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Money markets are not covered by the FDIC or NCUA. [1] During the financial crisis, the Reserve Primary Fund "broke the buck" and lost principal for investors.
by plewis_ 8y ago
Money markets are not covered by the FDIC or NCUA. [1] During the financial crisis, the Reserve Primary Fund "broke the buck" and lost principal for investors. [2]
[1] https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-market-account-en-915/ https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-mar...
[2] https://en.wikipedia.org/wiki/Reserve_Primary_Fund https://en.wikipedia.org/wiki/Reserve_Primary_Fund
- ineedasername 8y agoNearly the very first line in your first link states they are covered by FDIC or NCUA, depending on whether it's a bank or credit union: Like a regular savings account, a money market account at a bank is insured by the Federal Deposit Insurance Corporation (FDIC)... Where they are not insured is in a Brokerage firm, like Robinhood.
- barbecue_sauce 8y agoWeren't they partnering with Sutton Bank for the debit offering? I assumed that my money would actually be held by Sutton, similar to how my Fidelity cash management account is held in an actual bank that is not branded as Fidelity (which leads to some confusion when doing transfers).
- plewis_ 8y agoYou're right, I was confusing a money market mutual fund with a bank money market account.