Money market accounts typically offer higher interest rates than savings accounts, but lower rates than money market funds. While money market accounts require higher minimums than savings accounts, they are less risky than funds. Here, we’ll go over the common interest rates offered on these types of investments.

Low Risk and Reward for Savings Accounts
Typically, savings accounts have very few requirements. They are low-risk, FDIC-insured accounts that earn minimal interest. The interest on savings accounts is usually between 0.1-17% APY. You trade a low interest rate for a guaranteed return. Savings accounts appeal to people who want to make sure they protect their principal, and aren’t really concerned about making their money grow.

The Middle Ground: Money Market Accounts
Money market accounts usually require a minimum balance to be maintained. They are also FDIC-insured, but there are restrictions on withdrawals. Money market accounts tend to offer between 1-3% APY. As you can see, money market accounts pay higher returns than savings accounts. But, they require more cash up front.

Taking Risks with Money Market Funds
The interest rates earned on money market funds is usually dictated by the interest rates set by the Fed.  If the Fed sets interest rates at a low level, these funds won’t pay very well. But, if the Fed hikes rates, then you can expect to get a great payoff. Also, money market funds have roughly the same liquidity as savings accounts.
Weigh all of these factors before you decide what type of account is right for you. It’s important to place your money in an account where it will be secure and earn interest. You have to decide what type of risk you want to take.