All FDIC-insured deposits, including checking, NOW, and savings accounts are insured up to $250,000 per depositor, for each account ownership category, in the event of a bank failure. Money market deposit accounts (MMDAs) are included in this insurance coverage limit. MMDAs at an insured bank or savings association are not separately insured, but are Combined Insurance coverage with all other deposits at the same FDIC-insured bank or savings association. Thus, an individual who has an MMA at an FDIC-insured bank that also has several other FDIC-insured deposits at the same bank in different ownership categories would have a maximum of $250,000 of FDIC insurance coverage on those accounts.
In addition to MMDAs at insured banks, some consumers may purchase what are called “money market mutual funds” through a broker/dealer. While these are not technically MMDAs,they often offer similar features such as check writing privileges and higher interest rates than traditional savings accounts. Money market mutual funds also often have a stated value of $1 per share. Unlike MMDAs at banks and savings associations, however, these investments are NOT insured by the FDIC.
Investors should carefully consider whether their financial institution is FDIC-insured before investing any funds. They can visit www.fdic.gov or call 1-877-ASK-FDIC for more information about deposit insurance coverage. Depositors should also remember that even within the same ownership category at the same financial institution, they may exceed the $250,000 coverage limit if they have multiple types of accounts that are combined for purposes of computing the insurance limit such as CDs and checking accounts or multiple checking accounts in different capacities such as personal and business accounts.
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