While money market accounts are similar to savings accounts in many ways, one difference between them is that most money market accounts allow you to write a limited number of checks each statement cycle.
Money market accounts come with variable interest rates that may be much higher than rates on other types of bank accounts. They offer more flexibility than a savings account, but may still come with transaction limits. Account holders are generally limited to six withdrawals from a money market account each month, which affects how many checks can be written from the account.
Here’s what to know about money market accounts and their check-writing privileges.
Check-writing for money market accounts: How it works
Most money market accounts allow the account owner to write a limited number of checks each month.
Banks and credit unions also commonly limit the amount of withdrawals that can be made from a money market account to six per month. This includes most electronic, over-the-phone and check withdrawals. If an account holder goes over the limit, they may incur a penalty fee. There is typically no limit to how many checks can be deposited into the account, though.
As an example, Ally Bank allows for six withdrawals to be made each month from its money market account. There’s a $10 fee for transactions that exceed this limit, although the bank is temporarily refunding this fee due to the impacts of COVID-19.
Not all money market accounts impose a limit to how many checks you can write. Navy Federal Credit Union, for example, allows for unlimited withdrawals by any method from its Money Market Savings account. However, it requires a higher minimum balance — $2,500 — to earn interest.
The check-writing privileges that money market accounts come with is a major difference compared to traditional savings accounts. But while they allow for check withdrawals, money market accounts are still similar to savings accounts in that they are classified as non-transaction accounts, and therefore may impose limits on withdrawals. Money market accounts may earn higher rates than checking and savings accounts, so be sure to shop around for the best rates available.
Why do some banks have limits on how many checks you can write?
Under a Federal Reserve regulation, known as Regulation D, money market accounts are classified as non-transaction accounts. These types of accounts are designed primarily for saving and investing money, while transaction accounts (checking accounts) are intended for daily spending and other frequent transactions. Non-transaction accounts were historically only allowed six withdrawals per month, including check withdrawals, under the regulation.
The Fed amended Regulation D in April 2020, so the six withdrawal limit is no longer legally imposed. Many banks and credit unions still maintain the limit on savings and money market accounts, even though it’s not a federal requirement.
Although there may be limits on check withdrawals from money market accounts, there were some withdrawal types not included in the federal limitation of six per month that are often still unlimited today. These include withdrawals made in person at a branch, by mail or at an ATM.
How to write a check from a money market account
Money market accounts sometimes come with a free set of checks, though you can also order checks directly from banks or other third-party providers. Make sure that the account number written on the check matches up with your money market account’s number.
To write the check, fill out the various required fields with information about the payment, including:
- The date
- The check’s recipient
- Amount paid, written in words
- Amount paid, written in numbers
- A memo
It’s also important to keep track of what your bank or credit union’s withdrawal limits are and how many withdrawals you’ve made in the month. If you make a check withdrawal that exceeds the bank or credit union’s limitation, there may be a fee charged to the money market account.
Although it’s best to use a checking account for frequent transactions, such as daily spending and paying bills, money market accounts can also be used for writing checks, if needed.
Look out for limits that your bank or credit union may impose on how many withdrawals you can make from a money market account each month. Most financial institutions limit withdrawals from money market accounts to six per month, and withdrawals made by check count toward this limit. Avoid exceeding the limit so you don’t have to pay any extra fees.