To understand the difference between savings account and money market accounts you need to understand that it will help you in saving your funds in a much better way. For everything from buying a house to creating an emergency fund all things can be well assessed with the help of understanding the two. To know more read on and understand the difference between the two in details.
What is a Savings Account
A savings account is an account that is opened in a bank of a country. It helps you in stacking your money and even helps earn interest on the same. Other than depositing your money it comes with varied advantages like debit cards, low maintenance fees and more.
When to Use a Savings Account
Many of us might be having the question that saving the money and earning interest on the account is okay but how can we use the account and when is it best used to incur its advantages in the best way. We have some of the best examples where and when the savings account can be used. Some of these are as follows –
Ideal for short-term saving goals
Opening a savings account is an ideal way to save money for a plan that you have set for a short term. For example, if you are planning to buy a car in next 6 months then this can be an ideal place where you can save your money and pay the booking amount for your dream car. Also, the saved amount will rise as it will earn interest as well making it great for any short-term savings plan you have in your mind.
Limits and Charges
The account does not come with any limit to save in it. It is just the fact that all the money that is saved in the account should be legal and white. There are hardly any charges that you will have to pay on a savings bank account other than the non-maintenance of minimum balance, if any. You might also have to pay debit card charges ones a year in some of the selected banks in the country.
Interest rates on savings bank account are generally good for the amount that is saved in the account. It ranges from 3 to 5% depending on the bank and type of account you are opting for. Looking for a high interest savings bank account will lead you in saving and earning more money from the funds that you will save in the bank account.
What Are Money Market Accounts
Like savings accounts, money market accounts are financial balances where you can deposit money and procure interest. Not at all like savings accounts, the assets you deposit are put into financial markets. Your assets will likewise procure more interest than they would in a savings account.
Money market accounts, at times called money market deposit accounts, permit you to compose checks and access subsidizes through ATMs or electronic exchanges. Be that as it may, similarly as with savings accounts, certain transactions from money market accounts are restricted to only six every month.
Great for medium-term goals
Money market funds are great for medium term goals and helps in procuring money for a goal that you have set for a medium period. For instance, if you are aiming to buy a house in 3 to 4 years and want to save money for the same then money market accounts are your best friend and will help you in the best way to save money for the down payment or for that matter buying a house.
Limits and Charges
It comes up with ideal limits and charges that you will have to pay to have an account. It is not a hefty amount though.
The interest that you earn are best for your medium-term goals and will help you in creating funds in longer time for the product or service you are saving for. Opening a money market account will be a great option for all of us who are looking to invest money and save funds for medium term goals.
You can read more about savings account and money markets, and how they work. Also, let us know in the comments section what is your take on the two accounts, and which one do you prefer?