The rule that made a money market account different from a business savings account was deleted in April 2020, and the fee for breaking it survived

Our comparison table had a column headed Money market and a row in it that read 6 withdrawals a month. It sat there for two years. I wrote it, I checked it twice, and I never once opened the regulation it was supposed to be describing. A reader in Tulsa wrote in June to say her bank had allowed 14 transfers out of a business money market account in one calendar month, and she wanted to know what the penalty would be and whether she should move the money before the statement closed. I told her to expect a letter within the week. No letter came, and none was ever going to come.

I was wrong about all of it. That row had been wrong since April 2020, so I had been publishing it for roughly 26 months after it stopped being true, and I have no idea how many people read it.

This is the corrected comparison. The regulation that made these 2 products different was deleted 6 years ago. What is left behind is not a rule at all, and I think that is the harder thing to explain: it is a set of choices your bank made, which the bank can change with notice, and which you will find written down only in a document almost nobody opens.

The regulation does not know the difference

I started where the difference is supposed to live. Regulation D at 12 CFR 204.2(d)(2) defines what a savings deposit is, and the definition names the money market account inside itself, as an account “such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA)”.

One definition, doing the work of three product names. The same paragraph now ends by saying the depositor may make transfers and withdrawals “regardless of the number of such transfers and withdrawals or the manner in which such transfers and withdrawals are made”. Anybody running a business savings account vs money market account comparison at the level of federal rules is comparing 2 members of 1 category, and the category has a single set of rules for both.

This is not a quibble about drafting and I want to be plain about how far it goes. No federal rule requires a money market account to behave differently from a savings account in any respect: not the rate, not the minimum balance, not the transfer count, not the debit card, not the cheque book, not the fee for dropping below whatever line the bank drew this year. Every difference printed on a product sheet was put there by a bank. Two banks can make opposite choices and both are correct.

I find that harder to tell people than the old answer was. The old answer had a number in it and sounded like law. This one sounds like an invitation to read 40 pages of small print, which is exactly what it is.

The limit that stopped existing

The regulation d six transfer limit was real, and for decades it was the honest answer to why these accounts differed from a checking account. The Board of Governors deleted it in an interim final rule published on 28 April 2020, at 85 FR 23445, effective on the 24th and applicable from the 23rd. The summary says the amendment exists “to delete the numeric limits on certain kinds of transfers and withdrawals that may be made each month from ‘savings deposits’”.

I had assumed this was a pandemic measure that would lapse when branches reopened. I should have read the reasoning before repeating that, because the reasoning has nothing to do with branches. Reserve requirement ratios had been cut to zero on 26 March 2020, and once that happened the Board wrote that keeping a regulatory distinction between reservable transaction accounts and non-reservable savings deposits was “no longer necessary”. The limit had been holding up a monetary policy tool. The tool was switched off a month before the limit went.

So my row was not merely out of date. It described the plumbing of a machine that had already been unplugged.

Here is what keeps the row from being entirely stupid, and most summaries of the change leave it out. The rule permits banks to stop counting. It does not order them to. The Board put the question to itself at Q.1 and answered that the rule “permits depository institutions to suspend enforcement of the six transfer limit, but it does not require depository institutions to do so”.

A money market account withdrawal limit of 6 a month is therefore still lawful in 2026. I keep having to say that out loud to people who assume a deleted rule means a deleted term. It is a contract term now rather than a regulation, and that changes who you argue with when it bites, because quoting a rule at somebody achieves nothing when the number came out of their own product committee.

The fee survived the deletion as cleanly as the limit did. At Q.10 the Board says that Regulation D “does not require or prohibit depository institutions from charging their customers fees for transfers and withdrawals in violation of the six transfer limit”, so the deletion “does not have a direct impact on the policies or account agreements” of banks that charge them. I had expected the fee to fall with the rule. It did not, and 2 of the 4 agreements I read last week still price the seventh transfer at 10 dollars.

What the deletion left standing

One clause survived and I think it is the more alarming of the two. Under 204.2(d)(1) a savings deposit is an account where the depositor is not required by contract but “may at any time be required by the depository institution to give written notice of an intended withdrawal not less than seven days before withdrawal is made”.

