- Money market accounts are deposit accounts offered by banks and credit unions that provide good liquidity, higher interest rates than traditional savings accounts, and the ability to write checks or use a debit card to access funds.
- How much a $10,000 deposit in a money market account will earn annually depends on the annual percentage yield (APY) offered by your financial institution.
- If you deposit $10,000 into a money market account with a 5.00% APY, you will earn $513 in interest by the end of the year, assuming daily compounding.
- If you deposit $10,000 into a money market account with a 5.00% APY at age 20, you will earn nearly $85,000 in interest by age 65, assuming daily compounding.
- Alternatives to money market accounts include CDs, high-yield savings accounts, checking accounts and money market mutual funds.
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On This Page
- Key Takeaways
- How much will $10,000 make in a money market account in one year?
- Our top picks for savings accounts that offer reliable growth
- How much could I earn by 65 with $10,000 in a money market account?
- How does a money market account work?
- Should I invest $10,000 in a money market account?
- Alternatives to earning with money market accounts
- FAQ: How much will $10,000 make in a money market account?
- Related topics
On This Page
- Key Takeaways
- How much will $10,000 make in a money market account in one year?
- Our top picks for savings accounts that offer reliable growth
- How much could I earn by 65 with $10,000 in a money market account?
- How does a money market account work?
- Should I invest $10,000 in a money market account?
- Alternatives to earning with money market accounts
- FAQ: How much will $10,000 make in a money market account?
- Related topics
How Much Will $10,000 Make in a Money Market Account?
Reviewed By
Blake Esken - Los Angeles Times
Our top 3 recommended MMAs
Quontic Bank Money Market Account
FDIC Insured
rates_last_updated
rates_last_updated
APY
apy
Monthly Fee
$0.00
Minimum Opening Deposit
min_deposit
American First Money Market Deposit Account
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NCUA insured
Rates updated as of 9/9/2024
Rates updated as of 9/9/2024
APY
4.60 %
Monthly Fee
$0.00
Minimum Opening Deposit
$1.00
mph.bank Money Market Deposit Account
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FDIC insured
Rates updated as of 9/9/2024
Rates updated as of 9/9/2024
APY
4.50 %
Monthly Fee
$0.00
Minimum Opening Deposit
$1.00
How much will $10,000 make in a money market account in one year?
According to FDIC data, the average money market account earns 0.64% APY. However, the best money market accounts currently offer APYs of around 5.00% or higher. If you deposit $10,000 into one of these high-yield accounts, you would earn $513 or more in interest over a year, assuming daily compounding.
To understand how your potential earnings on a $10,000 investment can be affected by the APY of your money market account, take a look at the table below.
Earnings after one year on $10,000 in a money market account
| APY | Interest earned annually on $10,000 | Total value |
|---|---|---|
| 0.64% | $64.20 | $10,064.20 |
| 4.00% | $408.08 | $10,408.08 |
| 4.25% | $434.13 | $10,434.13 |
| 4.50% | $460.25 | $10,460.25 |
| 4.75% | $486.43 | $10,486.43 |
| 5.00% | $512.67 | $10,512.67 |
| 5.25% | $538.99 | $10,538.99 |
This table assumes that interest is compounded daily and credited monthly. The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
How much could I earn by 65 with $10,000 in a money market account?
The earlier you start your money market account, the more money you’ll make on your $10,000 investment. When you begin saving in your early 20s, you’ll have more time for interest to compound and your savings to grow over time. You can accumulate more interest when your initial investment grows for decades versus only a few years.
If you put $10,000 in a money market account with an APY of 5.00% at age 20, you’ll earn X in interest by the time you reach 65.
The table below shows how much your investment will grow by the time you turn 65 depending on the age at which you start savings.
Earnings over time on $10,000 in a money market account with a 5.00% APY
| Starting age | Years to 65 | Interest earned | Total value |
|---|---|---|---|
| 20 | 45 | $84,862.75 | $94,862.75 |
| 25 | 40 | $63,880.45 | $73,880.45 |
| 30 | 35 | $47,539.13 | $57,539.13 |
| 35 | 30 | $34,812.29 | $44,812.29 |
| 40 | 25 | $24,900.44 | $34,900.44 |
| 45 | 20 | $17,180.96 | $27,180.96 |
| 50 | 15 | $11,168.91 | $21,168.91 |
| 55 | 10 | $6,486.65 | $16,486.65 |
| 60 | 5 | $2,840.03 | $12,840.03 |
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
The calculations in the table above assume the following:
- The APY is fixed at 5.00% and will not change.
- Interest is compounded daily and credited monthly.
- You make no additional deposits or withdrawals.
- There are no account fees.
Learn more about how much you could earn over time with our savings calculator.
How does a money market account work?
Credit unions and banks offer money market accounts that work like other deposit accounts. They pay higher interest rates than regular savings accounts and often allow you to write checks or use a debit card to access your funds. Banks typically compound interest in money market accounts daily and pay it monthly.
[Learn more about how money market accounts compare to savings accounts.](http://arstechnica.netblogpro.com/compare-deals/banking/money-market/money-market-account-vs-savings-account)
Should I invest $10,000 in a money market account?
Consider the pros and cons when deciding whether or not to invest $10,000 in a money market account.
- Liquidity
- High interest rate
- Relatively low risk
- Limited transactions
- Limited growth potential
- Low returns
Pros explained
- Liquidity: This refers to how easily you can access funds held in an account. MMAs are highly liquid and allow you to spend money from your account much like you can from a checking account. You’ll be able to access your funds when you need them.
