When you open a regular old checking account, you’re almost always allowed to make as many transactions as you like – writing checks, making withdrawals, transferring money back and forth to your savings account, checking your balance, going to the ATM, etc. While it’s all very convenient and nice knowing you have access to your cash whenever you want it, the problem is that your checking account does not offer you interest on your cash – the federal government doesn’t allow it. If you want to put your money into an account that will give you an interest dividend, you may want to think about opening up a money market account. The downside of having a money market account is the number of withdrawals you will be allowed to make on a monthly basis.
Money market accounts usually only let you make three withdrawals per month. This number will vary from bank to bank, so if you’re planning on taking money out of your money market account on a frequent basis then you will want to explore as many different offers as you can, and see which bank is the most flexible in terms of accessing money from the money market account. Some banks also make a distinction between the number of withdrawals permitted and the number of checks written on the account – seeing them as the same thing, or allowing a certain number of both. So what happens if you write more than three checks or make more than three withdrawals in the span of a month? You get penalized with fees – and it’s very common for banks to raise fees to unprecedented numbers in order to profit. So again, if you’re planning on taking money out of your money market account on a frequent basis, make sure you find a money market account that has flexible withdrawal policies – otherwise, you may regret your decision when those fees start piling up, after all, money market accounts are only good for those who really want to put cash away for those rainy days.
With all important financial decisions be sure to consult with your financial advisor or someone who is financially knowledgeable before opening a money market account.
