01 May Savings or money market account?

Q. I don’t really understand the difference between a savings account and a money market account. Are there any differences?
— Learning

A. There sure are differences.

Both account types pay interest, are FDIC-insured and have a limit of six transfers or withdrawals per cycle per Regulation D, said Alison Williams, a certified financial planner with Stonegate Wealth Management in Oakland.

Regulation D is a Federal Reserve rule meant to regulate the level of reserves maintained by financial institutions, but it can be an inconvenience for account holders.

A “cycle,” in banking terms, is one month, but may not necessarily be a calendar month.

“For example, if you opened your account on January 11, your cycle could be the 11th to the 10th of each month,” Williams said. “It’s also important to consider that certain types of withdrawals/transfers aren’t counted toward the limit.”

Williams said the main difference between these account is withdrawing your money.

She said savings accounts are typically restricted to speaking with a bank rep or electronic transfers — a transfer to your checking account, where you would then access cash via an ATM, check, or debit card.

“Money market accounts, on the other hand, often come equipped with features traditionally associated with checking accounts, such as check-writing, billpay, and ATM/debit cards,” she said. “Since there are fewer restrictions to accessing your funds with a money market account, they typically offer a slightly lower interest rate than savings accounts.”

Also note that money market accounts and money market funds are different animals. You can learn more about that here.

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This post was initially published in May 2017.