What defines a "money market account"?

A money market account is primarily characterized as a savings account that usually provides higher interest rates based on the size of deposits and places limits on the number of transactions that can be made each month. This type of account is designed for individuals who want to earn a better return on their savings than a traditional savings account while still maintaining easy access to their funds.

The reason this definition holds true is that money market accounts typically require a higher minimum balance than regular savings accounts, and they often offer tiered interest rates—meaning the more you deposit, the higher the interest rate you may receive. This incentivizes account holders to save more. Additionally, regulations often restrict the number of withdrawals and transfers that can occur in a given month to a set figure, thereby promoting savings over frequent transactions.

This understanding aligns with the common features of money market accounts in banking and personal finance, distinguishing them from checking accounts, investment strategies, or accounts designed specifically for long-term growth.