This type of account is an interest-bearing account that typically pays a higher interest rate than a savings account, and which provides the account holder with limited check-writing ability. Interests are paid based on current interest rates in the money markets and it usually requires a higher minimum account balance than the normal savings account. It is typically able to offer higher annual percentage yields than other accounts as the vehicles invest in a variety of options from which traditional passbook accounts are restricted. Money market accounts fund minimums to establish an account vary among financial institutions as the case may be. Eschewing brick-and-mortar options for an electronic market presence, online banks are able to offer higher rates through reduced costs.
When opening an account with any bank, individuals will often check for whether the account has checking privileges and what interest benefits it offers. Most accounts that banks offer, give you either one of these benefits but not both. A checking account will allow you to write checks, but no interests. A savings account on the other hand will only offer you interest on your savings. Money market accounts are then a good choice for an individual that wants both priviledges. It will offer you a higher interest rates compared to savings and allow you limited checking abilities. The downside (which could also be an upside) is that they often require a higher initial deposit that its counterparts. Other than that, it is a recommended account that any investor should have.
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