Money market accounts first emerged in the early 1980s in response to regulations that capped the interest rates banks could offer for deposit accounts. These accounts blended and enhanced the features typically associated with checking and savings accounts.
When choosing an investment for cash, you will likely consider safety, liquidity, and return. Money market accounts typically offer higher interest rates than you can earn with a checking account. They also offer enhanced liquidity compared to savings accounts. All that is left to consider is whether they can match the safety of deposit accounts. In other words, are money market accounts FDIC insured?
Are Money Market Accounts FDIC Insured?
Money market accounts offered by FDIC member banks are insured up to the standard limit – $250k per account ownership category at each insured bank. At a single financial institution, the FDIC insurance limit considers the aggregate balance of a business’ accounts. For example, if a business had a checking account, savings account, and money market account at the same institution, only a total of $250k would be covered by FDIC insurance.
However, accounts in different ownership categories are not aggregated to determine the total amount of FDIC insurance. Ownership categories refer to the type of entity that owns the account. For example, a business and an individual are different ownership categories. For this reason, a business owner could receive $250k of coverage for their personal accounts plus $250k of coverage for business accounts in a single bank.
Why is FDIC insurance for money market accounts important?
FDIC insurance is an important consideration for businesses because it protects your company’s funds from bank failure. While rare, bank failures continue to be a threat to business deposits, particularly during times of economic stress. In fact, three of the four largest bank failures in American history occurred in the first half of 2023.
When an FDIC insured bank fails, depositors are protected up to the $250k limit. However, cash above the limit is still at risk. That’s why it’s important to secure FDIC protection for all cash.
Accessing Full FDIC Insurance for Money Market Accounts
Since FDIC insurance limits are per institution, you could open money market accounts with multiple banks to achieve full protection. However, this can be a difficult and time-consuming process.
Consider a business with $10 million in cash. It would need accounts at forty different banks – with $250,000 in each – to achieve full FDIC coverage. That’s forty relationships to manage, statements to reconcile, and interest rates to monitor. It could take an entire team to manage that company’s cash. Fortunately, there is an easier way to access full protection.
A More Robust Money Market Account – AMMA™ By ADM
Our company, the American Deposit Management Co. [ADM], has developed proprietary fintech that powers our American Money Market Account™ [AMMA™]. With AMMA™, businesses can achieve the safety, liquidity, and returns they need, without the hassle of multiple banking relationships.
AMMA™ Provides Access to Full FDIC Insurance
Using fintech, AMMA™ spreads millions in business cash across our nationwide network of financial institutions. This means that every penny of your business’ cash can be covered by FDIC insurance. Unlike managing multiple banking relationships manually, AMMA™ accomplishes full FDIC protection with one account and one consolidated monthly statement.*
Next Day Liquidity is a Key Feature of AMMA™
In addition to extended safety, AMMA™ provides next-day liquidity. When you need to withdraw cash from an AMMA™, you can easily initiate a transfer through our online portal and have the funds deposited in your preferred bank as soon as the next business day.
AMMA™ Delivers Nationally Competitive Returns
With AMMA™, you don’t have to spend valuable time searching for competitive interest rates. Our experienced cash consultants monitor the interest rates in our network and handle the investments. Additionally, our network is nationwide, allowing you to take advantage of geographic and need-based differences in deposit rates.
As you can see, AMMA™ provides the benefits of money market accounts – like higher interest rates and enhanced liquidity – without the traditional FDIC insurance limitations.* Additionally, the ADM team makes it simple to achieve the safety, liquidity, and rate of return your business needs.
Get Started with AMMA™ By ADM
At ADM, our experienced team of cash consultants works with each business to determine their liquidity and return needs. Then, we handle everything from locating competitive interest rates to investing the cash. All you need to do is fill out a simple application and make a deposit, and we’ll take it from there.
To learn more about AMMA™ and get started today, chat with one of our friendly representatives using the chat box at the bottom of your screen or visit our contact page.
*Funds in an AMMA™ can be deposited with traditional banks or Credit Unions. When funds are deposited at a credit union, NCUA insurance will be available in lieu of FDIC insurance and is functionally equivalent.