, even if something were to happen with the bank. As Simba might say “It means no worries, for the rest of your days!”

Money Market Accounts -

Higher interest Higher balance requirements

Limited withdrawals allowed per month (can use checks sometimes)

Compounded interest rates Increased rates with increased initial deposits are common

FDIC insured

Now take all the benefits of a savings account and pile on the whipped cream and a cherry…you have yourself a Money Market account (MMA)! It's a sweeter deal, if you have just a little more self control. Some of the benefits of an MMA include higher interest rates that are compounded more often than a Savings account (See the dollar signs yet?). MMA's are usually compounded daily and paid out monthly. This means that the interest you earn can be put back into your account to create a larger amount of money to earn interest on the following month. Similar to savings accounts ,MMA's are offered at FDIC insured institutions so you don't have to worry about your cache. MMA's are a great way to go if you do need to have some ease of access to your money…(that's where the self control comes in handy). Most provide access via check by a limited number each month. Withdrawals are also permitted to a certain number a month. The number of deposits you can make, on the other hand, is unlimited. So, MMA's have higher interest rates, are just as dependable, and easy to access? Are there any questions?

In short, choosing a Savings or Money Market account is a great way to hang your hat. You deposit your money then sit back and watch it grow. Most institutions provide the ease of online banking so you can even check your funds while you are sitting at home gulping down fresh squeezed orange juice. No more lines or signs reading “next window, please” to keep you from your account information!

????? A couple of tips for managing a Savings account or MMA the right way

To avoid access fees, make sure you stay within the allowable number of withdrawals per month for your account

Maintain the balance limit

 Deposit a larger initial amount of money for a possible larger interest rate