Money market accounts occupy an odd position at American banks, paying like savings while offering some features of checking. The hybrid is a product of regulatory history.
Deposit accounts were once tightly categorized
For much of the twentieth century, US regulation limited what banks could pay on deposits and separated transaction accounts from savings accounts by rule.
Checking accounts allowed unlimited transactions but were restricted in what interest they could pay. Savings accounts could pay more but were not meant for regular payments.
The categories were administrative rather than natural, and they created an opening for products that did not fit either box.
Competition came from outside banking
Money market mutual funds, which are investment products rather than deposits, began offering higher yields with check-writing features and drew deposits away from banks.
Banks were permitted to respond with a deposit account that could pay competitive rates while allowing a limited number of transactions.
The resulting account carried a similar name to the funds it was competing with, which is the source of persistent confusion between the two.
Deposit and fund versions differ fundamentally
A money market deposit account at a bank is a deposit, covered by federal deposit insurance within applicable limits like any other bank account.
A money market fund is a security held at a broker. It is not a deposit and is not covered by deposit insurance, though it is regulated as an investment product.
Similar names, similar stated purposes, entirely different legal structures, and a customer reading only the product name cannot tell which they hold.
Transaction limits were the defining constraint
Historically, federal rules capped certain types of withdrawals from savings and money market accounts per statement cycle, with fees or account conversion for exceeding them.
That limit was the reason such accounts could pay more, since the bank could treat the balance as more stable than a checking balance.
The rule has since been relaxed, and individual banks now decide whether to keep limits, which is why practice varies between institutions.
The remaining differences are institutional choices
Because the regulatory distinction has narrowed, differences between a money market account and a high-yield savings account now come largely from bank policy.
Some attach checks or a debit card to the money market version and not the savings version, and minimum balance requirements often differ as well.
Comparing them therefore means reading the specific terms rather than the category name, since the name no longer reliably indicates what the account does.