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Current top MMA rates: 4.5–5.2% (2025)
Enter APY rate
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Optional — additional monthly deposits
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To see after-tax earnings
Total Interest Earned
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How Money Market Accounts Work
A money market account (MMA) is an interest-bearing deposit account at a bank or credit union. MMAs typically offer higher rates than standard savings accounts and are FDIC-insured up to $250,000. Interest is usually compounded daily and credited monthly.
Compound Interest Formula
A = P × (1 + r/n)^(n×t)
Where P = principal, r = annual rate (decimal), n = compounding periods per year, t = years. With monthly contributions, each deposit earns interest from the time it's made. APY already accounts for compounding — use APY for straightforward comparisons between accounts.
💡 APY vs APR: APY (Annual Percentage Yield) includes compounding effects and is the true annual return. APR (Annual Percentage Rate) does not include compounding. Always compare accounts using APY for an apples-to-apples comparison.
Frequently Asked Questions
As of 2025, top online money market accounts offer APYs of 4.5–5.2%. Traditional bank MMAs often pay far less (0.5–1.5%). The national average is around 0.6%. Always compare rates at online banks and credit unions, which consistently offer higher yields than brick-and-mortar institutions.
Yes. Interest earned in a money market account is taxable as ordinary income in the year it is received. You'll receive a 1099-INT from your bank if you earn more than $10 in interest. There is no special tax rate for MMA interest — it's taxed at your regular federal and state income tax rate.
A money market account (MMA) is a bank deposit account — FDIC-insured, fixed rate, no risk to principal. A money market fund is an investment product (mutual fund) that invests in short-term debt — not FDIC-insured, variable yield, slight risk to principal. MMAs are savings products; money market funds are investment products.
The Federal Reserve's Regulation D previously limited certain withdrawals to 6 per month, but this rule was suspended in 2020 and has not been reinstated. However, many banks still impose their own limits and may charge fees for excessive withdrawals. Check your account terms for specific restrictions.
Both are FDIC-insured. Money market accounts (MMA) may offer check-writing and debit card access. HYSAs (typically at online banks) are savings-only with no check-writing but often offer slightly higher APYs. Note: money market funds at brokerages are investment products — not FDIC-insured — and are completely different from bank money market accounts.
On $10,000 at 4% for 1 year: daily vs annual compounding difference is just $8. On $500,000 over 10 years, the difference is ~$5,500. Always compare APY (not APR) — it accounts for compounding frequency and gives you a true apples-to-apples comparison between accounts regardless of how often they compound.
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