When you are dealing with your money, any type of savings account is helpful. All types of savings accounts allow you to have the ability to watch your money grow and keep it safe. However, before opening a bank account by definition, you should know your options. There are slight, but important differences between money market accounts (MMAs) and savings accounts. In this post, we will cover whether a money market account or a savings account is best for you.
Amount Of Money On Hand
To start, a determining factor about what kind of account you should open depends on how much money you have to start off with. Regular savings accounts do not require as much of a minimum balance as MMAs. Regular savings accounts normally require a small balance of about one hundred dollars. MMAs require a higher a minimum balance in the account. This often ranges from a few thousand to several thousand dollars. While each bank is different, the amount of money you start with is likely a deciding factor for those who are just starting out in opening a new account.
Number Of Transfers And Withdrawals
If you plan on making any transfers or withdrawals from your account, you should consider the differences between MMAs and regular savings accounts. Both MMAs and regular savings accounts limit the amount of withdrawals and transfers you can make. Both are limited to six transfers a month. This can limit your financial options. However, MMAs usually have stricter policies than savings accounts. You may have to wait a few days between withdrawals in MMAs. As stated previously, the policies vary by bank, so be sure to look into the particular rules of the account you are interested in. By figuring out roughly how often you will move your money around, you may want to consider this as a factor when choosing which account works for you.
Access To Your Money
The way you can access your funds varies slightly between MMAs and savings accounts. MMAs are typically easier to access because they allow you to write checks and use an ATM card to access your money. Regular savings accounts often only allow you to access money through online banking, or in person at one of your bank’s physical branches. Consider the ease of access between MMAs and savings accounts before you make a decision about opening a new account.
Interest You Can Earn
Many people who are interested in opening any kind of savings account are hooked by the amount of interest the account will offer. MMAs often offer higher rates of interest than a savings account. Regular savings accounts do give interest, but at a lower rate. This ties into the fact that usually MMAs require a higher minimum balance, so not everyone who is enticed by the higher interest rates MMAs offer, can receive this benefit. Either way, your account will gain interest whether you choose an MMA or savings account.
Possible Account Penalties
An important aspect to note about either kind of account is the possible penalties that may occur in either account type. If you do not meet the minimum balance of the account, the account may incur a monthly fee for any time you are under. Similarly, if you make above the allotted amount of transactions from the account in a month, your bank may charge you a fee for each transaction you are over. These may vary between MMAs and regular savings accounts, but generally these parameters are set by the individual banks. You can usually view them when doing your bank reconciliation statement. Make sure you avoid the possible penalties of either account by being clear on the limitations of the specific account you choose.
When it comes to saving your money, you are on the right track in looking at opening a savings account. The options between money market accounts and regular savings accounts are similar but vary slightly. This is why it is important to make a careful decision when it comes to choosing where you put your money. Look closely into the specific rules each bank has for the accounts they offer. You will be assured that your money is safe and gaining interest in an account that works best for you.