No, money market funds aren’t FDIC insured; FDIC cover applies to bank deposit accounts that may be labeled “money market,” not mutual funds.
Money market names get messy fast. A “money market fund” is an investment. A “money market deposit account” is a bank account.
This piece separates the labels from the legal cover, so you can tell what’s protected, what isn’t, and what to check before moving a big balance with less confusion.
In a brokerage app, the same cash balance can switch between a bank deposit and a fund with one setting.
Quick Coverage Map For Money Market Products
| Where Your Cash Sits | What It Is | What Protection Applies |
|---|---|---|
| Money market mutual fund (MMF) | Mutual fund holding short-term debt | No FDIC insurance; value can move |
| Government money market fund | MMF holding U.S. government/agency debt | No FDIC insurance; still an investment |
| Treasury money market fund | MMF heavy in U.S. Treasuries | No FDIC insurance; still an investment |
| Retail prime money market fund | MMF that may hold bank and corporate paper | No FDIC insurance; still an investment |
| Municipal money market fund | MMF holding short-term muni debt | No FDIC insurance; still an investment |
| Money market deposit account (MMDA) | Bank deposit account | FDIC insurance at an FDIC-insured bank |
| Brokerage cash sweep to bank deposit | Idle cash moved to partner banks | FDIC insurance at each program bank, within limits |
| Brokerage sweep to money market fund | Idle cash auto-buys an MMF | No FDIC insurance; broker failure handled differently |
Are Any Money Market Funds FDIC Insured? Here’s The Real Line
Are any money market funds FDIC insured? No. FDIC insurance is tied to deposits at an FDIC-insured bank, not to mutual funds, even when a fund tries to hold a steady $1 share price.
If you want FDIC cover for “money market” cash, you’re usually looking for a bank money market deposit account, or a brokerage sweep that moves cash into bank deposits. The label that matters is “deposit,” not “fund.”
Why The Naming Trips People Up
“Money market” gets used in two corners of the system:
- Money market funds live under securities rules. You buy fund shares that hold short-maturity debt.
- Money market deposit accounts live under banking rules. You hold a deposit at a bank, like savings with a different rate and rules.
Both are used as a parking spot for cash. Both can show yields that move with short-term rates. That’s where the similarities end.
What FDIC Insurance Covers
The FDIC covers certain bank deposit products when the bank fails. That set includes checking, savings, certificates of deposit, and money market deposit accounts held at an FDIC-insured bank. The FDIC lists the covered product types here: FDIC deposit products insured list.
FDIC insurance isn’t a promise that your balance can’t change because of fees or withdrawals. It’s a backstop if the bank fails, up to the legal limits and ownership rules.
What A Money Market Fund Is
A money market mutual fund is a pooled investment that buys short-term instruments such as Treasury bills, repurchase agreements, and other short-maturity debt. Many funds aim to hold a stable net asset value, yet they still carry market and credit risk.
You’ll often see a prospectus line that says the shares aren’t a bank deposit and aren’t insured by the FDIC. That’s the product in one sentence.
Where FDIC Can Show Up Near “Money Market”
You can still end up with FDIC cover while using a “money market” option. It happens in two common setups.
Bank Money Market Deposit Accounts
A bank MMDA is a deposit account. If the bank is FDIC insured, the balance is FDIC insured, within the standard coverage limits and ownership categories. MMDAs often have transaction limits, and banks set their own rates and fee terms.
The check here is simple: does your statement call it a deposit account at a named bank, and does the bank show FDIC membership?
Brokerage Sweeps That Move Cash Into Bank Deposits
Many brokerages sweep idle cash into partner banks. Your cash becomes a deposit at one or more banks in the sweep network. That deposit can be FDIC insured, within the standard limits, and the limit applies per depositor, per insured bank, per ownership category.
If your brokerage offers sweep choices, the SEC has a clear explainer on how these programs work and why a money market fund sweep is not the same thing as a bank sweep: SEC Investor Bulletin on cash sweep programs.
How To Tell What You Hold In Two Minutes
Don’t guess from the app label. Use the paperwork that defines the product.
Step 1: Read The Account Line On Your Statement
Look for words like “money market fund,” “government money market,” or a fund ticker symbol. That points to a mutual fund. Look for “deposit account,” “MMDA,” or a bank name and routing number. That points to a bank deposit.
