Banking Practice Exam 2025 - Free Banking Practice Questions and Study Guide

Money market accounts typically require higher minimum balances to avoid fees due to their nature as hybrid accounts that combine features of savings and checking accounts. These accounts often offer higher interest rates in exchange for maintaining a higher balance. The financial institutions provide this added benefit, but to manage the greater risk associated with higher interest rates, they impose minimum balance requirements. If the balance falls below this threshold, fees may be applied, which can offset the earnings from interest.

In contrast, basic checking accounts are designed for everyday transactions and generally have lower or no minimum balance requirements, focusing more on accessibility than interest earnings. NOW accounts also have their own minimum balance requirements, but they are often lower than those of money market accounts. Demand deposit accounts are similar to basic checking accounts, as they also prioritize accessibility and typically do not impose high minimum balance requirements.