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Money Market Accounts vs. Money Market Funds |
A money market account (MMA), or money market deposit account (MMDA), is an interest-earning savings account offered by a FDIC-insured financial institution with limited transaction privileges. Broadly, you are limited to six transfers or withdrawals per month with a maximum of three transactions to third parties or accounts at other banks. What is a Money Market Fund? A money market fund is a mutual fund that invests solely in cash and cash equivalent securities, which are also often referred to as money market instruments. These investments are short-term, very liquid investments with high credit quality. Money Market Accounts vs. Money Market Funds Money market accounts typically pay a high annual percentage yield (APY) while keeping your money safe. Money market accounts are FDIC-insured up to FDIC coverage limits. Money market funds, unlike money market accounts, are not FDIC-insured. Money market funds are sponsored by fund companies and carry no guarantee of principal. The U.S. Treasury will temporarily insure money market funds for the next year. While this temporary insurance coverage is not subject to coverage limits, it only covers money market funds held as of September 19, 2008 and excludes any subsequent contributions.
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