Money Market Earnings Calculator

Money market accounts offer relatively safe investments with competitive returns. This calculator helps you understand how your money grows over time with compound interest, comparing Annual Percentage Rate (APR) and Annual Percentage Yield (APY).

How to Use This Calculator

Enter your initial investment amount, the money market's annual percentage rate (APR), and the time period in years. The calculator will show you:

The total earnings after compound interest
The difference between APR and APY
A chart showing your balance growth over time

Use this tool to compare different money market accounts or plan your savings strategy.

Formula Explained

The calculator uses the compound interest formula to calculate earnings:

Future Value = P × (1 + r/n)^(nt)

Where:

P = Principal amount (initial investment)
r = Annual interest rate (APR)
n = Number of times interest is compounded per year
t = Time in years

For APY, the calculator assumes daily compounding (n=365) to show the true annual percentage yield.

Worked Example

Suppose you invest $10,000 at 2.5% APR for 5 years with daily compounding:

Future Value = $10,000 × (1 + 0.025/365)^(365×5)

Calculating this gives approximately $11,324.79 after 5 years.

The difference between APR and APY is about $12.79 for this example.

APR vs APY Comparison

APR is the simple annual interest rate, while APY shows the actual annual percentage yield after compounding.

Term	Definition	Example
APR	Annual Percentage Rate (simple interest)	2.5%
APY	Annual Percentage Yield (with compounding)	2.52%

Frequently Asked Questions

What is the difference between APR and APY?

APR is the simple annual interest rate, while APY shows the actual return after compounding. APY is always higher than APR when interest is compounded.

How often is money market interest compounded?

Most money markets compound interest daily, which is why APY is higher than APR. The calculator assumes daily compounding for accurate results.

Is money market interest taxable?

Interest earned in money markets is generally taxable as ordinary income in the US. Check with your tax advisor for specific rules in your jurisdiction.