Money Market Account

Money market funds, distinct from money market deposit accounts, are a type of mutual fund that are regulated by the Securities and Exchange Commission (SEC). Regulations were significantly updated in 2016 that notably include establishing a floating net asset value (NAV) for funds vs. the previous fixed net asset value of $1 per share.

Money market savings accounts are deposit accounts rather than transaction accounts, though they do allow up to six withdrawals per month. Money market savings and checking accounts both pay variable interest. Money market checking accounts, also called high-yield checking accounts, have minimum checking transaction and direct deposit requirements, unlike money market savings accounts.

Money market accounts are often confused with money market funds, which are a type of mutual fund. Other misconceptions include that money market accounts protect deposits from inflation, which they do not, and deposits are protected from bank failure regardless of amount. As with other types of deposits, money market accounts are only protected up to $250,000 per account.

Money market funds are a type of mutual fund. Some types of money market funds include U.S. treasury funds, U.S. Government and Agency funds and tax-free municipal money funds. Another type of money fund is a diversified taxable money fund that invests in such things as commercial paper and repurchase agreements offered by U.S. and foreign corporations.

Money market savings and checking accounts, such as those offered by commercial banks, are safe as they are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per account.  Money market funds are mutual funds and as such are not insured by the FDIC.  Most, however, invest in U.S. government securities and are therefore backed by the full faith and credit of the United States government.