NEWS RELEASE
Sept. 24, 2008
ABA Media Contact: Carol Kaplan       
(202) 663-5471
E-mail: ckaplan@aba.com

UNDERSTANDING THE DIFFERENCE:

MONEY MARKET MUTUAL FUNDS

VS.

MONEY MARKET DEPOSIT ACCOUNTS

Editors: Last week, the U.S. Treasury Department established an unprecedented, voluntary one-year guaranty program insuring U.S. money market funds in order to stem losses resulting from global financial market turmoil.  Many consumers are confused between money market deposit accounts (MMDAs) and money market mutual funds (MMMFs).  Understanding key differences is imperative so we thought your readers would find the following explanations helpful.  Readers who are still unsure which type of account they own should consult their statements or their banker.


A money market mutual fund is a short-term mutual fund that invests in government securities, certificates of deposit, asset-backed commercial paper and other highly liquid securities.  Money market funds sell shares to investors and earn interest based on performance.  However, if the fund suffers a major loss, the shareholder has no guarantee that the investment will be repaid.  Until last week, these investments carried no insurance.  However, the new guaranty program applies only to those money market funds that pay a fee to join it, and would only protect assets invested prior to September 20, 2008 for a period of one year. 


A money market deposit account is an interest-bearing savings account that typically earns more than a regular savings account, but less than a money market fund.  MMDAs are also less risky than MMFs:  they are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $100,000 per depositor per insured bank and up to $250,000 for some retirement accounts. 


The American Bankers Association brings together banks of all sizes and charters into one association. ABA works to enhance the competitiveness of the nation's banking industry and strengthen America’s economy and communities. Its members – the majority of which are banks with less than $125 million in assets – represent over 95 percent of the industry’s $13.3 trillion in assets and employ over 2 million men and women.

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