A money market account (MMA) is an FDIC-insured deposit account that typically earns a higher rate than a standard savings account in exchange for a higher minimum balance — often $1,000 to $25,000. Money market accounts usually compound interest daily or monthly, and the rate advertised is always an APY, so you can compare directly against HYSAs and CDs without any conversion.
The calculator above models a money market account: enter the APY from your bank, your starting balance, any monthly additions, and how many years you plan to hold the account. The result shows the exact interest earned and the ending balance, with a year-by-year breakdown you can compare against the opportunity cost of moving the same funds to a different product.
Money market accounts vs high-yield savings accounts
Both MMAs and HYSAs pay competitive rates, are FDIC-insured up to $250,000, and have no investment risk. The practical differences are in features and minimums. MMAs typically offer check-writing privileges and debit card access, making them more liquid for large, infrequent payments — useful if your emergency fund might need to cover a car repair or medical bill in a single check. HYSAs generally have no or low minimums but rely on ACH transfers that take one to two business days.
Rate differences between MMAs and HYSAs have narrowed as online banking has become mainstream, but MMAs from traditional banks often lag online HYSAs. Online banks and credit unions increasingly offer MMAs that match or exceed typical HYSA rates. The APY — not the account label — is the number that determines what you earn.
Money market accounts vs money market funds
These are different products that are easily confused. A money market account (MMA) is a bank deposit, FDIC-insured, with a fixed APY that changes when the bank adjusts rates. A money market fund (MMF) is an investment fund that holds short-term securities like Treasury bills and commercial paper. MMFs are not FDIC-insured but are generally very low risk; their yield fluctuates with the market and has recently exceeded many MMA rates.
This calculator models a money market account — FDIC-insured, bank-issued, with a stated APY. For money market funds, the 7-day yield is the standard comparison metric, and the calculation is the same: multiply your balance by the fund's annualized yield. The math is identical once you have the rate.
How much interest does a money market account earn?
At 4.5% APY, a $25,000 balance with $500 added each month earns about $9,000 in interest over five years, for an ending balance of around $64,000. With no monthly additions, the same $25,000 earns about $6,160 in interest over five years. Every additional $500 per month adds roughly $1,500 to $1,800 in interest over a five-year horizon at current rates.
The leverage here is straightforward: a money market account works best when you have a substantial balance that would otherwise sit in a low-rate checking account. Moving $50,000 from a 0.1% checking account to a 4.5% MMA generates roughly $12,000 more in interest over five years, with zero additional risk and identical FDIC protection.
Frequently asked questions
What is a money market account?
A money market account (MMA) is an FDIC-insured bank deposit that typically pays a higher interest rate than a standard savings account in exchange for a higher minimum balance. MMAs often include check-writing privileges and debit cards. They are not the same as money market funds, which are investment products and are not FDIC-insured.
What is a good APY for a money market account?
As of 2024-2025, competitive MMAs at online banks and credit unions are paying 4.5-5.25% APY. Traditional bank MMAs often pay significantly less. Compare the APY — not the nominal rate — across institutions. The national average MMA rate lags far behind what the top online offers pay.
How often does a money market account compound interest?
Most MMAs compound daily and credit interest monthly. Some compound monthly. The APY advertised already accounts for the compounding schedule, so if you enter the APY in this calculator the result reflects the actual growth correctly.
Is a money market account safe?
Yes — money market accounts at FDIC-insured banks are covered up to $250,000 per depositor, per institution, per account category. Credit union MMAs are covered up to the same limit by NCUA. There is no investment risk: your principal and earned interest are guaranteed, unlike a money market fund.
Worked examples
Each example below shows inputs fed directly into the compound interest engine — outputs are computed at build time, not hand-typed.
$25,000 money market with deposits, 5 years
$25,000 starting balance, $500 added each month, at approximately 5% APY compounded monthly for 5 years.
Total deposits of $55,000 grow to roughly $65,800 — earning about $10,800 in interest. Money market accounts often require higher minimum balances in exchange for slightly higher rates than standard HYSAs; this example shows how a healthy balance plus consistent deposits compounds over a 5-year horizon.
$50,000 lump sum money market, 10 years
$50,000 held in a money market account at approximately 5% APY for 10 years, no additional deposits.
A $50,000 lump sum at 5% APY grows to roughly $81,400 over 10 years — earning $31,400 in interest entirely from compounding. Money market accounts tend to be used for reserves and short-to-medium term savings where accessibility matters as much as yield.
Money market balance at ~5% APY: monthly deposit × years ($25,000 starting)
Each cell shows the projected balance for a $25,000 starting balance at approximately 5% APY, at the given monthly deposit and number of years. Monthly compounding.
| Monthly deposit | 1 yr | 3 yr | 5 yr | 10 yr |
|---|---|---|---|---|
| $0 | $26k | $29k | $32k | $41k |
| $250 | $29k | $39k | $49k | $79k |
| $500 | $32k | $48k | $66k | $118k |
| $750 | $35k | $58k | $83k | $156k |
| $1,000 | $39k | $68k | $100k | $195k |
Approximately 5% APY (using equivalent nominal rate 4.889%). Adding $500/month for 10 years on a $25,000 starting balance nearly triples the no-contribution ending balance.
What affects your results
These inputs move the needle most — ranked by their leverage on the final balance.
Money market accounts often tier their APY based on balance: balances above a threshold earn the advertised high rate; balances below may earn 0.01%. Keeping the balance above the threshold unlocks the full rate.
Money market accounts typically allow limited monthly withdrawals (6 per federal regulation under Regulation D, though this was relaxed in 2020). CDs lock money for fixed terms but may offer slightly higher rates. Choose based on how soon you might need access.
Money market rates are variable and follow the Federal Reserve benchmark. Unlike a CD, the rate can drop after you deposit. If you believe rates will fall, locking some funds into a CD makes sense. If rates rise, the money market automatically benefits.
Key takeaways
- ✓
Enter the APY shown on the bank's MMA disclosure — not the nominal rate. For most MMAs, this is the number advertised in large print.
- ✓
Model the balance with and without regular deposits to see whether the MMA's rate advantage is meaningful for your specific savings pattern.
More questions answered
How is a money market account different from a savings account?
They work almost identically from a compounding math perspective — both are deposit accounts that compound interest on your balance. The differences are practical: money market accounts often offer higher APYs for larger balances, may provide a debit card or check writing, and sometimes have higher minimum balance requirements. Both are FDIC-insured. The compound interest formula applies equally to both.
Are money market rates fixed?
No — money market account rates are variable and can change at any time. Banks set them based on the Federal Reserve benchmark rate and competitive pressure. If you want a fixed rate for a specific term, a CD is the alternative. Many people ladder: keep an emergency fund in a money market account (variable, accessible) and put longer-term savings in CDs (fixed rate, locked term).