Saving money is a goal of many investors, and a money market account can help accomplish that objective. Money market accounts are an interest-bearing deposit account that usually pays a higher interest rate than a standard savings account. The interest is added to the principal deposit amount, which allows the balance to grow larger over time. The last thing you want to do is lose money, so if you have a money market account, it's important to understand if you'll receive a penalty when closing it.
There isn't a penalty to close a money market account. The funds in the account are protected up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) for credit union accounts, until the end of 2013. You can close the account at any time by speaking with a bank representative either in person or over the phone. You will receive the balance contained within your account at the time of closure. If the account is overdrawn, however, you will have to bring the account current before the bank will close it. As of January 2014, the protected amount in money market accounts will fall to $100,000.
According to the Office of the Comptroller of the Currency, if you close your money market account before the bank posts your accrued interest, then you will forfeit that interest and not receive those funds. Accrued interest is interest earned on the deposit that has yet to be paid. It's usually credited to the account at the end of the month; however, when a bank chooses to credit accrued interest varies. Check the deposit agreement given to you by your bank for exact crediting procedures.
A money market account often requires you to maintain a certain minimum balance. If you are unable to maintain that balance, the bank will charge you a monthly fee. Monthly fees can eat into any interest that you earn on the account. If you owe any fees to the bank, those fees will be deducted from your balance at the time you close the account. To prevent these fees and preserve your accrued interest, abide by the balance guidelines of the money market account.
A money market account limits the number of withdrawals you can make from the account. Federal allows up to six withdrawals from the account per statement cycle or per calendar month. No more than three of those withdrawals can be in the form of a check, draft or debit card. If you exceed the number of allowed withdrawals, the bank reserves the right to close the account altogether or convert the account to a different type of account. This means you will lose the higher interest rate associated with the money market account.