How is a money market account different from a regular savings account
Money Market Account vs Saving Accounts
hi guys and welcome on this video we are
going to review the different aspects of
two of the most common investment tools
money market accounts MMA's and savings
account how do they work the pros and
cons in each of them and the difference
between them in terms of interest
flexibility withdrawal and more what is
a savings account when it comes to the
best place to deposit your money you're
looking at a savings account these
accounts give you the ability to not
just deposit money but to keep it safe
and still withdraw money too and you'll
earn interest for the most part you're
going to get these with a bank or credit
union and they'll be FDIC insured of
course you're not going to get much in
the way of interest with the average
amount being under 2% as of 2019 even
still a little is better than nothing a
savings account is considered a time
deposit these are accounts that your
bank can require you to keep for a set
period of time without making a
withdrawal or they can charge you some
type of penalty usually you won't have
these requirements but you may have a
limit on the number of withdrawals that
you can make in an account in a single
month you also might have fees monthly
for these types of accounts and those
fees might be based on how much money
you have in the account plus you're not
going to get cheques the federal
government actually limits the number of
times that you can with your money out
of a savings account in a single month
though you can make as many deposits as
you want in general telephone or
electronic withdrawals are limited to
only six in a single statement cycle
which generally runs about thirty days
though you'll have to talk with your
institution to find out for sure now
let's see what exactly is a money market
account these types of accounts are
somewhere between a checking account and
a savings account in some of the best
ways for example you're usually going to
get a slightly higher interest rate and
a savings account that will depend on
the institution that you go with though
you're also going to have an ATM card
and the ability to write checks
that means you don't have to go into a
bank or credit union and make a request
for your money of course you may not get
these features so you'll have to talk to
the institution and you may have to
request them generally you're going to
get a slightly higher interest rate here
than you will with the savings account
if you're looking at saving some money
for a specific goal that's more than a
couple years down the road but not quite
a decade out you may want to look at a
money market account larger purchases
like a mortgage could be great for this
type of account because you're going to
get a little more interest built up and
if you're just putting the money into a
savings account of course it's not just
about high interest rates there are
going to be other aspects you need to
pay attention to for example your
institution might require a minimum
balance so you can avoid having to pay
fees the balance may also affect the
interest rate that you get for some it
could be a few hundred dollars and
others might require thousands of
dollars now let's compare between money
market and savings accounts in terms of
interest you've always been able to get
better interest with the money market
account over a savings account these
rates are starting to go down however in
most cases you won't have dramatic
changes however minimum balances are
higher with money market accounts in
general you'll need to have a little
more money in a money market account
than the savings this means you have to
have a set amount in the account
according to the bank it could be
anywhere from one thousand to two
thousand five hundred dollars or more
with the savings account the idea is to
be able to store your money more
securely
that means there's generally no or a low
minimum than other options in fact it's
not uncommon for a savings account to
have absolutely no average daily balance
or opening balance one of the biggest
things that you'll find the difference
between a savings account and a money
market account is how you can access
your money with a money market account
you can generally write checks and you
can get a debit or ATM card
with a savings account you generally
have to call the bank making person
requests or use an electronic transfer
to get your money there are a couple of
features which are quite similar monthly
fees for example when it comes to either
of these types of accounts banks are
generally going to make more an interest
on the loans that they're lending your
money out for then they will spend in
paying interest to you that means
they're likely going to have very little
in the way of fees if anything at all if
it doesn't cost them much of anything
they're not going to worry about
charging you with either of these types
of accounts you could have a set amount
that you're allowed to withdraw at any
given time in general you'll be limited
to six withdrawals in a month or a
billing cycle any more than this and you
could be charged a fee just make sure
you know what the fee is going to be
before you go over your withdrawal limit
in terms of protection and safety you
don't want to keep your money stashed
around your house because it's
definitely not safe there what's great
is that when you open an account with a
bank or credit union it's likely going
to be covered by the FDIC that's the
Federal Deposit Insurance Corporation
and they make these institutions
guarantee your money up to two hundred
and fifty thousand dollars because
they're taking on a lot of your personal
information you don't have to do
anything to get this coverage and you
don't have to pay for it either it's
just there waiting for you on the bottom
line if you're debating between a money
market account and a savings account
keep in mind that you don't have to
choose one or the other you can get some
great benefits no matter which way you
go if you want to make sure your money
is more accessible but still safe you
might want to go with a savings account
they don't give you a lot of access but
they're available if you want to have
more access to your account but you
don't want to have it freely available
like with a checking account then a
money market account might be the better
way to go this type of account gives you
the ability to write checks occasionally
without having to worry about
transferring money but it's not quite as
free and as easy as a check
just remember you can have more than one
and you can have both of these types of
accounts that's it for now on our
website you can find more posts as well
as calculators and other financial tools
which of them is better for you we would
love to know your thoughts so feel free
to share them with us in the comments
below I hope you enjoyed it and don't
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