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Money market vs. savings account: what's the difference?

Money market accounts and savings accounts are both interest-bearing accounts, meaning that interest is paid on the account balance.

Most money market accounts come with a debit card and checks, to make financial transactions easier and more convenient. While money market accounts are similar to savings accounts, the earned interest rate tends to be higher and most financial institutions limit the number of withdrawals that can be made each month.
A savings account, also called a “deposit account,” is available from credit unions, banks, and online financial institutions. Savings accounts typically pay interest on the monthly balance with tiered levels of interest, so the more you save the more earned interest you’ll receive. There are no restrictions on the number of deposits or withdrawals an account holder can make, however there may be a minimum balance required in order to receive each of the tiered interest rates.
At Credit Union of Southern California (CU SoCal), we make it easy to open a money market account!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

Get Started on Your Money Market Account Today!

What is a money market account?

A money market account is a type of savings account offered by credit unions, banks, investment companies, and other financial institutions. Money market accounts are sometimes called money market deposit accounts or money market savings accounts.
Money market interest rates tend to be higher than most savings account interest rates, which makes money markets a good choice if you have a large sum of money that you need to keep fairly accessible.
Learn more about money market accounts.

What is a savings account?

Like the names suggests, a savings account is typically for depositing incoming funds to be saved. Savings accounts earn interest and the higher your account balance, the more interest you’ll earn.
Opening a savings account is easy and there is no limit to how many savings accounts a person can have. You’ll find savings accounts offered by credit unions, traditional banks, and through online banks. Most savings accounts require that a minimum balance be maintained. If your balance drops below the requirement a penalty will likely be charged.
There are many types of savings accounts, including money market accounts and certificates of deposit (CDs).

Pros and cons of money market accounts

Like with all types of financial accounts there are pros and cons. Which types of accounts you choose should be based on your unique financial situation and goals.


Higher earning. Money market accounts can have a higher interest rate than a savings account, making them a good option if you need to set cash aside but still keep it liquid.
Easier to access funds. Money market accounts ley you withdraw your money at any time and there aren't any restrictions on the length of time an account can be open.
Secure. All money market accounts are insured. If the account is held at a bank it is insured by the Federal Deposit Insurance Corporation (FDIC). A money market held at a credit union is insured by the National Credit Union Administration (NCUA).


Limited Withdrawals. Although you can withdraw money from a money market, most financial institutions limit the amount of withdrawals per month.
Account minimums. Money markets have a minimum account balance that must be maintained.
Fees. Failing to meet the monthly minimum account balance and exceeding the number of allowable withdrawal will result in penalty fees.
Variable interest. Money market rates are not fixed.

Pros and cons of savings accounts

It’s always good to have money saved for emergencies. The type of savings account you choose will depend on your unique financial needs. Here are some pros and cons to consider:


Interest bearing. Savings accounts almost always earn interest, so your money will grow while you’re not using it.

Easy access to funds. Savings accounts are fully liquid, meaning you can make a withdrawal at any time.

FDIC/NCUA insured. All savings accounts are insured. If the account is held at a bank it is insured by the Federal Deposit Insurance Corporation (FDIC). A savings account at a credit union is insured by the National Credit Union Administration (NCUA).


Lower earning compared to other saving options. Money Market accounts and certificates of deposit (CDs) are two types of savings accounts that earn higher interest than a traditional savings account. This is because they come with more withdrawal restrictions and the higher interest rate is an incentive and reward for accepting the stricter terms.
Restrictions on bill payments and checking writing. Savings accounts do not come with checks. If you need an account from which to pay bills, a checking account can provide you with check-writing and bill-pay resources, and even budgeting tools and resources.

How to decide between a money market vs. a savings account

Choosing the best type of account for your needs is easy. Start by thinking about your savings goals and whether you need frequent access to your money or if you’re ok with having somewhat limited access to funds.
When to choose a money market account. Money markets are ideal if you need to keep your money liquid, yet don’t mind a limited number of withdrawals each month. The reward will be a higher interest rate.
When to choose a regular savings account. If you’ll need to make frequent withdrawals and don’t mind receiving a lower interest rate for the ability to do so, then a regular savings account could work for you.
Both of these accounts are insured and great financial resources, so there is no right or wrong choice when it comes to saving money this way. Many people have both types of accounts.

Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.

Get Started on Your Money Market Account Today!

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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