Seven days of notice, on money you already own. I read paragraph (d)(1) three times before I believed it was still current.

The 2020 rule was asked directly whether it touched that clause and answered no at Q.4, so the reservation of right survives untouched on savings accounts and on money market accounts alike. Paragraph (d)(3) adds that a deposit “may continue to be classified as a savings deposit even if the depository institution exercises its right to require notice of withdrawal”, which tells me the drafters expected it to be used occasionally rather than never.

I have never met a business that had this invoked. I asked 4 bankers whether they had. Two said they had not seen it in 20 years between them, 1 said it exists for a bank run and would be authorised somewhere well above his pay grade, and 1 did not know the clause was in the agreement he sells. That is not evidence of anything much. It is 4 people in a country with more than 4,000 banks, and I am recording it only because the clause is in every agreement I have read and in none of the marketing.

Twenty five basis points that are not what they look like

The rate gap is the argument people actually care about, so here is the published version of it. The FDIC national rate table dated 17 August 2026 puts savings at 0.38 percent and money market at 0.63 percent, with interest checking at 0.07 and a 12 month CD at 1.71. The cap on all 3 non-maturity products is 4.38 percent.

A gap of 25 basis points looks like a reason to choose. It looked that way to me for years.

I built a spreadsheet on the strength of it, worked out that a 200,000 dollar operating balance earns roughly 500 dollars more a year in the money market column, then read footnote 2 of the same table and threw the spreadsheet away. That took most of an afternoon and I am still slightly annoyed about it, mostly because the footnote is not hidden anywhere and I had simply never scrolled that far down the page.

Footnote 2 says the savings and interest checking rates “are based on the $2,500 product tier”, while the money market and CD rates “represent an average of the $10,000 and $100,000 product tiers”. The two figures are measured at different balances. Some unknown part of the gap is the tier and not the product at all.

I cannot tell you how much of the 25 points survives once the balance is held constant. Nothing in the published table lets anybody work that out, and I went looking for a version that does. What I can tell you is that business money market account rates quoted to a real company are a negotiation rather than a rate card, and that the comparison worth making is 2 written quotes from 2 banks at your own balance on the same afternoon. That takes about 40 minutes of telephone. It beats every national average I have ever cited, including the ones I cited last month.

Splitting the money buys you nothing

This one costs people real money in a bad week and I hear it most often from careful bookkeepers. Put half in savings and half in the money market account, the reasoning goes, and the risk sits in 2 places instead of 1.

It sits in exactly one place. Insurance for a company works by owner rather than by product. All deposits owned by a corporation, partnership or unincorporated association at the same bank “are added together and insured up to $250,000”, separately from the personal accounts of the owners or members. Two accounts at 1 bank is 1 bucket of 250,000 dollars. Three accounts is the same bucket, and a fourth with a different product name on the statement is still that bucket.

Is a money market account fdic insured, then? Yes, and that is precisely why the split does nothing for you. Checking, savings, money market deposit accounts, certificates and qualifying prepaid cards are all deposits, all in 1 category, all summed for the same entity at the same bank. Coverage is bought with a second bank or with a sweep arrangement. I have never found a way to buy it with a second product, and I have looked hard, because clients ask for one about twice a month.

The name that costs money

Now the collision that matters more than everything above it. A money market account vs money market fund comparison is not two similar things wearing different labels. One is a deposit and the other is a security. Only one of them is insured.

The FDIC list of products it does not cover names mutual funds outright, alongside stocks, bonds, crypto assets, annuities and Treasury bills. A money market fund is a mutual fund. If operating cash sits in one, the 250,000 dollar figure has nothing to do with you any more, and what you have instead is SIPC, which replaces missing securities up to 500,000 dollars including up to 250,000 in cash if the broker fails, and which says plainly that it “does not protect an investor against the loss in value of a given investment”.

The FDIC also tells you what the disclosure sounds like when it happens, and I now watch for the exact wording: “This product is not a deposit or other obligation of, or guaranteed by, the bank.” I have seen that sentence in a footer under a heading that said Savings. It was not false in any respect. It was set in grey type about a third the size of the heading above it.

