A money market account is a type of savings account like all other regular saving account. But there are some differences between the regular saving account and money market account. Those differences are listed here. The major difference is that a money market account offers high savings rates. Also this type of account requires you to have higher minimum balance in the account. These account offers only limited numbers of withdrawals say three to six in most of the cases. Also there is a limit in checking the account. In most of the cases, three checks are allowed. The money in a money market account is insured by FDIC. This actually means that even if the bank exits the business, your money will be still there. Also you should be careful in choosing money market account rates.
Just like a savings account, money invested in money market account also yields you interest. Banks offer interest to your money because they can use your money to fund other people. Usually, this process goes like this. As the first step, you open a money market account in a bank and the deposit some amount of money in your account. The bank pays you some interest amount for your deposited money. Also the bank uses your deposited money to give loans to other people. This offered interest rate will be slightly higher than the interest rate paid for your money. The interest rates of money market account differ from one bank to another. Some banks may offer high interest rates because they may find harder to get people to open a money market account in their bank. Also there is an advantage in money market account is that the interest rates will be high if the money deposited in the account is more. Therefore, if you deposit more money into your account, then the return from the interest is also more. Also you should discuss in detail about the interest rates in prior to open a money market account in a bank. This will clarify all the doubts about the interest rates and other terms and conditions of the bank.