When it comes to managing cash for your business, choosing the right type of account can make a real difference. Two of the most common options—business savings accounts and money market accounts—may seem similar at first, but they each offer distinct features, benefits, and limitations that could impact how your business handles its finances.
If you’re looking for a secure place to store extra cash while earning interest, it’s important to understand the key differences between these two account types. This guide will help you compare them so you can decide which option (or combination) is best for your business.
Why Interest-Earning Accounts Matter for Businesses
Before diving into the differences, let’s look at why these accounts are worth considering in the first place.
Most businesses keep some cash on hand for upcoming expenses, seasonal fluctuations, or emergencies. Instead of letting those funds sit idle in a checking account earning little or no interest, moving them into an account that generates returns can help your bottom line.
Both business savings accounts and money market accounts offer a way to:
- Grow your cash reserves passively
- Improve financial stability over time
- Keep your funds accessible while earning interest
- Support long-term planning for expansion or investment
Now let’s break down the differences between these two account types.
What Is a Business Savings Account?
A business savings account works much like a personal savings account. It’s a low-risk place to deposit funds that aren’t needed for daily transactions, allowing them to grow with interest over time.
Key Features:
- Typically comes with a lower minimum balance requirement
- Earns interest (though often at a lower rate than other options)
- Easy to open if you already have a business checking account at the same institution
- Limited number of monthly withdrawals or transfers
Business savings accounts are a good starting point for companies that want to separate savings from daily expenses without locking away their money for long periods.
What Is a Business Money Market Account?
A business money market account is another interest-bearing option that blends features of both savings and checking accounts. These accounts tend to offer higher interest rates but may require a larger minimum deposit and balance to avoid fees.
Key Features:
- Typically higher interest rates than basic savings accounts
- May allow limited check-writing or debit card access
- Often requires a higher minimum balance to open or avoid fees
- Still limits the number of withdrawals per month
A business money market account is often chosen by businesses with more cash on hand that want a bit more flexibility and stronger returns. While you’ll still face withdrawal limits, you may have easier access to your money when needed.
Comparing Business Savings vs. Money Market Accounts
1. Interest Rates
- Money Market: Generally offers higher interest rates, especially for larger balances. Some institutions use tiered rates that increase as your balance grows.
- Savings Account: Interest rates are often lower and may be fixed regardless of balance.
If earning more on your cash is your priority, a business money market account may give you better long-term value.
2. Access to Funds
- Money Market: Often includes check-writing privileges and debit card access. While there are still limits on the number of transactions, the added access can be useful for occasional purchases or transfers.
- Savings Account: Limited to transfers and withdrawals, typically through your main business checking account. Most don’t offer checks or cards.
If you want the option to use your funds more directly, a money market account offers more flexibility.
3. Minimum Balance Requirements
- Money Market: Higher minimum opening deposits and balance requirements are common. Falling below the threshold may trigger monthly fees.
- Savings Account: Typically requires a lower balance to open and maintain. It’s more forgiving for businesses just starting out or working with tight margins.
Startups or small businesses with modest reserves may find a savings account more practical.
4. Monthly Transaction Limits
Both accounts are subject to federal limits on certain types of withdrawals and transfers (such as online transfers or outgoing ACH payments), often capped at six per month.
- Exceeding limits can result in penalties or account restrictions
- Some institutions may waive or adjust this rule based on account activity or type
While both accounts carry these limitations, the money market’s ability to issue checks or offer card access gives it a small advantage in usability.
5. Fees and Penalties
- Money Market: Higher balance requirements can mean higher fees if not maintained.
- Savings Account: Lower risk of incurring fees, especially if tied to your primary business banking relationship.
Always review fee schedules carefully before opening either type of account, especially if your balance fluctuates throughout the month.
When to Use a Business Savings Account
A business savings account is a good choice if:
- You’re building up an emergency fund
- Your monthly cash flow varies and you can’t commit to a high balance
- You want a separate account for tax savings or payroll reserves
- You’re new to business banking and want something low-risk and easy to manage
It provides structure without added complexity and can help form the foundation of your financial strategy.
When to Use a Business Money Market Account
A business money market account is best suited for:
- Businesses with larger cash reserves that want higher interest earnings
- Companies that want limited transactional access (such as checks or debit cards)
- Financial strategies that involve holding funds over longer periods without full investment commitment
If your business is past the startup phase and has cash available for medium-term growth or planned expenses, this type of account can be a smart next step.
Can You Use Both?
Yes, and many businesses do. You might use a savings account for smaller, short-term goals and a money market account for long-term reserves. Keeping both accounts can also help you manage multiple savings goals, such as tax prep, payroll, equipment upgrades, or expansion.
Example Strategy:
- Keep 3 months of operating expenses in a business savings account for quick access
- Park long-term funds in a business money market account to earn more interest
- Use your checking account for daily transactions
This layered approach helps balance liquidity with earnings potential.
Final Thoughts
Choosing between a business savings account and a business money market account depends on how your business manages cash and what your financial goals look like. Both offer low-risk ways to earn interest, but they serve slightly different purposes.
If you’re just starting to build your reserves or prefer a simpler setup, a savings account may be the right fit. If you have larger balances and want more from your idle cash, a money market account can offer greater returns and more flexibility.
Evaluate your average balances, accessibility needs, and long-term goals to find the right fit—or consider using both to create a well-rounded strategy.
