Closing a money market account without penalty is possible at almost any bank, because these accounts don’t lock your funds into a fixed term the way a CD does. The one charge to watch for is an early closure fee, usually $5 to $50, that some banks apply if you close within the first 90 to 180 days after opening. After that window, closing is generally free. A few smaller costs and timing mistakes can still catch you, so it’s worth planning the exit.
When the Early Closure Fee Applies
Some banks charge a flat fee if you close a money market account shortly after opening it. The window varies by institution but generally falls between 90 and 180 days from the account opening date, with fees running from $5 to around $50. Several large national banks don’t charge anything at all, so the practice isn’t universal.
No federal law caps the fee or sets the timeframe. Federal rules do require your bank to disclose any closure fee in the account agreement you received when you opened the account.1Consumer Financial Protection Bureau. 12 CFR 1030.4 – Account Disclosures If you can’t find the paperwork, call the bank or pull the disclosure from your online account before initiating closure. Past the early-closure window, this fee disappears.
Avoiding a Minimum Balance Charge in Your Last Month
Many money market accounts require a minimum daily balance, often $1,000 to $2,500, to avoid a monthly maintenance charge. If you start withdrawing funds in stages before closing, the balance can slip below that threshold and trigger a fee for the final statement period.
The simplest workaround is to close the account and withdraw the full balance in a single transaction rather than draining it gradually. If you close in person at a branch, you can typically walk out with a cashier’s check for the entire amount and skip the minimum-balance question altogether.
Time It Around Interest Crediting
Federal regulations require your bank to accrue interest on your full daily balance until the day you withdraw the funds.2eCFR. 12 CFR 1030.7 – Payment of Interest Accruing interest and actually paying it are different things, though. Most banks credit interest on a set schedule, often monthly or quarterly. If you close before that crediting date, the bank may keep the interest that accrued since the last payment.3Consumer Financial Protection Bureau. I Closed My Interest-Bearing Account, but the Bank Did Not Pay Me Interest Up Until the Day I Withdrew the Money. Why?
This is permitted as long as the forfeiture policy was disclosed in your account agreement.1Consumer Financial Protection Bureau. 12 CFR 1030.4 – Account Disclosures The amount is usually small. On a high balance near the end of a quarter, though, it can add up. If timing is flexible, close a day or two after interest credits post.
Redirect Automatic Payments and Deposits First
This is where most people make the expensive mistake. Automatic bill payments, recurring transfers, and direct deposits tied to a closed account will fail. The result is late fees on your credit card, lapsed insurance premiums, a missed loan payment, or a paycheck bounced back to your employer.
Federal law lets you stop a preauthorized electronic transfer by notifying your bank at least three business days before the next scheduled payment. The bank can accept the request by phone but may require written confirmation within 14 days.4Office of the Law Revision Counsel. 15 USC 1693e – Preauthorized Transfers You should also contact each merchant or biller directly to revoke authorization and update your payment method.5HelpWithMyBank.gov. How Can I Stop a Preauthorized Debit?
Before starting the closure, pull at least two months of statements and identify every recurring transaction. Update each company with your new payment information, then let the changes sit for about two weeks before you close. Closing the day after you switch autopay information is asking for a rejected transaction.
Joint Account? You’ll Likely Need Both Signatures
If the account has a co-owner, most banks require both owners to sign or provide written authorization before closing.6Consumer Financial Protection Bureau. Can I Remove My Spouse From Our Joint Checking Account? Some institutions let either owner close the account alone, but don’t assume yours is one of them. Call and confirm the policy before you show up expecting to walk out with a check.
What About the Old Six-Withdrawal Limit
Older guides warn that closing a money market account might push you past a federal six-withdrawals-per-month cap. That limit existed under Federal Reserve Regulation D for decades, but the Fed deleted it in April 2020.7Federal Reserve Board. Federal Reserve Board Announces Interim Final Rule to Delete the Six-Per-Month Limit on Convenient Transfers From the Savings Deposit Definition in Regulation D The change was made permanent, and the Fed suspended its compliance examination procedures for the old rule.8Board of Governors of the Federal Reserve System. CA 21-6 – Suspension of Regulation D Examination Procedures
Some banks still enforce their own internal transaction limits as a matter of policy. If yours does and you empty the account through many small transfers, you could face per-transaction fees. The fix is the same: pull the full balance in a single transaction.
How to Actually Close the Account
Most banks offer three routes: a branch visit, a call to customer service, or a request through the secure online portal. Branch visits are fastest. You hand over your ID, the representative processes the closure, and you leave with a cashier’s check or have the balance wired elsewhere. Phone closures work but typically take a few extra business days for disbursement. Some banks require a notarized written request by mail, especially on higher-balance accounts.
Have your account number and a government-issued photo ID ready. If you want the funds sent to another institution, bring the routing and account numbers for the destination. Ask for written confirmation that the account has been closed and the balance is zero. Without that record, you have no proof if the bank later claims a residual balance, charges a dormancy fee, or reports the account as abandoned to the state.
Expect a final statement showing the closing balance and any interest earned through the closure date. ACH transfers typically arrive within three to five business days.
You’ll Still Get a Tax Form Next January
If your money market account earned $10 or more in interest during the calendar year you closed it, the bank will send you an IRS Form 1099-INT the following January.9Internal Revenue Service. About Form 1099-INT, Interest Income That applies even if you closed in February with just $11 in interest for the year. The interest is taxable as ordinary income on your federal return.
If you earned less than $10, the bank isn’t required to send the form, but you’re still legally obligated to report the income. Keep the final account statement as a record.
Money Market Fund at a Brokerage? Different Rules
If what you actually hold is a money market mutual fund at a brokerage rather than a money market deposit account at a bank, the process is different. Money market funds are investment products, not FDIC-insured deposits. Redeeming shares can involve a settlement period of two to five days, and some funds impose short-term holding periods or redemption fees that bank accounts never charge. Check the fund’s prospectus before assuming the exit is penalty-free. Everything above applies to bank and credit union money market deposit accounts.