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Transaction Limitations on Money Market Accounts

On Money Market accounts do ACH transactions count in three or fewer total for the month or the six or fewer? For example, if I have six ACH debits from a money market account and no other debits, am I over the limit?


Money market accounts (sometimes referred to by the acronym MMDA) are accounts which any type of customer, business or individual, can have. Banks often issue checks that can be used on their money market accounts, but, unlike a regular demand deposit account (DDA), an MMDA can pay interest. The downside is that a federal regulation (the Federal Reserve Board's Reg D, specifically) sets strict limits on the number of transactions of certain types that can be done on a money market account within a month or statement cycle.

Under Reg D, a customer may have no more than six "covered" transfers or withdrawals each month. Rather than explaining what is considered "covered" (and thus counted toward the limit), it is easier to describe what is not covered. Transactions that are done l) in person; 2) by messenger; or 3) at an ATM are not covered, so the Reg does not limit the number of such transactions a customer can do. Transactions that are done any other way are counted. That would generally include telephone transfers, online banking transfers, and pre-authorized transfers, and to make matters somewhat more complicated, no more than three of those transfers or withdrawals may be by check or debit card.

Bankers sometimes refer to it as the "seat of the pants" rule. If you have to get up off the seat of your pants to go do the transfer or withdrawal -- going to the bank in person, sending someone to do it for you, or going to an ATM, it doesn't count toward the limit. If you can do it without getting up, it probably does count.

Now you know the basics. What is described above is the maximum number of transfers and withdrawals allowed by regulation. Keep in mind that your bank can set lower limits on activity than the regulations require. For example, under your deposit account agreement with your bank, the bank could decide to allow up to three transfers/withdrawals, or, for example, they could count transfers and withdrawals regardless of the manner in which they're done. Generally, ACH transactions fall within the six-per-month limit that's imposed on preauthorized and certain other transfers. They are generally not counted toward the three-per-month limit that applies to third-party transfers by check and debit card.

Published on 8/08/06