Money Market Interest Formula:
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Money market interest is the return earned on funds deposited in a money market account. These accounts typically offer higher interest rates than regular savings accounts while providing check-writing privileges.
The calculator uses the simple interest formula:
Where:
Explanation: The formula calculates simple interest, which means interest is earned only on the principal amount.
Details: Understanding potential earnings helps in financial planning and comparing different investment options.
Tips: Enter principal in dollars, rate as percentage (e.g., 2.5 for 2.5%), and time in years. All values must be positive numbers.
Q1: Is this simple or compound interest?
A: This calculator uses simple interest. Most money market accounts actually use compound interest, which would yield higher returns.
Q2: How often is interest typically compounded?
A: Money market accounts usually compound interest daily or monthly.
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's the difference between money market accounts and funds?
A: Money market accounts are bank products (FDIC insured), while money market funds are investment products (not FDIC insured).
Q5: Are there withdrawal limits?
A: Federal regulations may limit certain withdrawals to 6 per month, though this has been suspended during COVID-19.