Yes, if the product is a money market deposit account at an FDIC-insured bank. The FDIC lists "money market deposit accounts (MMDAs)" by name among the products it covers, and the coverage is $250,000 per depositor, per insured bank, per ownership category, dollar-for-dollar, including principal and any interest accrued through the day the bank closes. Since the FDIC was founded in 1933, no depositor has lost a penny of FDIC-insured funds, and the Deposit Insurance Fund behind that promise is backed by the full faith and credit of the United States government.
The catch is in the first sentence. The same two words sit on a second product, the money market fund, which is not a deposit, is not insured by anyone, and is required by federal rule to say so in its prospectus. Most confusion about "money market" insurance is people holding one product and reading about the other, so this page covers the account, then the fund, then the brokerage sweep between them. It is the insurance companion to the hub on high-yield money market accounts; how a money market account actually works covers everything else.
What "per depositor, per bank, per ownership category" protects
The rules are the same as for any other deposit, and are CDs FDIC insured walks through them for certificates; the figures on the two pages are identical.
Per depositor. The limit belongs to you, not to the account. A money market account and a savings account in your sole name at the same bank are added together and insured to $250,000 in total.
Per insured bank. The limit applies at each separately chartered bank. Two accounts at two brands that run on one charter are one bank for insurance purposes, and online banks for high-yield savings explains how to check a charter in the FDIC's BankFind tool in about a minute.
Per ownership category. Deposits in different categories at the same bank are insured separately, which is the legitimate way to hold more than $250,000 at one institution. The FDIC recognises single, joint, certain retirement, trust, employee benefit plan, business and government accounts. For a household's cash, the three that matter:
| Category | How it is insured |
|---|---|
| Single | All sole-name deposits at the bank, added together, to $250,000 |
| Joint | Each co-owner's share to $250,000; the FDIC assumes equal shares unless the records say otherwise, so two co-owners are covered to $500,000 |
| Trust, including payable-on-death | Since April 1, 2024: $250,000 per unique eligible beneficiary, up to five, a maximum of $1,250,000 per owner per bank |
Certain retirement accounts, a money market account inside an IRA for example, are a category of their own, insured to $250,000 in aggregate per person per bank. Joint ownership has legal effects well beyond insurance; couples and money covers them.
On illustrative balances: $180,000 in a money market account and $90,000 in a certificate, both in your sole name at one bank, is $270,000 in one category, and $20,000 of it is uninsured. Neither account is over the limit; the category is. The FDIC's EDIE estimator applies the rules to your actual accounts; use it for any balance near the line.
Account or fund: the same two words on two different products
A money market account is a bank deposit. Under the Federal Reserve's Regulation D it is a "savings deposit", and the regulation names the money market deposit account as its example. The bank owes you the balance, the bank sets the rate, and the FDIC stands behind the bank.
A money market fund is a mutual fund, registered with the Securities and Exchange Commission and run under Rule 2a-7 of the Investment Company Act. It holds short-term, high-quality debt: Treasury bills and agency paper in a government fund, commercial paper and bank obligations as well in a "prime" fund, municipal paper in a tax-exempt fund. You do not hold a balance; you hold shares, priced every day, and nobody owes you $1.00 a share. The SEC requires every money market fund's prospectus to say that an investment in the fund "is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency" and, unless an affiliate has contractually committed to support the fund for at least a year, that "you should not expect that the sponsor will provide financial support to the Fund at any time, including during periods of market stress"; retail and government funds must add that the fund seeks to preserve a $1.00 share price but cannot guarantee it.
That legend is not boilerplate. Three things in it are load-bearing.
The price can move. Since the SEC's 2014 reforms, institutional prime and institutional municipal funds must price their shares at market value, a floating net asset value. Government and retail funds may keep a stable $1.00 share price using amortised cost and penny rounding. "May keep" is the operative phrase: a retail fund's $1.00 is an accounting convention that holds while the portfolio holds.
It has broken. On 15 September 2008 Lehman Brothers filed for bankruptcy. The Reserve Primary Fund, then $62.5 billion in size, held $785 million of Lehman debt, about 1.3% of its assets, and faced redemption requests of $40 billion within two days, roughly two-thirds of the fund. At 4:00 p.m. on 16 September its trustees wrote the Lehman paper down to zero and the share price fell to $0.97. Requests in before 3:00 p.m. that day were paid $1.00 a share; everyone after was not. The remaining assets went back to investors pro rata while lawsuits ran, with part held back pending their outcome, and the SEC's page tracking those distributions was still being updated in January 2010, sixteen months on. On an illustrative $50,000 that is a $1,500 loss and a wait measured in months, against no loss and next-business-day access for an insured deposit at a failed bank.
