There are lots of investment products out there, and one of the most crowded spaces in the investment market is the Money Market category. Even though the risks and returns look roughly similar, there are marked differences between money market savings accounts and money market funds, and it’s important to know some key distinguishing factors.

The biggest factor is FDIC insurance. Money market savings accounts, typically obtained through an FDIC insured bank, behave exactly like a normal passbook savings account, with slightly higher interest rates. In the event of bank failure, your balance would be protected up to $250,000. Banks will usually require a significant opening balance and will typically have lots of options to access the funds. Interestingly, most brokerages have moved to this sort of account.

By contrast, money market funds are not insured by the FDIC, and behave exactly like an ultra-short term bond fund. They are created and run by all the usual suspects, and there are hundreds available from the large mutual fund companies. These companies typically value the fund in terms of Net Asset Value, which they label “NAV”, and it is very rare for the fund managers to allow a quarterly statement to show an NAV value of less than zero, but it has happened on a scattered basis since the global financial crisis of 2008.

Fees are handled very differently by these vehicles. In a money market account, although the banks figure out new ways to apply fees every day, they are pretty straightforward about them; a phone call would tell you everything you need to know. Mutual fund companies aren’t this way, and you’ll need to take a close look at the prospectus to figure out how fees are applied. Outside research might be the best way to go here; the mutual fund companies essentially apply the fees to the investment return, and sometimes hide that information inside small print in the prospectus. The expense ratio only gives part of the picture, and some study is going to be required.

Liquidity is another distinguishing factor. It will almost certainly be quicker and easier to transfer money from a bank’s money market account, especially if you have a checking account at that same bank. The mutual fund companies could have other barriers; weird freeze periods, arbitrary check float, end-of-day trading requirements, and whatever other plausible creative stories your fabulously wealthy investment manager might dream up. Use caution, and ask lots of questions.

In this time heightened risk for investors, and with the coming financial crisis in the U.S. being forecast by many economists, when considering the difference between money market funds and money market accounts, having the $250,000 FDIC insurance tips the scales in favor of money market accounts.