When it comes to savings accounts, there are so many options that it can sometimes feel overwhelming. Two popular choices are money market accounts and savings accounts. They’re both secure places to park your cash and earn interest, but they each come with their own set of features, benefits, and limitations. Which one is right for you? Here’s a look at each type of account and what it can offer you.

Understanding savings accounts

Savings accounts are one of the most straightforward ways to save money, with easy access to your cash. Pretty much all banks and credit unions offer them, and they’re designed to hold your money safely while it earns a modest interest rate.

Key features of savings accounts

1. Interest rates: Typically, savings accounts offer lower interest rates than other savings options. But those rates vary depending on the institution and the current economic climate.

2. Accessibility: You can easily access your money through withdrawals at ATMs, online transfers, or in-person at a branch. But keep in mind that federal regulations limit certain types of withdrawals and transfers to 6 per month.

3. Safety: Savings accounts are FDIC insured (or NCUA insured for credit unions) up to $250,000, so you can rest assured that your money is safe.

4. Minimum balance requirements: Lots of savings accounts have low or no minimum balance requirements, so you don’t necessarily need a lot of money to set one up.

Understanding money market accounts

Money market accounts (MMAs—just like mixed martial arts, only less exciting) combine features of both savings and checking accounts, with more flexibility and usually higher interest rates. You can get a money market account through companies like Charles Schwab, Ally Bank, or Discover Bank

Key features of money market accounts

1. Interest rates: MMAs generally offer higher interest rates compared to savings accounts. This makes them an attractive option if you’re looking to maximize earnings on your deposits.

2. Accessibility: MMAs often come with check-writing capabilities and debit cards for easier access to your funds. But, just like savings accounts, they are subject to the same 6-per-month withdrawal limit for certain transactions.

3. Safety: Money market accounts are also FDIC or NCUA insured up to $250,000.

4. Minimum balance requirements: MMAs typically require a higher minimum balance. If you fall below that minimum you may have to pay extra fees, or your account might no longer be eligible to earn the best interest rates.

Comparing the two: which one is right for you?

Interest rates and earnings

If your primary goal is to earn the most possible interest on your savings, a money market account might be the better choice. MMAs generally offer higher rates, which can help your savings grow more quickly. However, the difference in rates between the two types of accounts can fluctuate, so it’s smart to compare rates from various institutions.

Accessibility and convenience

In terms of accessing your funds, money market accounts have more flexibility, with check-writing and debit card options. That can be particularly useful if you anticipate needing to make occasional withdrawals or payments directly from your savings. But if you don’t need frequent access to your money and prefer the simplicity of online transfers, a savings account could be all you need.

Fees and minimum balances

Consider the minimum balance requirements and potential fees. Savings accounts often have lower minimum balance requirements, making them more accessible if you’re just starting to save or can’t maintain a higher balance. Money market accounts have higher interest rates, but they also usually come with higher minimum balance requirements. Make sure you can consistently keep your balance above the minimum to avoid fees that could cancel out the benefits of higher interest rates.

Safety and risk

Both savings accounts and money market accounts offer the same level of safety with FDIC or NCUA insurance up to $250,000.  Your money will be protected regardless of the type of account you choose.

Making your decision

When you’re deciding between a money market account and a savings account, think about your financial goals, how you plan to use the account, and whether you can meet the minimum balance requirements. Here are some final tips:

1. Review your goals: If you’re looking for a safe place to park your emergency fund or short-term savings with easy access, a savings account might be perfect.

2. Maximize earnings: If you have a larger amount to deposit and want to earn higher interest while still having some access to your funds, a money market account could be the best option.

3. Compare offers: Shop around and compare the terms, interest rates, and fees of both types of accounts from different financial institutions.