Export the growth schedule and summary, including fee and tax estimates, for further analysis or sharing.
Example money market APY scenarios
| Initial deposit | Contribution per period | Nominal rate | Compounding | Term | APY | Ending balance (approx.) |
|---|---|---|---|---|---|---|
| $5,000 | $200 | 4.25% | Daily | 3 years | 4.35% | ≈ $14,300 |
| $10,000 | $0 | 3.10% | Monthly | 2 years | 3.14% | ≈ $10,634 |
| $2,500 | $150 | 3.80% | Weekly | 5 years | 3.88% | ≈ $12,950 |
These rounded examples illustrate how contributions, compounding, and horizon affect both effective yield and final balance.
Formula used for money market APY
The calculator starts from the nominal annual interest rate (APR) and converts it into an effective annual percentage yield (APY) using the chosen compounding frequency.
Let r be the nominal rate as a decimal, and n be the number of compounding periods per year.
APY = (1 + r / n)n − 1
For balance growth, the calculator models an initial deposit plus a fixed contribution every compounding period. Contributions may occur at the beginning or end of the period, based on your selection.
It then subtracts an approximate prorated maintenance fee and applies the periodic interest rate, building a schedule of balances, contributions, and interest over the chosen horizon.
How to use this money market APY calculator
- Select a quick preset or enter all fields manually.
- Enter your opening balance in the initial deposit field.
- Set the contribution per compounding period, or leave zero.
- Provide the nominal annual rate quoted by your institution.
- Choose compounding frequency and investment horizon in years.
- Add an estimated monthly fee and tax rate if desired.
- Choose contribution timing, then click “Calculate APY and growth”.
The summary panel shows the effective APY, ending balance before tax, total contributions, interest after fees, fees paid, and net interest and balance after tax.
Use the chart and schedule to explore how fees and taxes affect long-term outcomes, and export data to CSV or PDF for deeper comparison and record keeping.
Key drivers of money market APY
APY depends on three main factors: the quoted nominal rate, how often interest compounds, and how long the funds remain invested. Higher compounding frequency increases the effective annual yield.
Money market accounts typically compound daily or monthly, making their effective APY slightly higher than a simple APR quote.
| Nominal APR | Compounding | Approximate APY |
|---|---|---|
| 3.00% | Annually | 3.00% |
| 3.00% | Monthly | 3.04% |
| 3.00% | Daily | 3.05% |
Money market APY versus traditional savings rates
Money market accounts often pay higher APY than basic savings accounts, especially at online institutions. They may require larger minimum balances or limit withdrawals compared with everyday savings options.
The calculator lets you estimate whether the extra yield justifies higher minimums, limited checks, or linked debit access requirements.
| Product type | Typical APY range | Liquidity characteristics |
|---|---|---|
| Basic savings | 0.01% – 1.00% | High liquidity, low requirements |
| Money market | 1.50% – 5.00% | Moderate liquidity, higher minimums |
| Short-term CDs | 2.00% – 5.00% | Low liquidity, early withdrawal penalties |
Impact of fees and taxes on effective APY
Maintenance fees and taxes reduce the return investors actually keep. Even small monthly fees can significantly erode effective yield when balances are modest or contribution levels are limited.
Use the advanced options to model monthly account fees and a personal tax rate on interest income, and analyze the resulting net APY impact.
| Scenario | Gross APY | Fees / tax assumptions | Approximate net APY |
|---|---|---|---|
| No fees, no tax | 4.35% | None | 4.35% |
| $5 fee, no tax | 4.35% | $5 monthly fee | 3.90% – 4.10% |
| $5 fee, 22% tax | 4.35% | $5 fee, 22% tax | 3.00% – 3.40% |
Using this calculator for savings strategy decisions
The money market APY calculator helps test different deposit plans, contribution schedules, and rate assumptions before committing funds. It is especially useful for comparing competing bank offers objectively.
You can vary starting balance, monthly funding, account fees, and compounding frequency to see how each factor influences long-term results and goal timelines.
- Compare promotional teaser rates with long-term stable offers.
- Check progress toward emergency reserve or short-term goals.
- Evaluate whether money market returns justify required minimums.
- Export CSV or PDF to discuss scenarios with a financial professional.
Frequently asked questions (FAQs)
1. What is APY and how is it different from APR?
APY stands for annual percentage yield. It reflects the effect of compounding over a full year. APR is the nominal rate before compounding. For savings and deposits, APY is usually the more meaningful comparison figure.
2. Can this calculator match my bank’s advertised APY?
Yes. As long as you enter the same nominal rate, compounding frequency, and time horizon, the calculator will reproduce the quoted APY closely. Small rounding differences may appear because of period rounding and decimal precision.
3. Does this tool account for withdrawal limits and liquidity rules?
Most money market accounts allow frequent withdrawals, but institutions may restrict check writing, transfers, or debit card usage. This calculator only focuses on rate, compounding, fees, and tax effects, not access limitations or regulatory transaction caps.
4. How are maintenance fees treated in the calculation?
Maintenance fees are deducted as an approximate prorated amount each compounding period. They reduce the effective return even when the nominal APY stays the same. Higher balances can soften the impact of fixed monthly dollar fees.
5. What assumptions should I use for future interest rates?
Use conservative estimates for future rates, not the best recent promotions. You can test multiple scenarios with higher and lower APY values, then compare final balances and net interest using the CSV or PDF exports.
6. Is this calculator providing financial advice or recommendations?
No. The results are educational illustrations based on inputs you provide. They do not constitute financial advice or a recommendation. Always compare actual account disclosures and consult a qualified professional before making savings or investment decisions.