What is a money market account?
A money market account is an account where you can deposit money while earning interest, which means your deposited funds grow over time. The money you deposit in money market accounts will usually earn higher rates of interest compared to traditional savings accounts. While money market accounts allow you to access funds through in-branch withdrawals, ATMs or electronic transfers, they are not designed for frequent transactions like checking accounts.
What is a savings account?
A savings account is also an account where you can deposit money and earn interest on the funds you deposit, but the interest rates on savings accounts are typically lower than those on money market accounts. The money you deposit in a savings account is not invested in the financial markets like it is with some money market accounts. As with money market accounts, savings accounts allow only limited access to funds, usually through in-branch withdrawals, ATM withdrawals or electronic transfers.
When should you use a money market account?
A money market account is a great way to save for medium-term goals such as a down payment on a house or a car. These accounts generally offer higher interest rates compared with traditional savings accounts, potentially earning more than twice the interest depending on the amount that you invest.
For medium-term goals — within a few years to a decade away — a money market account is a good option because it could generate more substantial returns over an extended period compared to a savings account. To access those returns, though, a money market account typically requires that you maintain a minimum balance to avoid fees.
When should you use a savings account?
A savings account is an ideal way to save for short-term financial goals that you aim to achieve over the next few years. These accounts are particularly useful for near-term goals that require smaller amounts of money than something like buying a home or paying for college. You can use a savings account to create an emergency fund for unexpected expenses, set aside funds for annual vacations, accumulate money for the holidays or other annual or biannual expenses.
Money market vs. high yield savings
A money market account typically offers a higher interest rate compared to even a high-yield savings account, though a high-yield savings account offers a higher interest rate than a basic savings account. A money market account may also come with check-writing capabilities and debit card access, allowing for more types of transactions than a high-yield savings account. Money market accounts often require a higher minimum balance and charge a fee if it is not maintained.
To learn more and discover the benefits of each type of account at Bellco, visit our personal banking page.
To compare interest rates on different types of Bellco accounts, explore our money market and savings account rates.