Skip to main content
Advertiser Disclosure
We do receive compensation from some partners whose offers appear on this page. We have not reviewed all available products or offers. Compensation may impact the order in which offers appear on page, but our editorial opinions and ratings are not influenced by compensation.

Ascent-logo

  • Credit Cards
  • Banking
  • Brokerages
  • Loans
  • Mortgages
  • Knowledge
  • Latest Picks
  • Search Icon Click here to search

Credit Cards

Top Picks
  • Best of February 2021
  • Cash Back
  • Balance Transfer
  • Travel
  • 0% APR
  • Rewards
  • Bad Credit
Knowledge
  • Beginners Guide to Credit Cards
  • How to Rebuild Your Credit
  • Maximize Your Credit Card Rewards
  • Learn More About Credit Cards
Credit Card Tools
  • Compare Cards
Looking for a new credit card?

Explore the best credit cards in every category as of February 2021.

Get started!

Banking

Top Picks
  • Best Savings Accounts
  • Best Bank Accounts
  • Best Money Market Accounts
  • Best CDs
  • Best Checking Account Bonuses
Knowledge
  • Beginners Guide to Banking
  • Everything You Need to Know About Savings
  • Money Market Accounts Made Easy
  • Learn More About Banking
Looking for a place to park your cash?

Check out our top picks of the best online savings accounts for February 2021.

Get Started!

Brokerages

Top Picks
  • Best Brokers of February 2021
  • Best Online Brokers for Beginners
  • Best Options Brokers
  • Best IRA Accounts
  • Best Roth IRA Accounts
  • Best Robo Advisors
Knowledge
  • How to Open a Brokerage Account
  • Beginner's Guide to Brokerages
  • Learn More About Brokerage
Just getting started?

Explore our picks of the best brokerage accounts for beginners for February 2021.

Get Started!

Loans

Top Picks
  • Best Loans of February 2021
  • Best Personal Loans for Bad Credit
  • Best Loans for Debt Consolidation
  • Best Low-Interest Personal Loans
  • Best Personal Loans for Good Credit
  • Best Personal Loans for Fair Credit
Knowledge
  • Personal Loans Made Easy
  • Debt Consolidation Guide
  • How to Pay Off Debt
  • Learn More About Loans
Thinking about taking out a loan?

Before you apply for a personal loan, here's what you need to know.

Get Started!

Mortgages

Top Picks
  • Best Mortgage Lenders of February 2021
  • Best Mortgage Lenders for Poor Credit
  • Best Refinance Lenders
  • Best VA Mortgage Lenders
Knowledge
  • First Time Homebuyers Guide
  • Home Loans Made Easy
  • The Complete Guide to Refinancing
  • How to Get a Mortgage with Bad Credit
  • Learn More About Mortgages
Tools & Calculators
  • Mortgage Calculator
Compare Rates
  • Today's Mortgage Rates
  • Refinance Rates
  • 15-Year Mortgage Rates
  • 20-Year Mortgage Rates
  • 30-Year Mortgage Rates
  • Jumbo Mortgage Rates
  • VA Loan Rates
  • 5/1 ARM Rates
  • 7/1 ARM Rates
  • FHA Mortgage Rates

Knowledge

Knowledge Section
  • All Articles
  • Credit Card Articles
  • Banking Articles
  • Brokerage Articles
  • Personal Loan Articles
  • Mortgage Articles
  • Personal Finance Articles
Recent Articles
  • Stimulus Check Update: Congress Moves One Step Closer to Another Round of Direct Stimulus Payments

    Personal Finance

    Stimulus Check Update: Congress Moves One Step Closer to Another Round of Direct Stimulus Payments
  • Mortgage Delinquencies Were Down in 2020's Fourth Quarter. Forbearance Could Extend That Trend

    Mortgages

    Mortgage Delinquencies Were Down in 2020's Fourth Quarter. Forbearance Could Extend That Trend
  • 22.6 Million Americans Can Cover Their Bills Through July If They Get a $1,400 Stimulus Check

    Personal Finance

    22.6 Million Americans Can Cover Their Bills Through July If They Get a $1,400 Stimulus Check
  • Current Mortgage Rates for February 24, 2021: Rates Up Again

    Mortgages

    Current Mortgage Rates for February 24, 2021: Rates Up Again
  • The Ascent
  • Knowledge
  • Banking

When Do Money Market Accounts Pay Interest?

by Dan Caplinger | March 6, 2019

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

A golden percentage sign made out of numbers.

Image source: Getty Images

If you're looking to open a bank account, one of the key tradeoffs you'll often have to make is whether you want greater access to your money or a higher interest rate. Historically, if you wanted to have ready access to your money at all times, then a checking account was the obvious choice -- but checking accounts didn't tend to offer much in the way of interest. If maximizing your interest income was the key consideration, then a savings account would give you a higher rate than a checking account -- but you wouldn't be able to get as much access to your money.

