It used to be that business money market accounts had higher interest rates than business savings accounts. Since 2009, the difference between the two has become minimal. Many online banks offer very competitive rates on savings accounts versus a money market account. The main difference is how the money is invested. With a money market account, the bank purchases short-term cash securities or its equivalent. A savings account, on the other hand, earns you interest by letting the bank lend your money and in turn, giving you a cut of their returns.
You may be able to earn much higher interest rates with a regular savings account. However, some money market accounts offer better flexibility in terms of how you access your cash. Some offer limited check writing capabilities and ATM cards giving you more options to take money out. Many competitors even offer ATM reimbursements, saving you money on fees.
At many banks, both types of accounts are FDIC- or NCUA-insured up to $250,000.
Withdrawals are limited with both business savings accounts and money market accounts. Federal Regulation D limits you up to six withdrawals per account cycle. If you exceed the limits imposed by the bank, you will be charged a penalty. Your account could be converted to a basic checking account or closed if you continually exceed the federal transaction limits. There may be exceptions to these limits, so it’s best the check with your bank or credit union to see which types of transactions are limited to the six per month.
To sum it up, there really isn’t much difference between the two types of accounts. You can use both for savings or as a backup funding source. If you want to find the best rates, you’re better off comparing both business money market and savings accounts to shop for the best deal.