Calculate the interest earned on your money market deposit each month.
%
e.g., 30 for a 30-day month, 31 for a 31-day month
Monthly Interest Earned: $0.00
Understanding Money Market Account Interest
Money market accounts (MMAs) are a type of savings account offered by banks and credit unions. They typically offer higher interest rates than traditional savings accounts and often come with limited check-writing privileges or debit card access, though with restrictions on the number of transactions per month. The interest earned on these accounts is usually compounded, meaning you earn interest on your principal plus any previously earned interest. This calculator helps you estimate the monthly interest you can expect to earn.
How is Monthly Interest Calculated?
The calculation for the interest earned on a money market account on a monthly basis involves a few key variables:
Principal Amount: The initial amount of money deposited into the account.
Annual Interest Rate (APY): The yearly rate of return, expressed as a percentage. For calculations, this needs to be converted to a decimal.
Number of Days in the Month: Money market accounts often accrue interest daily. To find the monthly interest, we need to know the specific number of days in the month for which we are calculating interest.
Days in a Year: Typically assumed to be 360 or 365 days for interest calculations, depending on the financial institution's convention. This calculator uses 365 days.
The formula used is a simplified version of the compound interest formula applied over a specific period:
Monthly Interest = Principal * (Annual Interest Rate / 100) * (Days in Month / Days in Year)
Let's break down the formula:
(Annual Interest Rate / 100): Converts the percentage rate into a decimal (e.g., 5% becomes 0.05).
(Days in Month / Days in Year): This fraction represents the portion of the year the current month covers. If you use 365 days in a year, this would be 30/365 for a 30-day month.
This calculation provides an estimate of the interest earned specifically for that month. The actual amount credited to your account might vary slightly due to the financial institution's specific day-count conventions and compounding frequency.
Use Cases
This calculator is useful for:
Budgeting and Financial Planning: Estimate passive income from your savings.
Comparing Accounts: See potential earnings from different money market accounts based on their advertised rates.
Understanding Growth: Get a clearer picture of how your money market deposits grow over time.
function calculateInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var daysInMonth = parseInt(document.getElementById("daysInMonth").value);
var daysInYear = 365; // Standard assumption for this calculation
var resultElement = document.getElementById("result");
var resultSpan = resultElement.getElementsByTagName("span")[0];
if (isNaN(principal) || isNaN(annualInterestRate) || isNaN(daysInMonth)) {
resultSpan.innerHTML = "Please enter valid numbers for all fields.";
resultSpan.style.color = "#dc3545"; // Red for error
return;
}
if (principal < 0 || annualInterestRate < 0 || daysInMonth <= 0) {
resultSpan.innerHTML = "Inputs must be positive values.";
resultSpan.style.color = "#dc3545"; // Red for error
return;
}
// Ensure daysInMonth is reasonable, typically between 28 and 31
if (daysInMonth 31) {
resultSpan.innerHTML = "Days in month should be between 28 and 31.";
resultSpan.style.color = "#dc3545"; // Red for error
return;
}
var monthlyInterestRateDecimal = (annualInterestRate / 100) / daysInYear;
var monthlyInterestEarned = principal * monthlyInterestRateDecimal * daysInMonth;
// Format to two decimal places for currency
resultSpan.innerHTML = "$" + monthlyInterestEarned.toFixed(2);
resultSpan.style.color = "#28a745"; // Green for success
}