Money Market Calculator

Calculate your potential returns from money market investments

How to Use This Calculator

1. Enter your initial investment amount

2. Input the annual interest rate (e.g., 4.5 for 4.5%)

3. Select your investment term

4. Choose how often interest compounds

5. Click "Calculate Returns" to see your potential earnings

Understanding Money Market Investments

What is a Money Market Account?

A money market account is a type of interest-bearing account at a bank or credit union that typically offers a higher interest rate than a traditional savings account. These accounts often require a higher minimum balance and may have transaction limitations.

Benefits of Money Market Accounts

  • Higher interest rates than traditional savings accounts
  • FDIC insurance up to $250,000
  • Check-writing privileges and debit card access
  • Flexible access to funds
  • Low-risk investment option

Understanding APY vs. Interest Rate

While interest rate represents the basic rate of return, Annual Percentage Yield (APY) shows your actual earnings when considering compound interest. The more frequently interest compounds, the higher your effective APY will be.

Compound Frequency Explained

Common Compounding Frequencies:

  • Daily: Interest compounds every day (365 times per year)
  • Weekly: Interest compounds every week (52 times per year)
  • Monthly: Interest compounds once per month (12 times per year)
  • Quarterly: Interest compounds every three months (4 times per year)
  • Annually: Interest compounds once per year

Money Market Investment Strategies

Maximizing Your Returns

To maximize your money market returns, consider these key strategies:

  1. Maintain the minimum balance to avoid fees
  2. Look for accounts with daily compounding
  3. Compare rates across different institutions
  4. Consider longer investment terms for better rates
  5. Watch for promotional rates and special offers

Current Market Trends

Money market rates typically follow the Federal Reserve's federal funds rate. In today's environment, many money market accounts are offering competitive rates compared to other low-risk investments.

FAQs About Money Market Accounts

Are money market accounts FDIC insured?

Yes, money market accounts at FDIC-insured banks are covered up to $250,000 per depositor, per bank.

What's the difference between a money market account and a savings account?

Money market accounts typically offer higher interest rates and may include check-writing privileges, but often require higher minimum balances.

How often do money market rates change?

Rates can change at any time based on market conditions and Federal Reserve policies.