Yes, money market accounts held at FDIC-insured banks are covered up to $250,000 per depositor, per bank

A money market account at a bank that carries FDIC insurance is protected the same way as a regular savings account. The Federal Deposit Insurance Corporation insures the money you hold there if the bank fails. The $250,000 limit applies to each depositor at each bank — so if you have $250,000 in a money market account at Bank A and $250,000 at Bank B, both are fully covered.

Money market accounts are different from money market funds, which are investment products sold by brokerages and are not FDIC insured. The name is similar, but the protection is not. If you opened your account at a bank and it is called a money market account, it is almost certainly FDIC insured. If you opened it at a brokerage or investment firm, it is not.

The coverage applies to the balance you hold on the day the bank fails, not to any interest you have earned but not yet received. Interest that has been credited to your account counts toward the $250,000 limit.

Key Takeaways

  • Money market accounts at banks are FDIC insured up to $250,000 per person per bank, the same as savings accounts.
  • Money market funds sold by brokerages are not FDIC insured and offer no federal protection if the firm fails.
  • The $250,000 limit resets at each different bank, so you can hold $250,000 at multiple banks and keep all of it covered.
  • Interest that has been added to your account counts toward the $250,000 limit, but interest that has accrued but not yet credited does not.

How the $250,000 limit works across multiple accounts at one bank

If you have more than one account at the same bank, the FDIC adds them together to determine coverage. A money market account and a savings account at the same bank are combined into one $250,000 limit. If you have $150,000 in the money market account and $120,000 in savings, only $250,000 is covered — the extra $20,000 is not.

The exception is if you hold the accounts in different ownership categories. A money market account in your name alone and a money market account in your name as a joint owner with your spouse are covered separately, each up to $250,000. A money market account in your name and one held in trust for your child are also separate. The FDIC publishes a full list of ownership categories on its website, but the most common ones are individual, joint, and trust.

If you are unsure whether your accounts are combined, use the FDIC's online calculator tool. You enter the bank name, the account type, and the ownership structure, and it tells you how much is covered.

Money market accounts at credit unions and online banks

Credit unions are not FDIC insured — they are insured by the National Credit Union Administration (NCUA), which offers the same $250,000 per member per credit union limit. A money market account at a credit union is covered the same way as one at a bank, but you are dealing with NCUA insurance, not FDIC insurance.

Online banks are FDIC insured if they are chartered as banks and hold FDIC membership. Most major online banks (Ally, Marcus, Discover, etc.) do carry FDIC insurance. You can verify this by checking the bank's website or calling customer service — they are required to disclose their insurance status. The coverage limit and rules are identical to brick-and-mortar banks.

What happens to your money if the bank fails

If your bank fails, the FDIC does not immediately transfer your money to another bank. Instead, the FDIC takes over the failed bank's operations and attempts to sell it to another bank. In most cases, a healthy bank buys the failed bank's deposits and customer accounts, and you wake up with your account at a new bank. This usually happens over a weekend, and your money remains accessible.

If no bank buys the failed bank, the FDIC pays out depositors directly. This process can take weeks or months, but the FDIC has never failed to pay covered deposits in full. You receive a check or a direct deposit for the amount covered by insurance (up to $250,000). Any amount above $250,000 is lost.

Bank failures are rare. The FDIC has insured deposits since 1933, and the vast majority of banks remain solvent. The insurance exists as a safety net, not as a common occurrence.

Interest rates and FDIC coverage

Money market accounts typically offer higher interest rates than regular savings accounts, but the rate varies by bank and changes frequently. The interest you earn is covered by FDIC insurance as long as the total balance (principal plus credited interest) does not exceed $250,000. Interest that accrues but has not yet been credited to your account is not covered, but this is a technical distinction — most banks credit interest monthly or daily, so the gap is small.

If you are holding close to $250,000, be aware that interest will push you over the limit. If you have $248,000 and earn $3,000 in interest over a year, your balance becomes $251,000, and only $250,000 is covered. You can avoid this by moving money to another bank or account before you cross the threshold.

Frequently Asked Questions

Is my money market account covered if the bank is not FDIC insured?

No. If your bank does not carry FDIC insurance, your money market account has no federal protection. You can verify your bank's insurance status on the FDIC's website by searching for the bank name, or by calling the bank directly — they are required to tell you.

Can I lose money in a money market account if the bank fails?

Only the amount above $250,000 is at risk. If you have $300,000 in a money market account at a bank that fails, the FDIC covers $250,000 and you lose $50,000. The covered portion is may provide.

What if I have a money market account and a checking account at the same bank?

They are combined into one $250,000 limit. If you have $180,000 in the money market account and $100,000 in checking, only $250,000 is covered total. The extra $30,000 in checking is not protected.

Does FDIC insurance cover money market funds?

No. Money market funds are investments, not bank deposits, and are not FDIC insured. They are sold by brokerages and investment firms. If you bought a money market fund through a brokerage, it has no FDIC protection, though it may have other protections through the Securities Investor Protection Corporation (SIPC).

If I move my money to a different bank, do I lose coverage?

No. Moving money between banks does not affect FDIC coverage. Each bank provides its own $250,000 limit, so you can hold $250,000 at Bank A and $250,000 at Bank B and keep all of it covered.