Independent educational resource. We are not a bank, broker, financial advisor, or affiliate of any issuer listed. APYs are sourced from each issuer's own published page on the date noted at the top of each rate table. Rates change frequently -- verify directly with the issuer before opening an account. FDIC insurance limits sourced from FDIC.gov. Nothing on this site is personalised financial advice. Consult a qualified advisor before making decisions about your savings strategy.

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HYSAMMAFAQ

Money Market Account vs Money Market Fund in 2026: FDIC vs SIPC, deposit vs investment

These are two completely different products that happen to share a name. Here is what each one actually is.

Side-by-side: MMA vs MMF

FeatureMoney Market Account (MMA)Money Market Fund (MMF)
Where it livesBank or credit unionBrokerage (Fidelity, Vanguard, Schwab)
Insurance typeFDIC up to $250k per depositor per institutionSIPC up to $500k against broker failure (not investment loss)
Can lose value?No (FDIC bank failure = insured)Very rarely (Reserve Primary Fund 2008: $0.97 NAV)
Typical 2026 yield2.85-4.50% APY4.25-4.75% 7-day yield
AccessChecks, debit, ATM (varies by issuer)Sell shares -- 1-2 day settlement
State tax on interestFully taxableGovernment MMFs: often state-tax-exempt on Treasury portion
Best fitEmergency fund, retiree cash, check writingBrokerage idle cash, IRA cash, yield vs rate risk tolerance

The 2008 "breaking the buck" event

On September 16, 2008, the Reserve Primary Fund -- one of the largest and oldest money market funds -- "broke the buck," meaning its NAV dropped from $1.00 to $0.97 per share. The fund held $785 million in Lehman Brothers commercial paper, which became worthless overnight after Lehman's bankruptcy.

The US Treasury temporarily guaranteed all money market fund balances to prevent a broader run. The SEC subsequently tightened MMF rules: stricter liquidity requirements (at least 10% daily, 30% weekly liquid assets), caps on longer-dated holdings, and "gates" and "fees" for institutional funds. As of 2026, retail MMFs remain structurally safer than in 2008, but the FDIC guarantee does not apply.

Common retail money market funds (reference)

VMRXX / VUSXX
Vanguard

Federal + Government. State tax advantage on Treasury portion.

FZDXX / SPAXX
Fidelity

FZDXX: Prime. SPAXX: Government. Check yield at fidelity.com.

SWVXX / SNVXX
Schwab

SWVXX: Prime. SNVXX: Government. See prospectus for holdings.

These are informational references only. Not a recommendation. Verify current yields at each brokerage.

Frequently asked questions

Can a money market fund lose money?⌄
Very rarely, but yes. Money market funds aim to maintain a stable $1.00 net asset value (NAV) per share. The Reserve Primary Fund 'broke the buck' in September 2008, dropping to $0.97, after holding Lehman Brothers commercial paper. This triggered the 2008 money market fund crisis. The Treasury temporarily guaranteed MMF values during the crisis. Since then, the SEC has tightened rules on MMF holdings (higher liquidity requirements, limits on risky holdings). As of 2026, 'breaking the buck' remains a non-zero risk, though extremely rare.
What is the difference between FDIC and SIPC?⌄
FDIC (Federal Deposit Insurance Corporation) insures deposits at FDIC-member banks -- checking, savings, money market accounts, CDs -- up to $250,000 per depositor per institution per ownership category. SIPC (Securities Investor Protection Corporation) protects brokerage account holders against broker failure (not investment losses). SIPC covers up to $500,000 ($250,000 in cash) if a SIPC-member broker goes bankrupt. SIPC does NOT protect against investment losses in money market funds.
Is a money market fund at Fidelity, Vanguard, or Schwab FDIC insured?⌄
No. VMRXX (Vanguard Cash Reserves Federal Money Market Fund), FZDXX (Fidelity Money Market Fund), and SWVXX (Schwab Value Advantage Money Market Fund) are investment funds, not FDIC-insured bank deposits. They are SIPC protected (against broker failure) but not against fund value loss. Government MMFs (VUSXX, VMFXX) hold US Treasury securities and are considered extremely low risk, but they are not backed by the FDIC guarantee.
Which money market fund has the highest yield right now?⌄
In May 2026, government money market funds are yielding approximately 4.25-4.75% (7-day SEC yield), slightly above the top MMA rates at banks. VMRXX and VUSXX at Vanguard, SPAXX at Fidelity, and SNVXX at Schwab are among the largest and most commonly held. Government MMFs that hold primarily US Treasury securities also carry state income tax exemption on the Treasury portion of their income -- an advantage for high-tax-state savers.
When should I use a money market fund instead of a money market account?⌄
Use a money market fund when: your cash is already in a brokerage account and you do not need bank-level check writing; when MMF yields are higher than MMA rates and the slightly higher risk is acceptable; or when you want state income tax exemption on Treasury-backed MMF interest. Use a money market account when: you need FDIC insurance certainty, want check-writing directly on the account, or the cash is for a near-term specific purpose (emergency fund, down payment).
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