What is typically true about the rate of interest on money market accounts compared to savings accounts?

Money market accounts generally offer a higher interest rate compared to traditional savings accounts. This difference is primarily due to the fact that money market accounts often require a higher minimum balance and provide limited transaction capabilities, allowing financial institutions to offer better interest rates as they can invest these funds more effectively. Additionally, money market accounts often combine features of savings and checking accounts, including check-writing privileges, making them slightly more flexible for account holders.

In contrast, savings accounts, while still providing interest, typically have lower rates because they are designed for easy access to funds with fewer restrictions. The interest rates on savings accounts tend to be lower since they cater to a broader range of customers, including those who may not maintain a higher balance. Overall, the structure and purpose of money market accounts facilitate the capability to offer higher returns on deposits compared to traditional savings accounts.