“Money market” labels two different products. A money market account (MMA) is a deposit account at a bank or credit union. A money market fund (MMF) is a mutual fund you buy inside a brokerage (Fidelity, Vanguard, Schwab, and others). Mixing them up changes what protects your cash if the issuer fails.
MMA basics: What is a money market account. Deposit HYSA vs MMA for near-term cash: HYSA vs money market account. Cash alternatives nearby: High-yield savings accounts and Treasury bills for cash.
Side-by-side
| Feature | Money market account (MMA) | Money market fund (MMF) |
|---|---|---|
| Where it lives | Bank or credit union | Brokerage fund share |
| Primary protection | FDIC (bank) or NCUA (credit union) within limits | Not FDIC; fund holds short-term securities; brokerage may have SIPC for custody failures (not market loss) |
| Goal | Savings-like deposit with check/debit access at some banks | Cash sweep or parking yield inside a brokerage |
| Rate source | Bank APY | Fund yield (after expenses) |
| Typical use | Emergency fund, sinking funds | Settlement cash, temporary parking between trades |
Deposit insurance in practice: FDIC/NCUA insurance. Brokerage cost stack when you keep cash in a fund: Brokerage account fees.
What people confuse
- An MMA is not a mutual fund. Your balance is a bank liability (within insurance rules).
- An MMF share price usually targets $1.00 for retail government/prime funds, but it is still an investment: yield and liquidity rules come from the fund prospectus, not a deposit agreement.
- Bank “money market” marketing sometimes sits next to HYSA pages—compare APY, fees, and transfer limits the same way you would an HYSA (How to choose a high-yield savings account).
Worked example: $25,000 cash park
Alex has $25,000 to hold for 6–9 months before a house down payment (mortgage shopping itself stays with a mortgage specialist—keep product shopping shallow here). Emergency fund already sits in an Ally HYSA.
| Option | Rough setup | Protection | Access notes |
|---|---|---|---|
| Credit-union MMA at 4.1% APY | Open share account; link checking | NCUA up to applicable limits | Limited withdrawals/month on some accounts |
| Brokerage government MMF at ~4.3% 7-day yield | Buy fund in Schwab taxable account | No FDIC; short Treasuries/repos in fund | Sell shares; settlement timing applies |
| HYSA at 4.0% APY | Already open | FDIC | Simple ACH; good for the emergency slice |
Alex parks $20,000 in the NCUA MMA (keeps insurance framing simple) and leaves $5,000 in the HYSA for same-week bills. The brokerage MMF is reserved for cash that will fund stock purchases later—not the down-payment pile—because a house timeline needs deposit-style clarity more than an extra tenth of a percent.
When an MMA fits
- You want FDIC/NCUA framing for emergency or near-term goal cash
- You like occasional check-writing or debit access some MMAs still advertise
- You already bank there and will not chase every 0.05% APY move
Pair with CD ladders when rates and timelines fit: CDs vs high-yield savings and Certificate of deposit ladder.
When an MMF fits
- Cash is already at a brokerage waiting to be invested
- You accept fund rules (gates/fees in stress periods are rare for retail government funds but exist in prospectuses)
- You are comparing after-fee yield, not “bank APY” marketing
Expense ratios and cash-sweep defaults matter—read the fee guide before assuming “free.”
Checklist
- Read the label: deposit account vs fund ticker.
- Map protection: FDIC/NCUA vs fund holdings + SIPC custody limits.
- Compare after-fee yield, minimums, and how fast you can move money.
- Keep true emergency cash in insured deposits unless you knowingly choose otherwise.
- Do not use an MMF as a substitute for understanding investing basics if the cash may become long-term securities.
Educational only. Not investment, tax, or deposit advice. Yields and insurance rules change; verify with the institution and official FDIC/NCUA/SEC materials.