Money market calculator

What this number means

The closing balance is your deposits plus everything you add plus the interest, if the rate stays where it is. The split below it separates what you contributed from what the account earned.

The rate assumption is doing more work here than on a fixed-term product. With a CD you are quoted a rate and it holds for the term, so the arithmetic is the answer. With a money market account the rate is the bank's to change, so the arithmetic is only as good as the assumption, and the assumption decays with time.

That is not a reason to avoid these accounts. Liquidity has value, and a variable rate cuts both ways. It is a reason to hold a long projection lightly.

How this is calculated

• The APY you enter is converted back to a nominal monthly rate first, because compounding an APY would apply the compounding twice.
• Each month, any deposit is added and then interest is credited on the total.
• Interest is rounded to whole cents as it is posted, matching a bank statement.

Deposits are treated as landing at the start of the month, so each one earns that month's interest. The alternative convention costs one month of interest on every deposit; over two years the difference is small but real, and calculators rarely say which they use.

APY is defined by the Truth in Savings Act and Regulation DD, 12 CFR 1030. Deposit insurance limits are set under the Federal Deposit Insurance Act at 250,000 dollars per depositor, per insured bank, per ownership category.

What this does not account for

• A rate that moves. The largest omission, and the reason this page exists separately from the CD page.
• Tiered rates. Many accounts pay differently above and below a balance threshold.
• Minimum balance requirements and the monthly fee charged for falling below them, which can exceed the interest on a small balance.
• Introductory rates that revert after a few months.
• Withdrawal limits. Some accounts still cap the number of certain transfers per statement cycle and charge for exceeding it.
• Tax. Interest is generally taxable in the year it is credited.
• Balances above the insurance limit at a single institution.

Questions

How is a money market account different from a savings account?

Less than the name suggests. Both are deposit accounts at a bank or credit union, both are federally insured to the same limits, and both pay a variable rate. Money market accounts more often come with cheque-writing or a debit card and more often require a higher minimum balance. The rate difference between the two is usually small and moves.

Is this the same as a money market fund?

No, and the distinction matters. A money market deposit ACCOUNT at a bank is FDIC insured. A money market FUND is a mutual fund, is not FDIC insured, and can in rare circumstances lose value. They sound alike and are different products under different regulators. This page is about the account.

Why does the projection get less reliable the further out it goes?

Because the rate is variable and this calculation assumes it is not. A bank can change a money market rate at any time. Over a few months today’s rate is a reasonable stand-in; over five years it is a scenario rather than a forecast. Rates on these accounts have moved by several percentage points inside a couple of years more than once.

What about tiered rates?

Many money market accounts pay different rates at different balance levels, so the rate can change as your balance grows or falls past a threshold. This page models a single rate. If your account is tiered, run it once per tier to see the range.