Estimate your earnings with our Money Market Account Calculator. Compare rates and see how fast your savings can grow securely.
Money Market Account Calculator
Calculate your potential earnings with our money market account
About Money Market Accounts
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 combine features of both savings and checking accounts, often providing limited check-writing abilities and debit card access while maintaining higher interest rates.
How Money Market Accounts Work
Money Market accounts work by pooling your money with other depositors to invest in low-risk, short-term debt securities like Treasury bills, certificates of deposit, and commercial paper. The financial institution passes a portion of the earnings from these investments back to you in the form of interest.
Interest Calculation Formula
The future value of a Money Market Account with compound interest is calculated using the formula:
Where:
- A = Final account balance
- P = Initial principal balance
- r = Annual interest rate (in decimal form)
- n = Number of times interest is compounded per year
- t = Time the money is invested for (in years)
- PMT = Regular monthly contribution
Annual Percentage Yield (APY)
APY is the effective annual rate of return taking into account the effect of compounding interest. The formula for APY is:
APY provides a more accurate measure of the actual return on your investment compared to the nominal interest rate.
Benefits of Money Market Accounts
- Higher Interest Rates: MMAs typically offer better returns than traditional savings accounts.
- Liquidity: They provide easier access to funds compared to certificates of deposit.
- Safety: MMAs are FDIC-insured up to $250,000 per depositor, per institution.
- Check-Writing Privileges: Many MMAs allow limited check-writing and debit card access.
Considerations Before Opening an MMA
- Minimum Balance Requirements: Many MMAs require higher minimum balances than savings accounts.
- Limited Transactions: Federal regulations typically limit certain types of withdrawals to six per month.
- Fees: Monthly maintenance fees may apply if minimum balance requirements aren’t met.
- Rate Fluctuations: Interest rates on MMAs are variable and may change over time.