Money market accounts vs. money market funds
Same name, very different products. One is a bank account, one is an investment. Here's how to tell them apart.
Written for plain-English understanding by Joseph Citizen. Why I built this →
These two products sound identical and are often confused. They serve similar purposes — holding cash you want to earn interest on — but they're structured completely differently.
Money market account (MMA)
A type of savings account at a bank. FDIC-insured up to $250,000. Often pays a competitive rate, sometimes with check-writing privileges. Your principal is guaranteed safe.
Money market fund (MMF)
An investment fund (a type of mutual fund) that holds very short-term, very safe debt — Treasury bills, high-grade commercial paper. NOT FDIC-insured. Held at a brokerage, not a bank. Generally considered very safe — major MMFs have rarely 'broken the buck' (lost principal) — but it's an investment, not a deposit.
When to use which
- MMA — for emergency funds and money you want bank-level guarantees on
- MMF — for cash sitting in your brokerage account between investments, often pays better than a HYSA
Keep the momentum going.
Certificates of deposit (CDs): the predictable cousin
A CD is a savings account where you agree to lock the money up for a set time in exchange for a guaranteed rate. Useful in some situations, ignored in others.
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Important
This lesson is general financial education only. It is not personal investment, tax, accounting, or legal advice. Examples are illustrative. Past performance does not guarantee future results.