Can You Add to Your Money Market Balance Regularly?

Money market accounts offer a higher interest rate but come with some restrictions compared to checking and saving accounts. But, can you add to your balance regularly with a money market account? And are you able to withdraw money at any time, or is it stuck in the account when you might need funds unexpectedly? 

Let’s take a closer look at what money market accounts are and what makes them tick. We’ll dive into how the restrictions on these accounts work and if they would actually cramp your style. We’ll also assess the major pros and cons of money market accounts and when it makes the most sense to open one.

WHAT IS A MONEY MARKET ACCOUNT?

Money market accounts allow you to deposit and withdraw money as you would in a regular checking or savings account but may limit how often you can access your account in a given month. In return, you earn a higher interest rate on your balance than you would in a checking or savings account. 

Money market accounts were created to allow banks and other financial institutions to pay higher interest rates than are allowed for regular checking or savings accounts. These accounts remain a popular place to stash cash so it can earn better interest while still remaining relatively accessible.

HOW DOES A MONEY MARKET ACCOUNT WORK?

Money market accounts can offer interest at a higher annual percentage yield (APY) than more “liquid” banking products like regular checking and savings accounts, but rates are still lower than term products like certificates of deposit, where you must commit to investing your funds for a fixed period.

Deposits in money market accounts are also fully insured in the same way as checking and savings accounts, allowing you to earn interest with very little risk.

Minimum deposit requirements are typically higher on money market accounts than on other deposit accounts and some do not pay interest on balances below a certain threshold. 

That said, it’s important to understand exactly how the restrictions placed on money market accounts limit your ability to access your deposited cash. 

Under Federal Reserve regulations, total transactions on any money market accounts were limited to just six a month in order to permit the accounts to qualify for higher interest rate ceilings. 

While those rules were lifted in 2020 to help people access cash during the Covid-19 pandemic, most banks and credit unions are still enforcing the original Regulation D requirements.

WHAT CAN I DO WITH A MONEY MARKET ACCOUNT?

Let’s break down how these regulations affect exactly what you can and cannot do with a money market account.

Deposits

There is no limit on how often you can deposit cash into a money market account or how much you can invest. Deposits into money market accounts are not affected by possible transaction limits.

Withdrawals

Withdrawals are usually restricted to a maximum of six per calendar month. Keep in mind that the amount you can withdraw may be subject to daily limits imposed by ATMs or bank cashiers.

Transfers

Transfers out of your money market account may be restricted to six a month in the same way that withdrawals are, but there are no limits on how many times you make transfers into your account.

Checking and Debit Card Payments

Many money market accounts offer the convenience of check and debit card services similar to those on your main checking account but withdrawals using these methods may still be restricted to six a month. You could face an additional fee if you write more than the maximum number of checks permitted in a calendar month.  

Now let’s take a look at some of the major advantages and potential disadvantages that money market accounts offer depositors.

PROS OF MONEY MARKET ACCOUNTS

Money market accounts are popular choices for savings. Here are some of the reasons why:

Higher Interest Rates

Money market accounts offer higher interest rates than most other regular deposit accounts while offering many of the same services and federal insurance guarantees.

Tiered Interest Rates

Some accounts, like Wasatch Peaks Credit Union’s Money Market Savings Account, offer generous tiered interest rates. That means the more you deposit, the more interest you earn.

Debit and Checking Services

Many money market accounts offer checking and debit card access, making money easy to access in emergencies.

Federal Deposit Insurance

Money market accounts offer the opportunity to earn interest while enjoying the same level of deposit insurance as your regular checking and savings accounts. Your account is insured up to a balance of $250,000, including both your original deposits and interest earnings. Deposits are guaranteed by the FDIC (for banks) and the NCUA (for credit unions).

POTENTIAL CONS OF MONEY MARKET ACCOUNTS

At the same time, there are some potential drawbacks to using a money market account. These may include:

Higher Minimum Balances

Some institutions may require a higher initial deposit or minimum balance to open or maintain your money market account. At Wasatch Peaks, however, we have no minimum balance requirement for our Money Market Savings Account.

No Interest Threshold

Some money market accounts will not pay interest on deposits below a certain level. But with a Wasatch Peaks Money Market Savings Account, you’ll still earn interest on every cent you deposit.

Transaction Limits

Many money market accounts limit withdrawals or outbound transfers of funds to six per month. This can potentially limit your ability to access funds if you need money unexpectedly.

WHEN TO CHOOSE A MONEY MARKET ACCOUNT 

When used correctly, money market accounts offer a unique blend of convenience and earning potential. They offer:

• Higher APYs than checking or savings accounts
• Full deposit insurance with almost no risk
• High liquidity compared to other higher-interest savings options

A money market account, unlike a certificate account, also allows you to add to your nest egg whenever you like, even as it continues to accrue interest.

These features make a money market account a flexible and potentially powerful savings tool provided you understand and respect the transaction limits.

A money market account can be a great choice for anyone who is disciplined enough to set money aside from their budget but still needs high levels of flexibility, service, and liquidity, including: 

Start-out Savings

If you’re looking to start building a nest egg for retirement, create a starter fund for a house down payment, or just want to put money aside for a vacation, a money market account allows you to keep your cash separate but available. 

This flexibility allows you to build up reserves until you are ready to use the money to invest in an IRA, buy into a certificate account, or book a plane ticket.

Emergency Fund

An emergency fund is critical if you are to protect your budget and savings from unexpected expenses or a sudden loss of income. A money market account allows you to put money aside while keeping it instantly available should you need it.

Temporary Home

If you need to store a significant amount of money for an uncertain period, a money market account provides a handy place to stash excess cash. It’s a good place to park a lump sum from an inheritance, insurance benefits, or a loan payout while you figure out what you want to do with the money.

That said, a money market account would not be a good choice if:

• You need to use it for day-to-day expenses
• You tend to run out of money unexpectedly
• You plan to keep a large amount of money on hand indefinitely

In short, a money market account offers real flexibility and interest-earning power for anyone with a budget and a plan for their money. That makes it a great place to start building something for the future, while still taking care of today.

WASATCH PEAKS: YOUR MONEY MARKET PARTNER

A Wasatch Peaks Credit Union Money Market Savings Account is a smart way to start setting aside money for your future while keeping your options open. 

Our highly liquid Money Market Savings Account offers:

• No minimum balance
• Tiered interest payments—the higher the balance, the more you earn
• Dividends computed daily and compounded monthly
• Full NCUA deposit insurance up to $250,000

If you open a Wasatch Peaks Money Market Savings Account today, you can build for your future by adding money to your balance whenever you are able—and you’ll earn interest on every cent you put in. Plus, you can rest assured that your money market account is about the safest investment you can make. Click below to learn more. 

Are Money Market Accounts Safe?