Savings vs Money Market Accounts - Which is best?

So, you've got a little cash and you're wondering what to do with it?

Maybe its a hefty tax return, a small inheritance or a bonus for that killer presentation you gave at work.

Regardless of where the windfall came from, that money can be the start of a new, financially-suave you.

With a little help from yours truly of course :)

The fact is, there's a whole host of investing options out there that can make your money work for you. Two of the most basic of these are the traditional savings account and a money market account. But which is best? Let's find out.

It used to be that the savings account was the first place we turned when we wanted to do something financially smart. "I'm going to get my finances in order," we'd say and off we'd go to open a savings account at our local bank.

That savings account would pay us anywhere between .2 and .5% interest and while we knew it wasn't big money, we had that satisfying moment of taking control.

Today, the traditional savings account still pays around 1/2 of 1 percent and as always, you can go open one for free at any local bank.

Other benefits to a savings account:

• No or low minimums to open
• Easy to access your money (liquid)
• Convenient (its right down the street, remember?)
• Online banking often allows transfers between checking and savings from your computer
• FDIC insured so your money is safe

Okay, before we start on this next section, I want to clarify something.

There are two types of money markets: Money Market Funds (MMF) and Money Market Accounts (MMA). A MMF is an investing option, such as stocks and bonds, which is another article by itself. So, for purposes of this comparison, we're going to talk about MMA's.

Money Market Accounts are kind of like a traditional savings account on vitamins. MMA's are usually high-yield, meaning they pay a higher interest rate than their traditional counterparts. MMA's also typically often check-writing capabilities or provide you with a debit card so you can get to your money when you need it.

Like the savings account, MMA's keep your money liquid, meaning you can access it at any time without paying big penalties for early withdrawals. Some accounts do limit you on the number of transactions you can have per month so pay attention to that when you're comparing accounts.

MMA's also range in the minimum deposit to open an account - some can be started with as little as $100, while others require substantially more to get things going.

Obviously, both the traditional savings account and the MMA will help you tuck some money away but if you really want the most bang for your buck, the Money Market Account is definitely the way to go.

Which MMA is right for you?

At this writing, there are three I recommend checking out:

Emigrant Direct (https://www.emigrantdirect.com) is currently paying 5.05% interest on their "American Dream Savings Account". No fees and no minimums to open, you can link your new Emigrant account to your existing checking account to transfer money back and forth.

ING Direct (http://home.ingdirect.com/) currently pays 4.50% and offers the same convenience features as Emigrant above.

Capital One (http://capitalone.com) offer a 5% MMA with no fees, free checks and ATM card and no minimum balance. Like Emigrant and ING, your account will be linked to your existing checking so you can transfer money back and forth. And, like the other MMA's and the traditional savings, its FDIC insured up to $100,000.