The names are nearly identical, and banks and brokerages do little to help you tell them apart. But the two products behave differently at the exact moment something fails.
A money market account is a deposit account, a cousin of checking and savings. The FDIC insures it up to $250,000 per depositor, per bank, so if the bank collapses, the government makes you whole. A money market fund is a mutual fund sold through brokerages. It holds short-term debt like Treasury bills and commercial paper, and it aims to keep its share price at a steady $1.
That stability is a goal, not a promise. In 2008, the Reserve Primary Fund’s share price fell below $1 and investor cash was frozen while the fund liquidated. SIPC coverage protects you if your brokerage fails. It does nothing if the fund itself loses value.
Figuring out which one you hold takes two minutes. Start with where you opened it. Banks offer money market accounts, and brokerages offer funds. Read the name next. The word “fund” or a five-letter ticker symbol means it’s an investment, not a deposit. Scan your statement or the institution’s site for “Member FDIC.”
If your emergency savings turns out to sit in a fund, decide whether that risk is acceptable. Funds often pay a bit more, but the gap is rarely wide enough to justify keeping uninsured money you’re counting on in a crisis.
The rule going forward is simple. A ticker means it’s a fund, and an FDIC logo means it’s an account. Park your safety net where you can name exactly what protects it.