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Money Market Accounts vs. Savings Accounts: The Best Option for You!
Deciding between a money market account and a savings account? You might be wondering: how do these accounts work, what benefits do they offer, and which one is the best fit for your financial goals? Understanding the differences and advantages of each option is an important step in deciding where to save and grow your hard-earned money.
At Space Coast Credit Union (SCCU), we believe in empowering you with the knowledge to make informed financial decisions. In this guide, we’ll break down the key features of money market and savings accounts to help you confidently choose the best account for your needs!
Savings Accounts: What They Are & Benefits
In general, you can open a savings account with a small amount of money and make deposits as often as you’d like. Financial institutions typically offer a variety of savings account types, typically for different purposes. Be sure to check with the financial institution about any limits on withdrawals or any fees, such as monthly maintenance fees or low balance fees.
Benefits of savings accounts:
- Potential to earn interest: With most savings accounts, you can also earn interest on your funds in the account.
- Flexibility: You can use a savings account for a wide variety of purposes: as a rainy day fund for emergencies, as a general account, or to reach a certain goal like saving for a down payment on a house, a wedding, or a vacation.
- Convenience: Most savings accounts come with debit cards for withdrawals if you’re in need of your funds.
- Security: Most savings accounts are insured, usually by the FDIC or the NCUA, but always double-check with the financial institution.
Keep in mind that with most savings accounts, if you’d like to use those funds for purchases, you’d need to transfer the money to a linked checking account first.
Money Market Accounts: What They Are
A money market account is a type of savings product that many financial institutions like SCCU offer. They’re also sometimes called a money market deposit account (MMDA) or a money market savings account (MMSA). However, money market funds and money market mutual funds also have similar names, but these are not the same as a money market account.
A money market account usually requires a larger opening deposit than other types of savings accounts. But, they also offer higher interest rates. The higher the balance in the account, the more interest you can earn. The limits on how many withdrawals you can make each month depend on the financial institution.
Money Market Accounts: Benefits
Let’s take a look at the top benefits of money market accounts:
- Earning potential: Compared to most traditional savings accounts, money market accounts pay tiered interest rates, so the higher your account balance, the higher the interest rate you can earn.
- Security: Although the name of this financial product contains the word “market,” it’s not like when someone invests in the stock market where the investor could potentially lose money. Instead, with an insured money market account, your money is safe with a predictable yield based on the current variable interest rate, and you can’t lose money.
- Flexibility: Money market accounts are flexible because you can deposit money at any time. Contrast that to a certificate of deposit (CD) where you can only deposit funds when you open the account or if you’re rolling it over for another term upon maturity.
- Convenience: Some money market accounts may offer a debit card for withdrawals at ATMs and bank branches as well as check-writing privileges for transactions.
At SCCU, you also enjoy great flexibility with our Money Mark account when you want to withdraw funds to make purchases, pay expenses, and so forth because there aren’t limits on the number of withdrawals and transfers you can make.
| Balance | Dividend Rate | APY^ |
|---|---|---|
| $0 - $2,499.99 | 0.00% | 0.00% |
| $2,500 - $9,999.99 | 1.00% | 1.00% |
| $10,000 - $24,999.99 | 1.05% | 1.06% |
| $25,000 - $49,999.99 | 1.10% | 1.11% |
| $50,000 - $99,999.99 | 1.15% | 1.16% |
| $100,000 - $249,999.99 | 1.20% | 1.21% |
| $250,000 and over | 1.25% | 1.26% |
^APY = Annual Percentage Yield.
Minimum average daily balance required for some accounts. Rates are accurate as of the effective date displayed, and they are subject to change. The APY (Annual Percentage Yield) is a percentage rate that reflects the total amount of interest paid on the account, based on the interest rate and the frequency of compounding for a 365-day period. Fees may reduce earnings on the account.
What’s Better for You? Money Market Accounts vs. Savings Accounts
Money market accounts and savings accounts offer similar benefits, and when deciding which type of account to open, consider your purpose and resources. If you’d like to open an account with a small amount of money or you’re new to saving, then a savings account is a good option. If you’re looking to save a larger amount of money with the potential to earn more on higher balances, then a money market account is a favorable option.
Here's the good news: You can open both a savings account and a money market account, using them for different purposes. It doesn’t have to be an either/or choice. Perhaps, as you build up your savings account, you can periodically transfer some of those funds to your money market account to enjoy the higher interest rate. Both can help reach your savings goals!
Credit Union Savings Accounts and Money Market Accounts
Whether you decide to open a savings account, a money market account, or both, you’ll benefit greatly from choosing a credit union as your financial institution. Credit unions are not-for-profit organizations where people—its members—pool their money for the benefit of the cooperative. This translates into better interest rates for savings-related products and more affordable loans with lower interest rates and reduced or no fees. Space Coast Credit Union is federally regulated by the National Credit Union Administration (NCUA).
Best Savings Accounts at SCCU
Opening a Regular Savings account at SCCU establishes you as a member of the credit union, and you begin earning dividends with your very first dollar. The minimum opening balance is just $5, which is also the minimum daily balance requirement.
- My Way Savings: With this account, you can name the account to match your goal (perhaps “Purchasing the Pontoon” or “Wonderful Wedding”) and receive monthly dividends towards your goal.
- Youth Savings: This account can help children establish healthy savings habits at a young age, and under your guidance and with SCCU’s financial wellness resources, they can learn quality money management skills.
- Christmas Club: This account helps make holiday shopping less stressful.
The best saving accounts are the ones that fulfill your needs and help you to achieve your goals. SCCU savings accounts also have no limits on withdrawals or transactions. Team Members will be happy to answer your questions about each account type and help you decide what’s best for you.
Best Money Market Account at SCCU
With an SCCU Money Market Savings account, you can earn a higher interest rate on your savings while maintaining flexible, convenient access to your funds. The opening deposit is $2,500, and this is also the minimum daily balance requirement. Keep in mind that you’ll need to maintain a balance of $2,500 to avoid a $15 monthly low balance fee.
Best Small Business Money Market Account at SCCU
Business owners can also benefit from a Small Business Money Market account at SCCU to maximize returns on any of their reserve savings. Same as the consumer Money Market account, the opening deposit requirement is $2,500, and the minimum daily balance requirement is $2,500, which needs to be maintained to avoid a $15 low monthly fee.
Opening Your Savings Account and Money Market Account at SCCU
If you live or work in one of these counties or you’re a relative of an existing member at SCCU, you can quickly and easily open a Regular Savings account online with a $5 deposit. This will establish you as member of our credit union—which gives you the ability to apply for a Money Market account online and enjoy all of the benefits of belonging to SCCU. Feel free to get in touch with us if you have any questions.