Step 2: Check Where It’s Held
If the account is at a bank, you’ll see a bank name and often an FDIC logo. If it’s at a broker-dealer, you’ll see positions listed as shares.
Step 3: Find The Sweep Destination
Brokerage cash can sweep into:
- a bank deposit program (FDIC rules apply at the bank level), or
- a money market mutual fund (no FDIC cover for the fund shares).
Your broker’s “cash management” or “sweep” disclosure should name the destination and list any partner banks.
Step 4: Match The Protection To The Risk
FDIC is for bank failures and deposits. A money market fund’s share value can still move. A brokerage failure is a separate event with separate rules.
Common Mix-Ups That Trigger Bad Decisions
These are the traps that show up most.
Mix-Up 1: “It Says Money Market, So It Must Be FDIC”
Funds and deposit accounts share the label. Only the deposit account can be FDIC insured.
Mix-Up 2: “My Brokerage Cash Is FDIC Insured No Matter What”
It depends on the sweep option. Some accounts sweep into bank deposits. Others sweep into a money market fund. Some let you pick. Check what the default was when you opened the account.
Mix-Up 3: “SIPC And FDIC Are The Same Thing”
They cover different events. FDIC deals with insured bank deposits. SIPC deals with missing customer assets when a brokerage fails. Neither one guarantees a money market fund’s price.
What To Watch If You Want “No Surprises”
If your goal is predictability, get clear on three points: product type, where the cash sits, and how the FDIC limit applies to you.
Ownership Category And The $250,000 Limit
The standard FDIC limit is $250,000 per depositor, per insured bank, per ownership category. If your sweep spreads deposits across several banks, you might raise total insured capacity, yet your other deposits at those same banks count too.
If you already hold checking and savings at one of the program banks, the sweep deposits and your existing deposits add together for the FDIC cap in the same ownership category.
Fees, Yield, And Access Timing
Money market funds can pay yields that track short-term rates. Bank deposit accounts can do that too, yet rates and fees differ by bank.
Read the fund’s expense ratio. Read the bank deposit terms for minimums, fees, and transaction limits. If you plan to move money same-day, check the cut-off times.
Liquidity Fees, Gates, And Floating NAV Notes
Some money market funds can use liquidity fees or redemption gates under stress, and certain institutional funds can have floating net asset values. The rule set depends on the fund type and share class.
If you’re parking emergency cash, read the fund’s “principal risks” section.
Decision Checklist Before You Move Cash
Use this as a quick pass. It keeps you out of label traps.
- Name the product. Is it a money market fund share, a bank MMDA, or a sweep deposit?
- Name the institution. Bank name for deposits, broker name for fund shares.
- Find the protection type. FDIC for bank deposits; no FDIC for money market fund shares.
- Map the cap. Add up your deposits at each insured bank by ownership category.
- Read the exits. For funds, check settlement timing and any restrictions in the prospectus.
- Keep proof. Save the sweep disclosure as a PDF.
Quick Checks And What They Mean
| Check | If You See This | It Usually Means |
|---|---|---|
| Account label | “Money market fund” plus a ticker | You hold fund shares; no FDIC |
| Account label | “Money market deposit account” | You hold a bank deposit; FDIC may apply |
| Statement footer | FDIC member bank name | Deposit account at that bank |
| Sweep disclosure | “Sweep to program banks” | Cash becomes deposits at listed banks |
| Sweep disclosure | “Sweep to money market mutual fund” | Cash buys an MMF; no FDIC |
| Prospectus line | “Not a bank deposit” | It’s a mutual fund share |
| FDIC limit math | Other deposits at same bank | They share the same cap by category |
Next Steps If You Want FDIC Coverage
Start by deciding whether you want an insured deposit or you’re fine with a fund that aims for low price movement. If you want FDIC cover, pick a bank deposit account or a brokerage sweep that lands in bank deposits, then confirm the bank list and the ownership category math.
If you’re using a money market fund for yield, treat it as an investment with low volatility, not as a substitute for deposit insurance. Keep the prospectus handy and recheck the sweep setting after account changes.
Are any money market funds FDIC insured? The answer stays no. You can still get FDIC protection near “money market” by choosing the deposit version and verifying the details before you move a large balance.