What Is The Difference Between A Savings Account And An MMA (Money Market Account)?

| Jan 25, 2010 | 38 comments

Only 8 days 3 hours 35 minutes left until Hanks Holiday Handout drawing!

Sorry I’m behind on a few of the readers requests, it has been a busy month for sure! But this was a fairly straight forward answer to Ben.

Hi Hank – You have posted a few times about the high yield savings and Money Market Accounts – sorry to sound like a noobie, but what is the difference between a Money Market Account (MMA) and a savings account? – Ben from Iowa

Hey Ben – Money Market Accounts (MMA) and a savings accounts are both just products that a bank offers, like a store offers carrots and peas. The accounts are deposit accounts held with a financial institution. FDIC or NCUSIF insured deposits are backed by the full faith and credit of the United States government.

The difference between the two types of accounts is that withdrawals from a Money Market Account may be limited to “x” per month. Check with your MMA issuer for this exact number, but it usually falls at 6 per month. Whereas, on the other hand, savings accounts typically do not limit the number of withdrawals. That’s the only difference – The next thing would be to check the APY of the account you’d be opening.

Filed Under: advice • Emergency fund • financial education • Frugal • Readers Requests

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  • http://billeater.com/ great saving tips

    Great information. Don’t MMA’s usually also have a much higher minimum balance ?

    great saving tips’s last blog post..Don’t Call 411 for directory information..make your bill lower !

  • http://www.petermonroe.net/about/ Peter Monroe

    What does the bank do with the money you give them? I assume something is different on their end. And is the interest rate changing or locked in?

  • http://modern-rants.blogspot.com Rob

    Are MMA safe these days with all the bank failures? I know that they back the money with the FDIC. What happens if the bank does go down? What would you have to do?

    Rob’s last blog post..Feds likely rate cut-Spend on Credit!

  • http://modern-rants.blogspot.com Robert

    Most all MMA’s have minimums. Whats the least you have seen?

    Robert’s last blog post..Feds likely rate cut-Spend on Credit!

  • http://myinvestingblog.com hank

    @great savings tips – some do – check out Bankrate.com to see which have what rates, but really, I’ve seen good rates with a variety of minimums.

    @Peter Monroe – They take your money and give it to someone else at a higher rate; that’s one of the ways that make money too. :) (Insert mortgage rate here). :)

    @Rob – Unless you’ve got 100k in a bank, you don’t have much to worry about, I recall reading something that the government bumped it up to 250k, but it is still safe, may take a bit more time to get it back, but the government doesn’t want to get the reputation of sticking it to folks.

    @Robert – I’ve seen good rates with $1 minimum balances.

  • http://www.income-king.com mike

    Great little post! It’s good you’re letting us readers know the difference between these two accounts. I myself have always heard of the two but didn’t know exact differences like the amount of withdrawals that you are allowed per month.

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  • http://diabeticgiftbasket.info/ Steward

    I always prefer money market accounts but you have to check what are the details.

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    I’ve been following your blog for a while now. sweet article. Thanks

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  • Phil Lanuto

    Here’s a bit more information on the difference between the two types of accounts:

    http://www.bestcashcow.com/savings_-_checking_-_cds/article/shane_adam_yellin/savings-accounts-vs-money-market-deposit-accounts

  • http://www.nashkellermedia.com Minh Schnarrs

    There is obviously a lot to know about this. I think you made some good points in Features also. Keep working ,great job!

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    I think you need both accounts to diversify.

  • http://chattywomen.com/pennythoughts/ Hedy

    Good to know-I’ve wondered about the difference before.
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    Money markets are useful as they have better returns.

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  • http://www.birdseyeseo.com Garreth Dickson

    I just currently migrated to Wachovia and started the MMA account however they did not explain much. They said there was a limit on transactions but not if I wanted to withdraw direct from it. I can also transfer around to other accounts that I have. However if I write a check from it I am limited to 3!! Any ways there was some good information on here and helped me clarify up the few questions I had.

    Thanks!

  • http://forexkagi.net Lowe

    I think it all depends on the style of how you handle your savings. The way I do it will be different from my dad’s generation. But is good to diversify too.

  • http://www.tradeplacer.com/blog TradePlacer.com

    Money markets can potentially break the buck and lose value. Savings accounts are guaranteed to hold their value by FDIC. Neither pay returns above inflation though.
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  • TradingTips

    Hey, very nice site. I came across this on Google, and I am stoked that I did. I will definitely be coming back here more often. Wish I could add to the conversation and bring a bit more to the table, but am just taking in as much info as I can at the moment.
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    Thank You.
    Trading Tips

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