Money market accounts are similar to savings accounts, but may pay higher interest rates. However, they tend to have higher balance requirements than savings accounts, and different interest rates may apply to different account balances.
>>Example: There may be one rate for balances below $10,000, a higher rate for balances between $10,000 and $25,000, and an even higher rate for $25,000 and above. In addition, you may need a larger deposit to open a money market account.
Unlike traditional savings accounts, money market accounts let you write a limited number of checks each month, in essence combining features of savings and checking accounts. If you exceed the limit, the bank won’t process any new transactions until the next period.
You may want to use a money market account for a portion your emergency fund, or to park money you intend to invest until you’ve accumulated enough to make a particular purchase.