Protect Your Savings with Insured Money Market Accounts
When it comes to earning interest on your savings while maintaining a high level of protection, money market accounts (MMAs) are an attractive option. Offered by banks and credit unions, these deposit accounts provide insurance coverage up to $250,000 per depositor, per institution, through the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA).
Understanding FDIC Insurance
FDIC insurance protects your deposits in case your bank fails. This insurance covers up to $250,000 of your principal deposits and accrued interest in each account category at any given bank. You can increase your insured deposits by spreading your funds across multiple account ownership categories, such as individual, joint, and trust accounts.
What Happens if Your Bank Fails?
If your bank fails, the FDIC will intervene to protect your deposits in one of two ways: by arranging for a healthy bank to buy your bank and take over management of your account(s), or by paying you directly, up to the insured limit on each account, typically within two business days of the failure.
NCUA Insurance for Credit Unions
Credit unions also offer insurance on MMAs and other deposit accounts through the National Credit Union Share Insurance Fund, which is administered by the NCUA. Like FDIC insurance, NCUA insurance covers your MMA deposits up to $250,000 per account category if the credit union fails.
Additional Protections
While FDIC insurance does not cover MMAs against all losses, banks and credit unions often have other coverage and protections in place, including banker’s blanket bonds and Electronic Funds Transfer Act protections.
Maximizing Your Insurance Coverage
To increase your insured deposits, consider spreading your funds across multiple account categories, opening MMAs at multiple banks or credit unions, or using services that spread your deposits across multiple banks. You can also open an MMA at a bank that belongs to the Depositors Insurance Fund, which insures unlimited deposits.
Other Deposit Account Options
While MMAs offer a safe and stable way to earn interest on your savings, they may not be the best option for larger sums of money. Consider exploring other FDIC-insured accounts, such as certificates of deposit, or investing in mutual funds or retirement accounts for higher returns.
Confirming Your Insurance Coverage
To confirm that your MMA is insured, talk to your bank or credit union or use online tools such as the FDIC’s Electronic Deposit Insurance Estimator or the NCUA’s Share Insurance Estimator.
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