How this instrument works
A money market account is a bank deposit that sits between a checking account and a certificate of deposit: it usually pays a better rate than a plain savings account, carries FDIC insurance up to the standard coverage limit, and — unlike a CD — still lets the holder add money or make a limited number of withdrawals without breaking a fixed term. Banks often reward it with tiered rates, so a $25,000 balance can earn measurably more than a $2,000 one at the same institution, and many require a minimum balance to dodge a monthly fee that would eat into the yield this instrument is built to show.
The projected balance here comes from two pieces added together: the opening deposit compounding on its own for the full stretch, and a stream of monthly deposits compounding as an ordinary annuity, where each contribution earns interest only from the month it lands. That second term is why this sheet takes a Monthly deposit, $ field at all — a certificate of deposit or a fixed deposit is funded once and then left alone, but a money market account is built to keep accepting cash, so the arithmetic has to account for money arriving on sixty different dates rather than one.
The name invites a mix-up worth untangling: a money market account is a bank deposit, insured and rate-guaranteed for as long as the bank quotes that rate, while a money market fund is a mutual fund that invests in short-term debt and carries no federal deposit insurance — its share price can, in rare stress, slip below a dollar. This calculator prices the deposit product only, at one flat rate for the whole stretch. It does not model tiers that rise with balance, a monthly maintenance charge, the transaction limits many banks still enforce on this account type, or the tax owed on interest once it is credited.
- Enter the sum you are opening the account with in Initial deposit, $.
- Enter what you plan to add every month in Monthly deposit, $ — set it to 0 to model a lump sum with no further contributions.
- Set the bank's quoted yield in Annual interest rate, %.
- Choose how many years you are projecting in Years.
- Read Projected balance for the compounded total — opening deposit plus every monthly contribution — at the end of that stretch.
Worked example — $10,000 opening, $200 a month, five years
Set Initial deposit, $ to 10,000, Monthly deposit, $ to 200, Annual interest rate, % to 4.5, and Years to 5. The monthly rate works out to g = 4.5 ÷ 1200 = 0.375%, applied across n = 60 months, and Projected balance reads $25,947.07.
Split that figure to see where it comes from: the $10,000 opening deposit alone compounds to $12,517.96 over five years, while the $200-a-month stream — $12,000 of actual contributions plus $1,429.11 those deposits earned along the way — supplies the remaining $13,429.11. Total interest across the account, opening deposit and monthly stream combined, comes to $3,947.07 on $22,000 of money actually paid in.
Questions
How is a money market account different from a money market fund?
A money market account is a bank or credit union deposit, covered by FDIC or NCUA insurance up to the standard limit, paying a rate the institution sets and guarantees for however long you hold it. A money market fund is a mutual fund that buys short-term debt like Treasury bills and commercial paper; it carries no federal insurance, and its share price — usually held near $1 — can in rare episodes of stress fall below that. The overlapping name is coincidence, not a shared product.
Why does this calculator let me add a monthly deposit when a CD calculator doesn't?
Because the products behave differently. A certificate of deposit is funded once and then locked until maturity, so its arithmetic is a single lump sum compounding alone. A money market account is built to keep accepting money — a regular transfer from a paycheck, for instance — so the Monthly deposit, $ field and the annuity term inside the formula exist to price exactly that ongoing stream, on top of whatever the account started with.
Does this figure account for tiered interest rates?
No — it applies one flat Annual interest rate, % across the whole balance for the whole stretch. Many banks actually pay a higher rate once the balance clears a threshold, sometimes several thresholds stacked on top of each other, and a balance that crosses a tier partway through the year earns a blended rate this sheet does not model. Check your bank's own rate tiers directly if your balance sits near one of those lines.
Are there limits on withdrawals from a money market account?
Often, yes. For decades, federal Regulation D capped certain withdrawals and transfers from these accounts at six per statement cycle; the Federal Reserve suspended that specific cap in 2020, but plenty of banks still enforce a similar limit in their own account agreement and charge a fee past it. This calculator assumes the balance is left alone to grow — it does not model withdrawals, fees, or the cap your own bank may still apply.
Is the money in a money market account actually insured?
Yes — at a bank it is FDIC-insured, and at a credit union the equivalent NCUA coverage applies, both up to $250,000 per depositor, per institution, per ownership category as of this writing. That protection is a real structural difference from a money market fund, which carries no such federal insurance. Confirm your own institution's coverage and your account's ownership category if a balance is approaching that limit.
Why might my bank's real payout differ from Projected balance?
Most likely rounding or timing: banks often credit interest daily on the actual balance rather than crediting it once a month on a clean average, and a deposit or withdrawal partway through a period changes the exact days each dollar sat in the account. This sheet assumes contributions land in a clean, regular monthly rhythm at a single flat rate; a real statement reconciled day by day will land close, typically within a few dollars on a balance this size, but not always to the cent.
References
- CFPB — Compare bank and credit union account types
- FDIC — deposit insurance coverage and per-depositor limits
- Federal Reserve — Regulation D and the 2020 withdrawal-limit change
Read this first: This instrument shows arithmetic, not advice. Real offers add fees, taxes and terms that vary by lender and place — verify the figures against your actual paperwork before deciding anything.