Money Market Account Calculator (variable APY & monthly deposits)

Understanding the money market account calculator — concept and principle

Money market accounts pay a variable rate that banks can change at any time. This calculator projects your balance with monthly deposits and lets the APY change once during the period, then shows how much that change cost or gained you compared with the original rate.

APY falling from 4.0% to 3.25% after 6 months cuts two years of interest from $1,093.69 to $927.45.

How it is calculated

APY already includes compounding, so the equivalent monthly rate is i = (1 + APY)^(1/12) − 1.
Each month: B_k = B_(k−1) × (1 + i_k) + deposit, where i_k is the rate in force that month.
Interest earned = final balance − total deposited.
The same projection with the first APY throughout gives the "if the rate had stayed" figure; the difference is the effect of the change.

The principle

Interest is credited monthly on the balance, and each deposit starts earning from the next month. Because APY is the annual yield after compounding, converting it to a monthly rate with the twelfth root keeps the yearly growth exactly equal to the APY. When the rate drops, every dollar already in the account and every future deposit earns less from that month on, so a rate change late in the period matters less than one early on.

Worked example

Default inputs: opening deposit 10,000 USD, 300 USD at the end of each month, APY 4.0% for 6 months, then 3.25%, 24 months in total.

Monthly rates: 1.04^(1/12) − 1 ≈ 0.3274%, then 1.0325^(1/12) − 1 ≈ 0.2668%.
Running the balance month by month gives 18,127.45 USD at the end.
Total deposited = 10,000 + 300 × 24 = 17,200 USD, so interest = 927.45 USD.
At 4.0% the whole time, interest would have been 1,093.69 USD.
Effect of the rate change = 927.45 − 1,093.69 ≈ −166.23 USD.

Each point is the calculator re-run with only “Opening deposit” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Opening deposit	Balance at the end
2,500	$10,103.04
5,000	$12,777.85
7,500	$15,452.65
10,000	$18,127.45
12,500	$20,802.26
15,000	$23,477.06
20,000	$28,826.66

How to read the result

Use the result to compare a money market account with a fixed-rate CD or a high-yield savings account. If you expect rates to fall, a CD locks in today's rate; if you need easy access, the money market account's flexibility may be worth the uncertainty. Check minimum balances and fees, which can wipe out small interest gains.

Common mistakes

Dividing the APY by 12 instead of taking the twelfth root.
Confusing APY with APR (the nominal rate before compounding).
Ignoring tiered rates that pay less on smaller balances.
Forgetting tax on interest.

Keep in mind: Rates on money market accounts are variable and can change more than once. Fees and taxes are not included. This is not financial advice.

Frequently asked questions

Is a money market account the same as a money market fund?

No. A bank money market account is a deposit (FDIC-insured in the US within limits); a money market fund is an investment fund and is not deposit-insured.

How often does interest compound?

Many accounts compound daily and credit monthly; the APY already reflects this.

Why does the rate change matter less if it happens late?

Fewer months remain at the lower rate, so less interest is lost.

Sources: FDIC, Truth in Savings Act (Regulation DD) and deposit insurance basics · US SEC Investor.gov, Money Market Funds

Checked 9 Nov 2026. Annual percentage yield as the compounded yearly rate, converted to a monthly rate (1 + APY)^1/12 − 1, and month-by-month balance with end-of-month deposits: standard formulas.

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