What Is a Money Market Account? A Smart Middle Ground Between Checking and Savings*

What are the best accounts for managing your money? You can use a checking account to access the money you need often. You can open a savings account to earn more interest, but you can’t access that money as easily. And then there are longer-term investment accounts.

Many people feel limited by these choices, though. Isn’t there another option? There is.

Checking vs. Savings

The checking account vs. savings account binary has dominated personal banking for a long time. These are the two basic accounts available. Let’s quickly go over both.

Checking Accounts

Checking accounts are perfect for frequent withdrawals and relatively low balances. These accounts typically offer very little interest, so your money won’t grow while it’s in there. However, when you need cash for a night out or to go to the farmers’ market, you can take it out of your checking account. 

Debit cards are also often linked to checking accounts, so whenever you pay with debit, you’re using your checking account. You can also use it for automatic withdrawals and recurring payments, as well as automatic deposits.

Savings Accounts

If you have your paycheck auto-deposited to your checking account, you can take out the money you need and move the rest to your savings account. Here, your money can gain more interest and grow for you. Banks may have a minimum balance requirement and they’ll likely limit how many withdrawals you can make, charging you a fee for each withdrawal past that amount.

A savings account probably shouldn’t be your only vehicle for long-term savings, but they’re great for earning interest while still being accessible. However, they’re not super accessible. And that leads us to …

Money Market Accounts

A money market account (MMA) splits the difference between checking and savings accounts. An MMA earns interest and combines features of the other two accounts. Many banks and credit unions offer MMAs, and they may come with checkbooks and debit cards.

However, you can’t have unlimited transactions with a money market account as you might with a checking account. On the plus side, MMAs typically pay higher annual percentage yields while allowing easier access to your funds than a savings account.

With an MMA, you can make as many deposits as you want — banks rarely frown on you putting more money in — but certain withdrawals, such as “convenient transactions,” might be limited to a handful per month. And because money market accounts come with check-writing and debit card privileges, you can use them to pay people, buy things or withdraw from ATMs. But these transactions count against your monthly withdrawal limits, so you need to be careful. Furthermore, MMAs typically require monthly fees but are generally insured by the FDIC, offering federal deposit protection².

Ultimately, a money market account offers higher savings benefits while still keeping your funds relatively accessible for all the small things.

Get the Best Account for You

Contact a Vectra Bank professional and we’d be happy to discuss all your account options.

 

^{*Please refer to the Deposit Account Agreement, Account Disclosure, Deposit Rate Sheet and Personal Account Schedule of Fees, or speak with a banker for more details.}

 ^{2As a client of Zions Bancorporation, N.A. your deposits are insured by the FDIC to at least $250,000 per depositor, for each Account ownership category. To learn more, please visit the FDIC’s website: fdic.gov/deposit.}