I just opened a Savings Money Market Account with USAA today. I just noticed that the account is not FDIC insured. When I was talking to my customer service rep he said that it will not "lose" money. How is that possible if it is not FDIC insured?
Any info is appreciated! Thanks!
2007-08-16 15:00:26 · 2 answers · asked by Mary A 4 in Business & Finance ➔ Personal Finance
It's not legal for the rep to say you can't lose money. It's not very likely. I don't think even one Money Market Mutual Fund has ever failed.
Having said that...... USAA is a fair place for investments.
If all you want is a savings account you might consider these FDIC insured banks;
www.GMACBank.com
www.HSBCDirect.com
www.INGDirect.com
2007-08-16 16:00:05 · answer #1 · answered by Common Sense 7 · 1⤊ 0⤋
Money market funds rarely lose money. In the past, when they have lost money, the firm that manages the money market fund has usually made up the loss. So the customers haven't lost any money in those situations.
Having said that, there are some rumblings now about money market funds that invest in asset-backed commercial paper (which are short term investments backed by collateral such as credit card debt and home mortgages). Some of this paper may be losing value because of the credit crisis among hedge funds. If you want to be sure you're safe, move the money to a credit union or bank--and make sure it is deposited in an FDIC insured account (some investments at banks and credit unions are not FDIC insured). Credit unions are likely to pay higher interest rates, although online banks like ING pay very competitive rates. Another safe investment is a money market fund that invests only in U.S. Treasury securities. Since U.S. Treasury securities are direct obligations of the U.S. government, these particular money market funds are effectively as safe as an FDIC guaranteed account. Vanguard offers such a money market fund.
2007-08-16 22:15:01 · answer #2 · answered by Uncle Leo 5 · 1⤊ 0⤋