Are Money Market Accounts Safe?

Definition of "Are money market accounts safe?"

Edward Cole real estate agent

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Edward Coleelite badge icon

Springer Realty Group

Undoubtedly, the security and safety of your funds and investments are of top priority. How can you be sure if government-backed protection does not cover you? Inflation and recession fears have impeded many people from opening an account or investing in assets. However, this article will reveal a profitable way of investing your hard-earned money. At the same time, you won’t fear security breaches or bank failures.

Why should you consider opening a money market account over a savings account?

When opening a savings account at your bank or credit union, a teller or financial consultant will explain the critical differences between a checking and a savings account. But they can also bring the many advantages of a money market account to your attention.

Opening a money market account is considered one of the trendiest investment opportunities during a recession and inflation. Money market accounts offer a winning combination of safety and potential returns. No wonder they are an attractive choice for numerous investors. But are money market accounts really safe in the United States?

Discover the perks of the money market and savings accounts!

First, we must discover what we’re dealing with. An MMA is a deposit account opened at banks that provide three unbeatable perks: better returns, stability, and liquidity. Navigating the money market, you’ll find out that it offers more lucrative interests than an old-fashioned (yet still reliable) savings account. You might wonder whether better terms and interest come at the price of reduced account security. The answer, in short, is No!

Can we recommend opening a money market instead of a traditional savings account? A savings account serves to park your cash while benefiting from pocket change. Secondly, a money market account will earn you (slightly) more via greater interest. Nevertheless, both accounts will be safeguarded by a federal agency. 

Your money is ensured by the Federal Deposit Insurance Corporation (FDIC)!

The statutes and protections put in place by the US government and the Federal Deposit Insurance Corporation (FDIC) ensure the safety of your money market account.

What is this institution, and why should you know about it? The FDIC is an independent federal government agency that protects depositors and investors in American banks. In other words, the government steps in if all hell breaks loose, like during the most infamous recessions in US history

How does FDIC secure your deposits?

The agency provides deposit insurance. Suppose your bank fails. In that case, the FDIC will get involved and reimburse depositors up to $250,000 per company, organization, or institution. This coverage includes money market accounts held at FDIC-insured banks. 

This protection extends to the principal amount and the accumulated interest in your money market account. Beware, though! The $250,000 limit applies per depositor. What happens if you have deposited more than that sum? In that case, we recommend you spread your funds across multiple insured institutions!

The Securities and Exchange Commission guarantees an extra layer of protection.

Besides FDIC, the Securities and Exchange Commission (SEC) imposes rules on the quality and maturity of the securities held in money market accounts. These regulations limit the risk exposure of your funds. Plus, they ensure banks invest in low-risk assets and financial instruments, such as Treasury bills, government securities, and highly-rated short-term corporate debt.

What can still go wrong with money market accounts?

You must also understand that the system has a few loopholes. Money market accounts are safe to some extent, but they are not entirely risk-free. 

First, the bank may face financial difficulties. Seldom banks fail, and depositors can experience temporary obstacles in accessing their funds. However, with the FDIC’s deposit insurance, most depositors have been able to recover their money. For this reason, choose a reputable bank with a strong track record!

Secondly, we know how politics can bring pressure on business. Similarly, the Federal Reserve’s monetary policy influences your money market account rate. In a low-interest-rate environment (that is, in the is pre-Covid period), the returns on money market accounts are modest. We recommend opening a high-yield savings account to get the most out of your investment. Or don’t be afraid to dream big and start investing in real estate!

Assessing your financial goals and considering other investment options is vital if you’re seeking higher yields.


Everybody in the States considers money market accounts to be safe investments. The FDIC insurance and regulatory supervision provide heightened protection for investors and depositors. However, like any investment, money market accounts still carry some risk. We suggest carefully researching and selecting a prestigious bank or credit union when opening a money market account to dodge financial dangers!

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