Money Market Account Calculator
Calculate earnings on money market accounts and compare different rates. See how compound interest and regular deposits affect your savings over time.
Money Market Results
Rate Comparison
Money Market Features
Federal Insurance: FDIC insured up to $250K
Liquidity: Check writing and ATM access
Higher Rates: Better than savings accounts
Minimum Balance: Often $1,000-$10,000
Understanding Money Market Accounts
Money market accounts (MMAs) offer higher interest rates than traditional savings accounts while providing liquidity and FDIC insurance. They are ideal for emergency funds and short-term savings goals.
Money Market Account Features
- Higher Interest Rates: Typically 3-5% APY vs. 0.5-1% for savings
- Federal Insurance: FDIC insured up to $250,000 per depositor
- Liquidity: Limited check writing and ATM access
- Minimum Balances: Often require $1,000-$10,000 minimum
- Fees: Monthly maintenance fees if balance drops below minimum
- Interest Compounding: Usually monthly or daily
Compound Interest Calculation
Future value with compound interest:
FV = P × (1 + r/n)^(n×t) + PMT × [(1 + r/n)^(n×t) - 1] ÷ (r/n)
Where: P = principal, r = rate, n = compounding frequency, t = time, PMT = regular deposit
Current Money Market Rates
| Account Type | Average APY | Minimum Balance | Best For |
|---|---|---|---|
| Online MMA | 4.0-5.0% | $0-$1,000 | High yields, convenience |
| Bank MMA | 2.5-4.0% | $1,000-$10,000 | Branch access, lower minimums |
| Credit Union MMA | 3.5-4.5% | $500-$2,500 | Member benefits, competitive rates |
MMA vs. Other Savings Options
| Option | APY Range | Liquidity | Risk |
|---|---|---|---|
| Money Market Account | 3.5-5.0% | High | Very Low |
| High-Yield Savings | 4.0-5.5% | Very High | Very Low |
| CD (1-year) | 4.5-6.0% | Low | Very Low |
| Treasury Bills | 4.0-5.0% | Medium | Very Low |
Benefits of Money Market Accounts
- Safety: FDIC insured up to $250,000
- Liquidity: Access funds when needed
- Higher Returns: Better rates than savings accounts
- Compound Interest: Interest on interest
- No Market Risk: Not affected by stock market fluctuations
- Tax Advantages: Some accounts offer tax benefits
Considerations and Limitations
- Minimum Balances: Required to avoid fees
- Transaction Limits: Limited check writing (3-6 per month)
- Fees: Monthly maintenance or excess transaction fees
- Rate Volatility: Rates can change with market conditions
- Inflation Risk: Returns may not keep pace with inflation
- Tax Implications: Interest income is taxable
Maximizing MMA Returns
- Shop Around: Compare rates from multiple institutions
- Online Banks: Often offer higher rates with lower fees
- Meet Minimums: Maintain required balance to avoid fees
- Compound Frequently: Look for daily compounding
- Regular Deposits: Automate savings for consistent growth
- Rate Monitoring: Move funds when better rates are available
When to Use Money Market Accounts
- Emergency Fund: Safe place for 3-6 months of expenses
- Short-term Goals: Savings for purchases within 1-3 years
- Bridge Funds: Temporary holding between investments
- Conservative Allocation: Portion of portfolio in safe assets
- Retirement Savings: Part of overall retirement strategy
Tip: Money market accounts offer a great balance of safety, liquidity, and returns for short-term savings. They're ideal for emergency funds and money you might need within a few years. Always compare rates and fees, and consider online banks for the best deals.