The 2008 backstop cannot be repeated the same way. Three days after the Reserve fund broke, the Treasury announced a one-year guarantee programme for money market funds, funded by up to $50 billion from its Exchange Stabilization Fund. The Emergency Economic Stabilization Act passed that October ordered the Treasury to repay that fund and barred it from using the Exchange Stabilization Fund for any future guarantee programme for the money market fund industry. Whether Congress would improvise differently next time is a guess, and this page does not make it.
The SEC has tightened the rules twice since. In 2014 it introduced the floating price for institutional funds and let boards impose liquidity fees and "gate", meaning suspend, redemptions in stress. In March 2020 prime and tax-exempt funds saw large outflows anyway, and the July 2023 reforms removed the gates, raised minimum liquidity to at least 25% of assets in daily liquid assets and 50% in weekly, and require institutional prime and institutional tax-exempt funds to charge a liquidity fee on days when net redemptions exceed 5% of net assets; any non-government fund's board must impose a fee if it judges one to be in the fund's interest. Those protect a fund's remaining shareholders. They are also a list of things that can happen to your money in a fund and cannot happen to a deposit: a fee on the way out, a price below what you paid, a wait.
What about SIPC? A brokerage account carries protection from the Securities Investor Protection Corporation, to $500,000 including $250,000 for cash, and SIPC treats money market fund shares as securities. That protection is about custody: if the broker fails and your shares are missing, SIPC restores them. In its own words it "does not protect against the decline in value of your securities", and it says plainly that this is not the same as FDIC protection for cash at a bank. A fund that repeats 2008 inside a solvent brokerage is a loss SIPC does not touch.
None of this makes a money market fund a bad product; a government fund holding Treasury bills is about as low-risk as a security gets, and money market vs high-yield savings sets out where each fits. It makes it a different product, and the difference is the whole of the word "insured".
How to tell which one you hold
| Clue | Money market account | Money market fund |
|---|---|---|
| Where it lives | A bank or credit union | A brokerage or fund company |
| The name | "Money market account", "money market deposit account", "money market savings" | "… Money Market Fund", usually with a ticker symbol |
| The paperwork | A deposit agreement and a Truth in Savings disclosure | A prospectus carrying the SEC's required loss warning |
| The rate | An APY the bank sets and can change | A 7-day yield the portfolio produces |
| The insurance line | "Member FDIC" or "Federally insured by NCUA" | "Not insured or guaranteed by the FDIC or any other government agency" |
| Can the balance fall? | No | Yes |
A ticker, a 7-day yield or a prospectus means a fund; an APY and a "Member FDIC" line mean an account. A product sold at a bank's investment desk with "money market" in the name is very often a fund; the FDIC's own warning is that non-deposit investment products "are not insured by the FDIC, even if they were purchased from an FDIC-insured bank".
Brokerage cash sweeps: insured, at one remove
Cash sitting in a brokerage account is usually "swept" each day into one of two places: a money market fund, with everything above applying, or a deposit account at one or more banks in the broker's sweep programme. FINRA, the brokers' regulator, describes both and notes that bank sweep programmes do carry FDIC insurance to the $250,000 limit per customer.
They do, through pass-through coverage, which is insurance that depends on paperwork. The deposit at the programme bank is in the broker's name for its customers, and the FDIC insures it as yours only if three conditions hold: the money is actually yours; the bank's records show the account is held on behalf of customers; and your identity and share are ascertainable from the bank's records or the broker's. If they hold, your share is insured at that bank, added to anything you hold there directly in the same category. If they do not, the deposit is insured to the broker, aggregated with everything else in the broker's name at that bank, and you are a creditor of the broker. The FDIC lists "companies that place their customers' funds into different banks to help customers maximize their deposit insurance coverage" as exactly this kind of arrangement, and its FAQ warns that deposits placed by a third-party broker can take extra time to resolve after a failure.
On illustrative numbers: a programme with four banks can cover a single-ownership balance to $1,000,000, four limits of $250,000, which is where "up to $1 million" headlines come from. If you already keep $100,000 directly at one of those banks, it now holds $350,000 of your money in one category and $100,000 of it is uninsured, however the marketing reads. Read the programme bank list against your own accounts.
