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Which type of savings account you should open he depends on your goals and the amount of money you plan to deposit. If you plan to put a large amount in the bank and maintain a high balance, you’ll likely benefit from a money market savings account. Otherwise, a basic savings account might make the most sense.

What Is a Money Market Savings Account?

A money market savings account pays a higher rate of interest than a basic savings account. Banks usually require a higher minimum balance for this type of account, and there may be higher fees associated with the account, too. Like a basic savings accounts, money market savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC), so you enjoy the same security you do with other savings accounts. And unlike with a basic savings account, you can write checks from a money market savings account - though the Federal Reserve restricts this to six checks or transfers out of the account per month, as Bankrate states.

When a Basic Savings Account Is the Right Choice

Compared to money market savings accounts, basic accounts usually have minimum balances and fees. Typically, there are ways to avoid minimum balances and fees, such as setting up recurring transfers or having additional accounts, like a checking account, with the same bank. Savings accounts are also more likely to waive fees if you set up a monthly transfer into the account. Of these two types of savings accounts, the basic account is the better choice for people who are starting off with a smaller amount of savings, who intend to have a lower balance, or who are saving for shorter term goals. Understanding potential fees is very important as they can offset any interest you may earn on the account.

When a Money Market Savings Account Is the Better Option

If you can meet the minimum deposit and the minimum balance, then you’re usually better off with a money market savings account. For example, if the account’s minimum deposit is $25,000 and you have $25,000 that you’re saving for a longer term goal, like for your first home – and don’t plan on withdrawing it for a year or more – then putting the funds in a money market savings account will yield you more interest earnings.

So to decide which type of account makes the most sense for you, review your current situation as well as your future financial goals. Whichever you choose, saving in one form or another will only help get you where you want to go.

This material is presented for informational purposes only and should not be construed as individual tax or financial advice. KeyBank does not provide legal advice.

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