What is a money market account known for?

A money market account is known for requiring a minimum balance to maintain the account, which can vary among financial institutions. Additionally, these accounts typically offer tiered interest rates that increase based on the balance; therefore, users can earn a higher rate of interest as they maintain a larger balance. This structure contrasts with other types of savings accounts and checking accounts, where interest rates might not be tiered or may be fixed regardless of the balance.

The tiered interest rate feature incentivizes account holders to save more, as they are rewarded with better returns on larger deposits. Furthermore, while these accounts do usually have higher interest rates compared to traditional savings accounts, they still fall under a lower risk category compared to investments in the stock market or high-risk options. This combination of features makes money market accounts a popular choice for individuals who seek a safe place to park cash and earn some interest on their savings.