The rules for these funds were rewritten in a release published on 3 August 2023, adopted “to improve the resilience and transparency of money market funds”. Fund boards can no longer suspend redemptions, which is genuinely good news and the one change in that release I would call an unqualified improvement, because a gate is the failure mode where a treasurer does everything correctly, files the redemption on time and still cannot pay anybody on Friday. Daily liquid assets must run at 25 percent of the portfolio and weekly at 50. Institutional prime and institutional tax-exempt funds now have to charge a liquidity fee whenever net redemptions pass 5 percent of net assets in a day, and they price in a floating value to 4 decimal places rather than a fixed dollar.

I read that fee rule as a business rather than as an investor and it changes shape. The day everybody wants their money is the day taking yours out has a price attached, set by formula, with nobody on the other end holding authority to waive it for you. For a fund I would defend that design. For the account that pays salaries on the 30th I would not.

A digression about the phrase itself

An aside, and it will not help your account. The phrase money market is doing three unrelated jobs on the same bank website and I have started to find that hard to read past.

There is the money market as an actual market in short dated paper. There is the money market deposit account, which is a savings deposit under the paragraph quoted above. And there is the money market fund, which holds the paper directly, sits with a different regulator under a different statute, and gives a different answer about insurance. A bank may offer all three without drawing your attention to which is which. Nothing in the names warns you. I have counted the three usages on a single page of one bank website, sitting in the navigation, in a product tile and in a footnote about wealth management, and nothing on that page told me the third one was a security rather than a deposit.

The regulator noticed the naming problem and declined to touch it. At Q.7 the Board confirms the rule “does not require depository institutions to change the name of any accounts or products that have the words ‘savings’ or ‘savings deposit’ in the name”. My suspicion is that this is 40 years of product naming nobody was given a mandate to tidy, rather than anything designed, and I would not defend that as more than an impression. Anyway, back to the account.

The 5 questions I would send by email

By email, because the answers vary from bank to bank, almost none of them is published, and an answer you can quote back later is worth several times an answer you remember hearing. I send all five in one message now. It reads as brisk rather than rude, in my experience, and it produces one reply instead of four.

Do you still enforce a transfer limit here, and what happens on the seventh transfer? It is a contract term now, so I ask which clause carries it and I ask for the fee in the reply. Some banks charge per excess transfer under the same policy the Board declined to disturb at Q.10, some convert the account to checking, and some stopped counting in 2020 without ever updating the sheet the branch hands out.

What rate applies at my actual balance, in writing, today? The published 0.63 percent is an average across 2 tiers and across the country. It is not an offer to anybody.

Does this account carry the seven day notice clause, and where does it sit? It will be there in some form. I ask in order to put on the record that I have read the agreement, which quietly changes the tone of every later conversation about it.

Is this product a deposit or a fund? I ask in exactly those words, because the marketing name will not tell me. If the answer is a fund, the 250,000 dollar figure does not apply and the last question changes as well.

How much of the company money sits at this bank in total, across every account? That total is what is covered, and it is the 1 number here that a second product at the same institution cannot improve by a single dollar.

The number I could not find

One figure would settle the question my reader asked and it does not exist anywhere. Nobody publishes how many banks still enforce the six transfer limit. The Board permitted suspension, declined to require it, asked for no reporting on the choice, and there is no line in the whole document asking a bank to say which way it went. The Board did ask for comment on “the considerations that may lead depository institutions to choose, or to be required, to retain a numeric limit”, which suggests it wanted to know and never published what it learned.

So the honest answer to somebody asking whether her account has a withdrawal limit is that I do not know, and neither does anyone else without reading her particular agreement. The complaint database gives volume without answering the question: 5,958 complaints about savings accounts in the 12 months to 1 August 2026 against 71,031 about checking accounts, of which 3,645 sit under managing an account, the bucket a surprise transfer fee lands in.

The detail I keep thinking about is smaller than any of that. The rule that deleted the limit was published as an interim final rule with comments due by 29 June 2020. It is the end of August 2026 and I have not found a final one. Six years is a long time for a definition that every deposit agreement in the country hangs off to sit in a provisional state, and I could not work out whether that means the Board considers the matter closed or simply never came back to it.