The paperwork risk is not theoretical. In 2024 a fintech intermediary called Synapse, which kept the ledger between several apps and their partner banks, went bankrupt; the FDIC's vice chairman told the board that "over 100,000 customers lost access to their accounts" and that tens of millions of dollars appeared to be missing. No bank had failed, so deposit insurance never triggered; the dispute was over whose records proved what, and are high-yield savings accounts safe tells that story for savings apps. The FDIC proposed a rule on 17 September 2024 requiring banks holding such custodial accounts to keep beneficial-owner records and reconcile them daily; comments closed on 16 January 2025 and, as far as could be established when this was written, it had not been finalised. A brokerage sweep is not a fintech app, but the mechanism of coverage is the same one, which is why two of the FDIC's three conditions are about records.
What happens to a money market account the day a bank fails
The same as for any deposit, and more orderly than the word suggests. When a regulator closes a bank, the FDIC usually arranges for another insured bank to buy the deposits, a purchase and assumption, and your account reopens there, typically by the next business day; less often it pays depositors directly, usually beginning within a few days of closing. Interest is covered through the date of closing. Transferred accounts are insured separately from anything you already held at the acquirer for at least six months, after which everything there counts together. The acquirer can change the rate, but so could the old bank on any day; unlike a certificate there is no penalty to escape, so if the new rate is poor the only question is where to move the money. Balances above the limit become a claim on the failed bank's assets, paid pro rata as they are sold, often over several years and not necessarily in full. That is not a plan.
Credit union money market accounts are insured, by a different agency
A money market account at a federally insured credit union is not FDIC-insured, because a credit union is not a bank. It is insured by the National Credit Union Administration through the National Credit Union Share Insurance Fund, at $250,000 per member-owner, per insured credit union, per ownership category, backed by the full faith and credit of the United States. The NCUA's own record is that no one has lost a single penny of insured deposits at a federally insured credit union, and its not-covered list is the familiar one: stocks, bonds, mutual funds, life insurance, annuities, municipal securities. The fund-versus-account line, drawn a second time by a second agency.
The protection is equivalent in strength and separate in every rule: the categories, the trust arithmetic, the lookup tools. Verify a credit union at the NCUA, not in BankFind, and do not carry FDIC figures across on the assumption that they match. A small number of credit unions carry private, non-federal share insurance instead; the disclosure will say so, and that is a different promise.
What the insurance does not do
The question "is a money market account risky" mostly has answers that have nothing to do with bank failure.
It does not protect the rate. A money market account is a savings deposit; the rate is variable, and a cut arrives without ceremony. Money market account rates explains how to read one, and the hub says where the official baseline lives.
It does not govern access. Regulation D still lets a bank require seven days' written notice before a withdrawal from any savings deposit; almost none exercise the right, but the clause is in the rule. The Federal Reserve deleted the six-per-month transfer limit on 24 April 2020, so nothing in the regulation now caps the count; your account agreement may, and that is a term to read rather than assume.
It does not cover fraud. Money taken by someone else is a matter for the bank's error-resolution process and Regulation E, with deadlines that tighten the longer you wait. Two-factor authentication and transaction alerts do more here than any insurance.
It does not cover fees or inflation. A monthly fee below a minimum balance is a certain loss on a small balance, and cash held for decades loses purchasing power however safely it is held. Where to keep an emergency fund sizes the cash that belongs in an insured account, and HYSA vs CD vs T-bills covers the Treasury securities that are not FDIC-insured and do not need to be.
What to actually do
Read the insurance line before the rate. "Member FDIC" or "Federally insured by NCUA" means a deposit. "Not insured or guaranteed by the FDIC" means a fund. Neither line is buried.
Confirm the charter, not the brand. BankFind for a bank, the NCUA's own lookup for a credit union. If two brands share one certificate number, they share your limit.
Add up everything at that institution in each ownership category. Money market, savings, checking, certificates. Near $250,000, run EDIE before adding more.
If you use a brokerage sweep, read the programme bank list against your own accounts. Coverage at each bank is added to what you hold there directly, and it depends on the broker's records being right.
If you hold a money market fund, hold it on purpose. Know whether it is a government, prime or tax-exempt fund, whether its price floats, and that SIPC covers its custody and not its value. For an emergency fund, the answer on money market vs high-yield savings is the deposit.
If your bank is acquired after a failure, diarise six months. Transferred accounts are separately insured for at least that long; then everything at the new bank counts together.
Never let "money market" stand in for "insured". The words describe what the money is invested in, not who stands behind it; only the insurance line does that.
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