Can You Write Checks or Pay Bills From a Money Market Account?

A money market account is a type of deposit account that earns interest, blending characteristics of traditional savings and checking accounts. These accounts provide a balance between earning competitive interest rates on deposited funds and offering transactional flexibility. Individuals often use money market accounts to grow savings while retaining access to their money.

What is a Money Market Account

A money market account (MMA) is an interest-bearing deposit account offered by financial institutions, including banks and credit unions. These accounts provide a higher interest rate compared to traditional savings accounts, often featuring tiered interest rates where larger balances can earn more. MMAs are federally insured by the Federal Deposit Insurance Corporation (FDIC) for banks and the National Credit Union Administration (NCUA) for credit unions. This insurance protects deposited funds up to $250,000 per depositor.

Institutions typically require a higher minimum balance to open or maintain an MMA compared to standard savings accounts, which can range from several hundred to a few thousand dollars. Failing to meet these minimum balance requirements may result in monthly fees or a lower interest rate. Money market accounts are distinct from money market funds, which are investment products that are not federally insured and carry investment risk.

Transaction Features and Limitations

Money market accounts provide features for convenient access to funds, such as check writing and debit card use. This functionality enables account holders to manage expenses directly from the account. Many institutions also support online bill payment services from money market accounts. These transactional capabilities offer flexibility for individuals who need occasional access to their savings without transferring funds to a separate checking account.

Money market accounts typically have limitations on the number of certain types of transactions per statement cycle. While a federal regulation that previously imposed a strict limit was suspended, many banks and credit unions still impose their own limits. These limits generally apply to transactions such as checks, debit card purchases, and electronic transfers. Exceeding these self-imposed limits can lead to fees or account conversion to a different type with fewer features or lower interest earnings.

Withdrawals made in person at a branch, through an ATM, or by mail or telephone are often not subject to these monthly transaction limits. This means that while money market accounts offer some transactional flexibility, they are not designed for frequent, day-to-day spending. Their structure encourages saving while still providing accessible funds for less frequent, larger expenditures or emergencies. Account holders should review their institution’s specific terms to understand the applicable transaction limits and potential fees.

Comparing Money Market Accounts with Other Account Types

Understanding the distinctions between money market accounts, checking accounts, and savings accounts helps in choosing the most suitable option. Checking accounts are primarily designed for daily spending and offer unlimited transactions, including frequent debit card use, check writing, and electronic transfers. They typically pay very little interest on balances, prioritizing accessibility and transactional volume. Money market accounts offer some transactional features like checks and debit card access, but usually have restrictions on the number of these transactions per month, making them less suited for everyday spending. Money market accounts generally offer higher interest rates than checking accounts.

Savings accounts are primarily for accumulating funds and generally offer more restricted access to money compared to money market accounts. Traditional savings accounts may not offer check-writing privileges or debit card access, requiring transfers to a checking account for spending. While both money market and savings accounts earn interest, money market accounts often provide more competitive interest rates and greater flexibility in accessing funds directly through checks or debit cards. Some high-yield savings accounts can offer interest rates comparable to or exceeding those of money market accounts, but they often lack the direct transactional features found in MMAs.

The choice between these account types depends on an individual’s financial habits and goals. For managing daily expenses and frequent transactions, a checking account remains the standard. If the primary goal is to save money while earning a competitive interest rate and having some limited, direct access to funds, a money market account can be a suitable choice. For long-term savings where immediate and frequent access is not a concern, a traditional savings account or even a high-yield savings account might be appropriate. Many people find value in holding a combination of these accounts to meet diverse financial needs.