Jane Dotson
Money market accounts are a type of deposit account, typically offered by banks and credit unions, that combines the benefits of savings and checking accounts. They offer higher interest rates and check-writing capabilities. Money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). The FDIC insures money market accounts issued by banks, while the NCUA insures those issued by credit unions. This insurance protects account holders' deposits up to a limit of $250,000 per depositor, per institution, per account category. This means that if you have more than $250,000 in a single account category at one bank, only the first $250,000 will be covered by FDIC or NCUA insurance.
| Characteristics | Values |
|---|---|
| Insurer | Federal Deposit Insurance Corp. (FDIC) or National Credit Union Association (NCUA) |
| Insured amount | Up to $250,000 per depositor, per financial institution, per ownership category |
| Insured by NCUA? | Yes, if the account is issued by a credit union |
| Insured by FDIC? | Yes, if the account is issued by a bank |
| NCUA display requirements | Federally insured credit unions must display the official NCUA insurance sign at each teller station, website, and branch |
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What You'll Learn
Money market accounts are FDIC-insured
Money market accounts are a type of deposit account, typically offered by banks and credit unions. They are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). The FDIC is a government agency that helps maintain the safety of the US banking system and insures bank deposits. The NCUA, on the other hand, regulates and insures customer deposits at federal credit unions.
Money market accounts are insured up to $250,000 per depositor, per financial institution, per ownership category. This means that if you have a single-owner money market account, it is protected up to $250,000. If you co-own an account with another person, each of you is insured for $250,000 on the account, for a total of $500,000. This insurance protection is provided automatically for deposit accounts at any FDIC-member institution, and you don't need to apply for it.
Money market accounts offer benefits such as earning interest, check-writing capabilities, and insured deposits. They tend to pay higher interest rates than other types of savings accounts, but they usually limit the number of transactions you can make by check, debit card, or electronic transfer. They often require a higher minimum balance and may limit withdrawals.
Overall, money market accounts are a low-risk option for individuals looking to grow their savings with the added benefit of insurance protection on balances up to $250,000.
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NCUA insurance covers credit unions
The National Credit Union Administration (NCUA) is responsible for regulating federal credit unions, insuring deposits, and protecting members of credit unions. The NCUA was created by Congress in 1970 to insure members' deposits in federally insured credit unions.
The NCUA's Share Insurance Estimator helps consumers, credit unions, and their members understand how its share insurance rules apply to member share accounts—clarifying what's insured and what portion, if any, exceeds coverage limits. Federally insured credit unions offer a safe place for individuals to save their money, with deposits insured up to at least $250,000 per individual depositor.
The National Credit Union Share Insurance Fund, established by Congress in 1970, insures individual accounts at federally insured credit unions up to $250,000. It also separately protects IRA and KEOGH retirement accounts up to $250,000. The fund is administered by the NCUA and backed by the full faith and credit of the United States.
Credit union members are automatically covered by the Share Insurance Fund when they join a federally insured credit union. Federally insured credit unions must display the official NCUA insurance sign at each teller station, on their website, and wherever they accept share deposits or open accounts.
Money market accounts, which are typically offered by banks and credit unions, are insured by the Federal Deposit Insurance Corp. (FDIC) or the NCUA. The NCUA insures money market accounts issued by credit unions, providing deposit insurance that safeguards your money even if the financial institution fails.
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Limits of $250,000 per depositor
Money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund (NCUA). The FDIC insures money market accounts issued by banks, while the NCUA covers those issued by credit unions. The NCUA is the government agency that insures deposits at member credit unions. The NCUA's counterpart for banks is the FDIC.
The NCUA insurance limit is $250,000 per depositor, per federally insured credit union, per ownership category. This means that the NCUA insurance covers up to $250,000 of the total balance of individuals' credit union accounts. For example, if an individual has $$150,000 in a savings account and $100,000 in a money market account at the same credit union, their total deposits do not exceed $250,000, so they are fully insured by the NCUA.
For joint ownership accounts, the NCUA provides additional coverage of up to $250,000 for each account holder. This means that a joint savings account could be insured for up to $500,000, consisting of $250,000 for each account holder.
The NCUA insurance coverage also varies for different types of accounts, such as single ownership accounts, joint ownership accounts, IRAs and other certain retirement accounts, revocable trust accounts, and irrevocable trust accounts. For single ownership accounts, the NCUA insurance limit is $250,000 per member-owner. For joint ownership accounts, the limit is $250,000 per owner, with the primary owner being a member of the credit union. IRAs and certain other retirement accounts are also insured up to $250,000 per member-owner.
The NCUA insurance coverage is automatic for members of federally insured credit unions, and there is no need for members to apply for it separately. Credit unions are required to prominently display the official NCUA insurance sign at each teller station and on their websites. The NCUA insurance is backed by the full faith and credit of the United States, and no one has lost insured deposits at a federally insured credit union.
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Money market funds are not insured
Money market accounts are a type of deposit account, usually offered by banks and credit unions. They offer benefits such as earned interest, check-writing capabilities, and insured deposits. Money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). The FDIC and NCUA guarantee that depositors' money will be protected up to certain limits in the event of a bank's failure.
Money market funds, on the other hand, are a unique type of mutual fund that can be purchased through a brokerage firm or a mutual fund company. These funds invest in assets, so they are not federally insured. Money market funds are considered investments, and as such, are not guaranteed. This means that there is a risk of losing money by investing in a money market fund. An investment in a money market fund is not a bank account and is not insured or guaranteed by the FDIC or any other government agency.
The lack of insurance on money market funds means that there is a risk of losing money if the investments do not perform as expected. This risk is inherent in any investment and is why diversification and understanding the specific fund's policies are crucial. Money market funds tend to be low-volatility investments that hold short-term, minimal-risk securities, but they are not risk-free.
In summary, money market accounts are insured deposit accounts, typically offered by banks and credit unions, and are insured by the FDIC or NCUA. Money market funds, which are purchased through brokerage firms or mutual fund companies, are not insured because they are considered investments, and the government does not offer insurance on mutual funds. Investors should be aware of this distinction and carefully consider the risks before investing in money market funds.
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Federally insured credit unions
The NCUA was established by Congress in 1970 to insure member share accounts at federally insured credit unions. Credit union members are automatically covered by share insurance when they join a federally insured credit union; they do not need to apply for it. The Share Insurance Fund insures individual accounts at federally insured credit unions for up to $250,000, and a member's interest in all joint accounts combined is insured for up to the same amount. The fund also separately protects IRA and KEOGH retirement accounts for up to $250,000.
Credit union members can learn more about their share insurance coverage by downloading and printing brochures available in English and Spanish on the NCUA's consumer website, MyCreditUnion.gov. They can also calculate the amount of their insured funds using the NCUA's Share Insurance Estimator.
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Frequently asked questions
Yes, money market accounts are FDIC-insured or NCUA-insured up to $250,000 per depositor, per financial institution, per ownership category.
Money market accounts are deposit accounts, while money market funds are investment products. Money market funds are not federally insured.
Money market accounts offered by banks are insured by the FDIC. Credit unions offer money market accounts insured by the NCUA. Check your bank or credit union's website for "Member FDIC" or "Federally insured by NCUA".
To maximize your insurance coverage, you can open accounts at different banks or open multiple accounts at the same bank in different ownership categories.
