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Bottom Line Up Front

  • Savings accounts are a great tool to better your financial health, like using a high-yield account to establish an emergency fund.
  • Saving accounts keep your money protected. They can even earn dividends to help your money grow faster. 

Time to Read

6 minutes

May 9, 2022

Short-term goals, long-term goals, an emergency fund... It can start to feel overwhelming when you try to save for so many objectives with one savings account. To make it easier to keep your money organized and track your progress, you can separate your funds into multiple bank accounts. 

Let's talk about 3 different savings accounts — savings, money market and certificates of deposit — and what they can be used for. 

What Is a Savings Account?

A savings account, like a checking account, is a type of deposit account that’s federally insured. The National Credit Union Administration (NCUA) insures credit unions, and the Federal Deposit Insurance Corporation (FDIC) insures banks. You’ll earn a guaranteed interest rate on deposits and won’t lose money.

The main features of a savings account include:

  • interest, helping your savings grow
  • liquidity, letting you easily access your money
  • federal insurance, meaning you’ll never lose money you deposit*
  • automatic or direct deposits, making the process of saving that much easier

When to Use a Savings Account

Since you can take money out at any time, these accounts are perfect for:

  • an emergency fund 
  • saving for a future vacation 
  • down payments on a home or car. 

Just note your number of monthly withdrawals may be limited (savings accounts are meant to encourage saving, after all).

How to Open an Online Savings Account

To open an online savings account with Navy Federal, you’ll need the following for your account agreement:

  • Government-issued photo ID. Examples include a driver’s license, passport or military ID.
  • Personal information. Social Security Number, date of birth, home address and phone number. You’ll also need to be eligible for their membership. (At Navy Federal, all members of the military, DoD, veterans and their families are eligible.)
  • Minimum opening deposit. Navy Federal requires a minimum deposit of just $5 when you become a member and open a savings account.

What Is a Money Market Account?

A money market account is a high-yield savings account that offers a higher interest rate, or annual percentage yield (APY). With Navy Federal Credit Union, you can start to earn dividends in an MMA with a minimum balance of $2,500. 

The main features of a money market account include:

  • interest (annual percentage yield or APY), helping your savings grow (once you hit the minimum deposit)
  • liquidity, letting you easily access your money with no penalties for early withdrawal
  • federal insurance, meaning you’ll never lose money you deposit*

Automatic deposits into your regular or money market savings account make the process of saving even easier.

When to Use a Money Market Account

Money market and standard savings accounts have a lot in common, but there are times when you might prefer to use a money market account, such as:

  • if you’ve saved enough cash to benefit from the interest available with higher balances
  • to save for a project that might require check-writing (such as a home renovation)
  • if you have a high and long-term savings goal that you could reach faster with more interest


What is a Certificate of Deposit?

A certificate of deposit (CD), or a learn more about a certificate, is similar to a money market account in that it allows the depositor to earn slightly higher dividends than in a traditional savings account. However, in a CD or certificate, your money is locked in for a period of time at the end of which the financial institution will pay interest.

The main features of a certificate account include:

  • higher interest rates. You can receive a higher annual percentage yield (APY) with a certificate than a traditional savings account or money market account. 
  • low-risk federal insurance, meaning you’ll never lose money you deposit*
  • deposits held for a fixed period of time, encouraging you to save and not spend

When to Use a Certificate

Because certificates have maturity dates while regular savings accounts and money market accounts don’t, you should take this into account when deciding which type of savings account matches your specific financial goals. 

For example, a certificate would be ill-suited for an emergency fund because you wouldn’t be able to get to your money quickly without a penalty. However, certificates work well for:

  • savings goals with a specific end date (like a wedding or a down payment on a house)
  • when you already have a full emergency fund in an easily accessible deposit account and have additional money to save
  • safely storing large amounts of money while taking advantage of the best rates available for larger deposits
  • when you want to avoid the volatility of the stock market and need a stable rate of return
  • protecting money in an IRA or other retirement account as you get close to retirement age


All savings accounts serve different purposes. But they share one thing in common: They help you stay prepared for the good and the not-so-good in life, whether you’re dying for an unforgettable vacation next year or you blow a tire on the way to work. Learning the differences and how to leverage each one depending on your goals is just one of the many ways you can stay empowered and educated about your financial health. 

Key Takeaways Key Takeaways


*NCUA/FDIC insurance is up to $250,000 per account ownership category.

This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.