What type of account typically requires high minimum balances and offers higher interest rates?

A Money Market Savings Account is designed to typically require a higher minimum balance than other types of accounts, such as regular savings or checking accounts. These accounts usually offer higher interest rates as an incentive for customers to maintain that higher balance. This structure benefits both the bank, which can utilize these larger deposits for lending and investment purposes, and the account holder, who earns a better return on their funds compared to more standard savings options.

In contrast, regular savings accounts generally have lower minimum balance requirements and typically offer lower interest rates. Similarly, checking accounts prioritize easy access to funds for everyday transactions and usually don’t require a minimum balance, often yielding minimal to no interest. Certificates of Deposit, on the other hand, do require larger deposits and often provide higher interest payments, but they lock up the funds for a specified period, which differentiates them from the more flexible Money Market Savings Accounts.