Are money market accounts FDIC insured?

Closeup of a senior couple going over their home finances and considering a money market accountImage: Closeup of a senior couple going over their home finances and considering a money market account

In a Nutshell

Generally, money market accounts with deposits up to $250,000 are insured by the Federal Deposit Insurance Corp. or the National Credit Union Administration at most banks and credit unions. But there are important details to know about how deposit insurance works.
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When you put your money into a money market account, it’s generally protected up to $250,000.

A money market account is a type of savings account that you can open at many banks and credit unions. Money market accounts can earn a higher annual percentage yield, or APY, than traditional savings accounts, but may come with more limitations, such as restricting the number of checks you can write or withdrawals you can make every month.

Like other savings accounts, money market accounts are usually insured up to $250,000, which means if the bank or credit union you put your money in fails, the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) will guarantee your funds up to that limit.

Are money market accounts FDIC insured?

The funds you deposit in a money market account at an FDIC-insured bank are typically insured up to $250,000. You can find a list of insured financial institutions by using the FDIC’s BankFind tool. Similarly, money market accounts at federally insured credit unions are covered by the National Credit Union Administration (or NCUA).

What are the deposit limits?

If your bank or credit union fails, your funds will be restored, dollar for dollar, up to the $250,000 limit, assuming the financial institution is federally insured. Keep in mind that limit applies per person, per account type, per bank.

There are some ways you could have more than $250,000 insured by the FDIC.

  • If you have $250,000 in deposit accounts at one bank, you can also have more insured by the FDIC if you have a revocable trust at the same institution. The FDIC typically insures up to $250,000 per unique beneficiary. (Beneficiaries can be a living person, nonprofit or other charity.)
  • If you have a total of $250,000 in a single account at one bank, and up to another $250,000 in another bank, you would be covered up to $500,000 if both banks failed.

Is there a limit to how many money market accounts I can have insured?

That $250,000 FDIC deposit insurance is available per depositor, per bank, per ownership category. That means your deposits are automatically insured up to $250,000, across all your accounts of the same category at an FDIC-insured bank.

For example, if you have multiple money market accounts, or a money market account and another insured account that’s in the same category as determined by the FDIC — like a checking or savings account — the money in all those accounts at the same bank are added together and insured up to $250,000.

Do I have to apply for FDIC insurance?

No. Your deposits are automatically insured whenever an account is opened at an FDIC-insured bank.

How do money market accounts work?

Money market accounts, sometimes called money market deposit accounts or money market savings accounts, are offered by many financial institutions like banks and credit unions. They are similar to savings accounts in that you can use them to keep your money for things like an emergency fund.

Money market accounts usually pay higher interest rates than traditional savings accounts. In exchange for those higher rates, money market accounts usually come with some restrictions, such as maintaining a minimum balance and limiting the number of monthly withdrawals you can make.

Why do money market accounts pay higher interest rates?

Money market accounts typically offer a higher interest rate because they usually require larger-than-normal deposits and have limits on the number of transactions allowed.

How do money market accounts pay interest?

Typically with money market accounts, interest is compounded daily or monthly and paid monthly.

What restrictions are there on money market accounts?

There are limits to the number of transactions you can make on your money market account every statement cycle, including withdrawals and payments. You cannot withdraw money or make payments by check, debit card, draft or electronic transfer more than six times per month.

ATM withdrawals or payments via ATM, mail, messenger, telephone, check or in person do not count against the six-transaction maximum. Depending on your bank or credit union, you may also have to make a minimum deposit to open a money market account.

How do I open a money market account?

You can open a money market account at any financial institution that offers one. Be sure to shop around and understand the minimum balance requirement, transaction limitations, fees and the APY.

What financial accounts aren’t FDIC insured?

Not all financial accounts are insured by the FDIC, even if you opened them at FDIC-insured banks.

Some products that aren’t covered include …

  • Annuities
  • Money market mutual funds (these are offered by brokers, not banks or credit unions, so they aren’t covered by the FDIC)
  • Stocks
  • Bonds
  • Government securities
  • Municipal securities
  • U.S. Treasury securities

Theft and fraud

Deposit insurance protects your deposits in the event the FDIC- or NCUA-insured financial institution fails. However, FDIC insurance does not cover losses due to fraud or theft. Your financial institution may have a separate policy that covers those issues.

Depositing via financial apps

More people are using online banks and banking apps, which may not be backed by federal insurance. Check with your bank to make sure it has FDIC insurance.  

Banks that are FDIC insured, whether they’re traditional brick-and-mortar banks or online, means your funds are insured up to the coverage limit. Online-only banks and banking apps, such as Chime, may have agreements with FDIC-insured banks that allow them to offer insured deposit products. But it’s important to understand that non-bank companies are never FDIC insured.

What’s next?

Should your financial institution fail, money market funds up to $250,000 generally are insured by the FDIC or NCUA per person, per account category, per institution. If you believe a money market account might be right for you, be sure to do your research and shop around for a competitive APY and deposit requirement that makes sense for you. Make sure you’re familiar with any limitations or monthly maintenance fees.

You may also want to consider other federally insured deposit accounts or investment products, like savings accounts or certificates of deposit that may offer you more flexibility or other perks.

About the author: Sarah Sidlow is a freelance writer and editor based near Detroit. She has a master’s degree in journalism from Georgetown University. Sarah’s work has appeared in Luxembourg’s national newspaper, Washington City Paper… Read more.