- High interest rate: Unlike traditional savings accounts, money market accounts offer higher interest rates. You can earn more money by depositing your funds in an MMA instead of your regular savings account.
- Relatively low risk: Money market accounts are relatively low-risk savings vehicles. Since banks hold them, your money is FDIC insured up to $250,000.
Cons explained
- Limited transactions: While you can access your money in an MMA with a debit card or check, most banks limit the number of transactions you can complete each month. This can be a problem if you intend to make lots of transactions.
- Limited growth potential: Money market accounts also have a limited growth potential compared to other types of investments. While the interest rates are typically higher than traditional savings accounts, other investment choices offer higher rates and a greater growth potential.
- Low returns: The returns offered by money market accounts are generally low. The interest that accumulates is at a lower rate than the returns you might enjoy from investing in stocks.
Alternatives to earning with money market accounts
Some relatively low-risk alternatives to consider when you are thinking about what to do with $10,000 include CDs, high-yield savings accounts, checking accounts and money market mutual funds. Let’s take a closer look at each of these alternatives.
CDs
Certificates of deposit (CDs) are accounts offered by credit unions and banks. If you open a CD with $10,000, you’ll agree not to make withdrawals for a specific duration. In exchange, the bank will pay a guaranteed interest rate during the CD’s term.
The interest you’ll earn on a $10,000 CD depends on the account’s term and the financial institution. Terms can range from a few months to five years, and the best rates currently range from 4% to 6%.
Unlike money market accounts, CDs are illiquid. You can’t access your money before the CD’s term ends without paying penalties.
High-yield savings accounts
High-yield savings accounts are available online and from some brick-and-mortar banks. They offer higher interest rates than traditional savings accounts. These accounts offer APYs similar to those offered by money market accounts, and both are FDIC-insured.
Unlike money market accounts, high-yield savings accounts do not come with the ability to write checks or access funds with debit cards. Instead, you will have to make withdrawals or transfers to access your money.
Learn how much you can earn with $10,000 in a high yield savings account.
Checking accounts
Like money market accounts, checking accounts give you ready access to your money and the ability to write checks and use debit cards for purchases. They are also FDIC-insured. However, checking accounts do not pay interest.
Money market mutual funds
Money market mutual funds may share a similar name to MMAs, but they are an entirely different investment product. These are mutual funds sold by brokers instead of banks through which you can invest in short-term securities. They carry a greater risk than MMAs and are not FDIC-insured.
However, money market mutual funds typically offer higher interest rates than money market accounts or other savings accounts. However, they typically do not allow you to write checks or withdraw funds with debit cards.
FAQ: How much will $10,000 make in a money market account?
How much will $10,000 make in a money market account in one year?
The amount you earn from depositing $10,000 in a money market account over one year depends on the APY offered by your bank. With daily compounding and monthly interest payments, you would earn approximately $64 at the industry average rate of 0.64% APY. However, if your bank offers a higher rate of 5.00% APY, you would earn around $513 in one year.
How much will $5,000 make in a money market account in one year?
If you deposit $5,000 in a money market account without making any additional contributions, you will earn around $32 in interest at the industry average rate of 0.64% APY. However, if your bank offers a higher interest rate of 5.00% APY, you will earn $256. These calculations assume daily compounding of interest.
How much will $1,000 make in a money market account in one year?
If you deposit $1,000 in a money market account with no additional contributions or withdrawals, you will earn around $6 in interest over one year at an APY of 0.64%. However, if your bank offers a higher interest rate of 5.00%, you will earn $51. These calculations assume interest is compounded daily.
What is the average return on a money market account?
The industry average APY for money market accounts is currently 0.64%. However, some banks, such as those listed above, offer higher interest rates of 5.00% or higher.
Are money market account rates fixed?
Money market account rates are not fixed. They are variable and can change at your bank’s discretion. If you want an investment paying a guaranteed rate, you might consider investing in a CD.
Who has the best money market rates?
You will have to do some research to discover the best money market rates. However, the banks listed above offer some of the most competitive rates.
Is it worth putting money into a money market account?
Putting money into a money market account can be a great choice if you’re building an emergency fund, saving for a large expense such as a vacation, or are an independent contractor who needs to set aside money to pay quarterly taxes.
About the Author
Christy Montour is a seasoned finance writer with extensive experience in explaining a wide range of investment types, retirement accounts, and insurance products. With a background in taxation from law school, Christy possesses a deep knowledge of tax strategies and the tax code.
Christy has written thousands of blogs for clients on finance and investment topics. She covers a wide range of subjects, from the Offshore Voluntary Disclosure Program to IRS installment plans, offers-in-compromise, tax liens, levies, and criminal tax issues such as tax evasion and fraud. Christy’s expertise allows her to break down complex financial topics into clear, accessible content for her readers.
About the Reviewer
Blake Esken has over 15 years of experience in product management and has been a member of the Los Angeles Times staff for over five years.
As part of his role at the Los Angeles Times Commerce Team, Blake acts as the in-house reviewer and fact checker for LA Times Compare. He supervises all content for compliance and accuracy and puts to use skills he has honed through years of experience managing high-stakes projects for a range of industry-leading companies.
He has a strong background in data analysis, compliance, and communication, which allows him to support LA Times Compare through fact-checking in an effort to provide up-to-date and factual information across our content.
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