Money Market Savings Calculator

Compound Interest Formula:

\[ FV = P \times (1 + \frac{r}{n})^{n \times t} \]

Principal (P):

Annual Interest Rate (r):

Compounding Frequency (n):

Time (t):

years

Future Value (FV):

Interest Earned:

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1. What is Compound Interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It allows savings to grow at an accelerating rate over time, as interest is earned on both the original amount and the interest that has been added to it.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ FV = P \times (1 + \frac{r}{n})^{n \times t} \]

Where:

$ FV $ — Future Value of the investment
$ P $ — Principal investment amount
$ r $ — Annual interest rate (in decimal form)
$ n $ — Number of compounding periods per year
$ t $ — Time the money is invested for in years

Explanation: The formula calculates how much an investment will grow over time with compound interest, taking into account how frequently the interest is compounded.

3. Importance of Money Market Savings

Details: Money market accounts offer higher interest rates than regular savings accounts while providing liquidity and FDIC insurance. They are ideal for emergency funds or short-term savings goals, with current rates up to 4.30% APY as of September 2025 according to Forbes.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage, select compounding frequency, and time in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and APY?
A: APR (Annual Percentage Rate) doesn't account for compounding, while APY (Annual Percentage Yield) does. APY gives a more accurate picture of actual earnings.

Q2: How often do money market accounts compound interest?
A: Most money market accounts compound interest daily and credit it monthly, but this can vary by institution.

Q3: Are money market accounts FDIC insured?
A: Yes, money market accounts at FDIC-insured banks are protected up to $250,000 per depositor.

Q4: What are the current best money market rates?
A: As of September 2025, top money market accounts offer up to 4.30% APY, though rates fluctuate with market conditions.

Q5: Are there withdrawal limits on money market accounts?
A: Federal Regulation D limits certain types of withdrawals to six per month, though this regulation was suspended during the pandemic and may vary.