Money Market Account Calculator – Savings Growth
Calculate money market account growth with compound interest
Table of Contents
How to Use
- Enter your initial deposit amount
- Add optional monthly contributions
- Enter the annual interest rate (APY)
- Select compounding frequency
- Set the time period and click calculate
What is a Money Market Account?
A money market account (MMA) is a type of savings account that typically offers higher interest rates than traditional savings accounts. MMAs often come with check-writing privileges and debit card access while still being FDIC insured up to $250,000.
Money Market vs Savings Account
| Feature | Money Market | Savings Account |
|---|---|---|
| Interest Rate | Generally higher | Generally lower |
| Minimum Balance | Often higher ($1,000+) | Usually lower |
| Check Writing | Usually included | Rarely offered |
| FDIC Insured | Yes, up to $250K | Yes, up to $250K |
| Transaction Limits | May have limits | 6 per month (Reg D) |
Understanding Compound Interest
Compound interest means you earn interest on both your principal and previously earned interest. More frequent compounding (daily vs annually) results in slightly higher returns.
- Daily compounding: Interest calculated every day
- Monthly compounding: Interest calculated 12 times per year
- Quarterly compounding: Interest calculated 4 times per year
- Annual compounding: Interest calculated once per year
Frequently Asked Questions
- What is a good money market account rate?
- As of 2024, competitive money market rates range from 4% to 5.5% APY. Online banks and credit unions often offer the highest rates. Compare rates regularly as they change with market conditions.
- Are money market accounts safe?
- Yes, money market accounts at FDIC-insured banks are protected up to $250,000 per depositor, per institution. Credit union MMAs are similarly protected by NCUA insurance.
- What is the difference between APY and interest rate?
- APY (Annual Percentage Yield) includes the effect of compounding, while the interest rate does not. APY gives you a more accurate picture of your actual earnings over a year.
- Can I lose money in a money market account?
- You cannot lose your principal in an FDIC-insured money market account. However, if inflation exceeds your interest rate, your purchasing power may decrease over time.