Money Market Account vs. Fund: Compare Before You Choose

For U.S. consumers comparing places to hold money for a near-term purchase or expense. This comparison does not recommend a particular account or fund.

Similar names hide different products: one is a deposit account; the other is a mutual-fund investment.

Money market deposit account

At an FDIC-insured bank, eligible deposits are protected within applicable insurance limits.

At a federally insured credit union, check NCUA coverage. Include other accounts there when checking coverage.

A minimum deposit may be required. Check limits on checks, debit-card payments and electronic transfers against your expected use; do not assume every withdrawal method has the same restrictions.

Money market fund

Check-writing does not make a fund a deposit.

Funds are not FDIC-insured.

Retail and government funds generally target a stable share price; losses remain possible. Yields generally change with short-term rates. Shares are generally redeemable on business days; verify when proceeds can reach your spending account. Rules vary by fund type. All funds may charge redemption fees, called liquidity fees. In certain stressed circumstances, funds may permanently stop redemptions and close. Read the disclosures, not just the name or usual share price.

Make the choice for your task

Eliminate products that cannot meet your required protection, loss tolerance or access needs; compare costs only among the remaining choices.

Start with your own amount and spending date. If an answer is missing, leave that option undecided rather than filling the gap with an advertised return.

General education, not an individualized investment recommendation.

CFPB · SEC

Photo by Sasun Bughdaryan on Unsplash.