A money market account can be an excellent vehicle for keeping your money safe, but it is not necessarily a substitute for your regular bank account. That is because many money market accounts place restrictions on the number of checks you can write each month, as well as restrictions on the amounts of those checks.
Number of Checks
Some banks restrict the number of checks you can write against their money market accounts each month. For instance, one bank might limit you to three checks a month, while another might allow you to write up to five checks on your account. If your bank does impose these restrictions on its money market accounts, find out if the restrictions apply to checks only, or if ATM withdrawals and other transactions are included in the total.
In some cases you might face a restriction on the size of checks you can write. For instance, your bank might require that any checks written on your account be for at least $100. Some banks might set the bar even higher, requiring that any checks be for at least $250. A money market account that imposes these restrictions might be fine for an emergency fund, or as a place to hold money between investments, but it would not be a suitable substitute for a checking account.
Minimum Balance Requirements
Even if your money market account allows you to write unlimited checks for any amount, you still need to be cognizant of the minimum balance requirements. The minimum balance requirements tend to be much higher for money market accounts than for checking or savings accounts, and if you dip below that minimum balance you could face a hefty monthly service charge. Before you start writing any checks, call the bank and find out what the minimum balance requirement is.
Keep in mind that each bank establishes its own rules for money market accounts, from the minimum balance requirements to the number of checks you can write each month. Always read the fine print carefully when opening any type of bank account, whether it is a regular savings account or a money market. Keep the paperwork you received when you opened the account as well. That will give you a reference if you do have any questions about the account and its rules.
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