This Money Market Account calculator helps you estimate your savings growth with interest over time based on your deposit and contributions. Feel free to modify the amounts to fit your own.
Money Market Account Calculator
Calculate the growth of your money market account over time
Future Value
Total Deposits
Interest Earned
The future value of a money market account with regular contributions is calculated using the compound interest formula. This formula accounts for both the initial deposit and regular monthly contributions.
Where:
- A = Future Value
- P = Initial Deposit
- r = Annual Interest Rate (as a decimal)
- n = Compounding periods per year
- t = Time in years
- PMT = Monthly contribution
Example Calculation
Let’s say you have an initial deposit of $5,000, contribute $100 monthly, with an annual interest rate of 2.5% compounded monthly for 5 years:
Initial Deposit (P) = $5,000
Monthly Contribution (PMT) = $100
Annual Interest Rate (r) = 2.5% or 0.025
Compounding Frequency (n) = 12 (monthly)
Time Period (t) = 5 years
Using the formula:
A = $5,000(1 + 0.025/12)12×5 + $100 × [((1 + 0.025/12)12×5 – 1) / (0.025/12)]
A = $5,000(1.002083)60 + $100 × [(1.00208360 – 1) / 0.002083]
A = $5,000(1.133) + $100 × [(1.133 – 1) / 0.002083]
A = $5,665 + $100 × [0.133 / 0.002083]
A = $5,665 + $100 × 63.85
A = $5,665 + $6,385 = $12,050
After 5 years, your money market account would grow to approximately $12,050.
Money Market vs. Other Savings Accounts
Money market accounts offer a balance between accessibility and higher interest rates compared to traditional savings accounts:
- Traditional Savings: Lower interest rates but highly accessible with no minimum balance requirements.
- High-Yield Savings: Higher interest rates than traditional savings, but may have limitations on withdrawals.
- Money Market: Higher interest rates with check-writing privileges, but typically require higher minimum balances.
- Certificates of Deposit (CDs):strong> Highest interest rates, but funds are locked for a fixed term with penalties for early withdrawal.
Understanding Money Market Accounts
What is a Money Market Account?
A money market account is a type of savings account that typically offers higher interest rates than traditional savings accounts. It combines features of both savings and checking accounts, often including check-writing privileges and debit card access.
Interest Rates
Money market accounts usually offer variable interest rates that may change based on market conditions. Rates are typically higher than traditional savings accounts but may be lower than what you could earn with certificates of deposit (CDs).
Insurance and Security
Money market accounts offered by banks are FDIC-insured up to $250,000 per depositor, per institution. Those offered by credit unions are NCUA-insured for the same amount, making them a safe place to keep your money.
Accessibility
Unlike CDs, money market accounts offer greater liquidity with limited check-writing abilities and debit card access. However, they are still subject to federal Regulation D, which limits certain types of withdrawals to six per month.
Minimum Balance Requirements
Many money market accounts require a higher minimum balance to open and maintain the account. Falling below the minimum balance may result in fees or a lower interest rate. Always check the specific requirements before opening an account.
When to Choose a Money Market Account
Money market accounts are ideal for those who want higher interest rates than traditional savings accounts while maintaining some accessibility to their funds. They’re particularly suitable for emergency funds or medium-term savings goals.