What to expect from your failed bank

Money market accounts vs. mutual funds
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There are different types of money market accounts, and many consumers don't realize theirs may not be insured by the FDIC, says Erika Safran, a Certified Financial Planner with Safran Wealth Advisors LLC in New York. One type, which is called a money market account, is more like a savings account and earns interest at a rate set by the bank. It usually limits the customer to a certain number of transactions within a stated time period and is insured by the FDIC up to the $250,000 limit.

However, another type of money market, called a money market mutual fund, is usually comprised of investments in short-term CDs or securities, such as Treasury bills and government or corporate bonds. They are debt investments held by mutual funds rather than bank deposits, and as such are not FDIC-insured.

For owners of insured money market deposit accounts, your funds may be unavailable or inaccessible for a few days, but then you can expect business as normal, Alverson says. However, interest rates could change when the new owner takes over.

For uninsured money market mutual funds, "the money is still there," but you may have to wait longer to get it, Alverson says. "It depends on who buys the bank and whether they integrate that business or sell it to another institution."




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