Comparison with "Money Market Funds"

Although money market deposit accounts have a similar name to money funds, they are not the same: a money market fund consists of assets held by a brokerage (or bank) on behalf of investors, while a money market deposit account is a deposit at the bank, and hence a liability of the bank towards depositors.

A money market fund is a kind of mutual fund (technically, a regulated investment company). Investors receive shares in this company, which buys securities (for example, commercial paper). There are rules on what kind of securities may be held and rules about diversification. Thus, investors have risk on the assets, but not on the bank.

A money market account is simply a liability of the bank (albeit a high-priority one). It is a note on the bank's books that it owes someone money. It has no specific assets; essentially, it is backed by the entire bank. Thus, investors have risk on the bank, but not (directly) on any assets that the bank may invest in with these deposits – in fact, the deposits will not in general match up with any particular assets: they are simply one among many liabilities of the bank.

Also, like checking accounts, these accounts are insured by the FDIC or a state analog.