The Differences Between Money Market Fund & Money Market Savings Accounts

Understand accounts vs. funds when choosing where to stash your cash.

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You can put your cash to work in a money market mutual fund or a money market account. These are not identical investments, despite the similarity in names. Each one is different with regard to how you make money, whether your investment is protected and how you gain access to your cash. One you understand how each of these types of investments work, you can make informed decisions about how you want to manage your cash.


When you put your cash in a money market account, you are making a deposit with a bank. That means your investment is insured by the Federal Deposit Insurance Corporation for up to $250,000. However, just because you give a bank your money doesn't mean you automatically have a money market account. Banks also sell money market mutual funds. These are not insured by the FDIC. If insurance is important to you, make sure you ask for a money market account, not a fund.


Mutual funds charge maintenance fees. These fees pay the money managers. You have to calculate your return on a money market fund by subtracting the fees from the interest you earn. Many banks, on the other hand, do not charge fees for money market accounts. They make their money by loaning out the money you put in your account at a higher rate than they pay you. This "spread" between what the bank charges for loans and what it pays for accounts like yours is the profit the bank makes.


You can get your money out of either a money market fund or a money market account easily but not always quickly. If you ask for money from the fund, it will send you the money after the close of business on the day of the request. The next day, you can check with your bank to see if the money arrived electronically. When you own a money market account, you can withdraw money from the bank or write checks on the account. This means your money market account cash is available on the same day you want it.

Minimum Investment

Most mutual funds require a minimum investment. That means you may have to save your money until you have enough to qualify. Some banks require minimums for money market accounts, but many don't. If you find a bank that doesn't require a minimum investment, you can put your money to work earning interest immediately, even if you don't have a large amount saved.