Fortunately, the creation of money market accounts solved that dilemma for many investors. Rather than having to pick between access and a high rate, money market accounts offer the best of both worlds -- as long as you can meet the rules. Below we'll take a closer look at when money market accounts pay interest and whether the higher rate you'll often get makes up for the requirements that money market accounts have.

Why money market accounts pay interest at all

The general idea behind banks offering money market accounts stems from the need to deliver products that people want. Historically, customers were willing to accept the tradeoff of no interest in exchange for check-writing capabilities. But that changed over time, and now customers want to be able to get greater access to their funds while still maximizing the return they can earn on the money they have on deposit.

Money market accounts occupy a middle ground between checking and savings accounts. They don't offer the unlimited check-writing that a checking account allows, instead limiting you to six checks or other electronic withdrawals every month. They also tend to have greater minimum balances than savings accounts do, especially before money market accounts will pay the top interest rates available. Sometimes a money market account will have a tiered rate, with a lower rate applying to relatively low-balance accounts and a higher rate kicking in once your balance tops a larger amount.

However, in order to entice customers to choose money market accounts, the interest rates banks offer tend to be extremely attractive. The intent is to draw in the high-value customers who are best able to afford the minimum balances the accounts carry. For others, interest is still available, but you might well have to pay monthly maintenance fees that will more than offset any interest you earn.

When to expect your money market account interest

In general, you can expect to get interest at whatever interval is set forth in the deposit agreement at your particular banking institution as long as you do the following:

  • Open the money market account and complete all necessary documentation.
  • Fund the money market account with the appropriate minimum balance for generating interest.
  • Maintain an adequate minimum balance to avoid triggering a loss of interest.
  • Meet any other requirements your bank set forth.

What you'll find is that most banks pay your interest on your money market account on a monthly basis. At most financial institutions, that'll be the last day of the month, but some banks instead look at the day on which you open the account and then pay interest on that day of the month from there on out. It doesn't make any real difference in terms of how much money in interest you'll eventually get, but the right timing can be useful if you intend to use the interest income to help you pay bills or meet other living expenses.

Don't let yourself get confused between when interest gets paid on your money market account and when you have interest that's credited and pending to your account. If you look at many banks -- especially those institutions that have a heavy presence online -- you'll often find in your account summary a line that says how much interest you've accrued on your money market account. That interest exists and will eventually get paid to you, but it'll only show up as a posted transaction on the monthly or other basis that the bank chooses.

The reason for the disconnect between when interest gets credited and when it's actually paid on a money market account has to do with the method of compounding that a bank uses. Most banks use daily compounding, in that they calculate a balance on account for each day and then apply a daily interest rate to calculate that day's interest. It's that daily amount that gets added to the accrued interest that you might find on your online banking summary. However, even though the amount of accrued interest is taken into account in figuring out what the next day's interest should be, it doesn't show up in your official bank balance on record. Again, that doesn't happen until the interest is officially posted at the end of the month or other period.

Get the interest you deserve

If the primary reason for opening a money market account is to get a higher interest rate, it's important to jump through all the hoops required to get it. Doing your due diligence upfront will make sure that you don't get a nasty surprise when it comes time to receive your first interest payment, and it'll ensure that whatever top interest rate you were expecting to get will indeed be the amount that you receive.

Money market accounts can be extremely useful, and they can be the best possible savings vehicle available to maximize the amount of interest income you can receive. As long as you're aware of how interest works with these accounts and when you should expect to see your hard-earned money come in every month, you'll be on guard to make sure you do everything you need to do to ensure the flow of interest keeps coming in.

These savings accounts are FDIC insured and can earn you 12x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 12x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2021.

Two top online savings account picks

Rates as of Feb. 15, 2021 Ratings Methodology
Logo for CIT Bank Savings Builder
Logo for American Express® High Yield Savings Account
CIT Bank Savings Builder American Express® High Yield Savings Account
Member, FDIC Member, FDIC
Rating image, 5.0 out of 5 stars.
5.0 stars
ToolTip Icon for Star Rating. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 5.0 out of 5 stars.
5.0 stars
ToolTip Icon for Star Rating. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. = Best
= Excellent
= Good
= Fair
= Poor
Open Account

On CIT's Secure Website.

Open Account

On American Express' Secure Website.

Read Review Read Review

APY: Up to 0.45%

APY: 0.50%

Best For: No monthly maintenance fee

Best For: High APY

Min. to earn APY: $25k or $100 monthly deposit for highest tier

Min. to earn APY: $0

About the Author

Dan Caplinger
Dan Caplinger icon-button-linkedin-2x icon-button-twitter-2x

Dan is a lawyer and financial planner. He has been writing since 2006 and covers topics ranging from investing and tax planning to personal finance.

Share This Page
Facebook Icon This icon shares the page you are on via Facebook
Blue Twitter Icon Share this website with Twitter
LinkedIn Icon This image links to share the page over LinkedIn.
Email Icon Share this website with email
The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

Featured Offer

Amex_Savings_BlueBox_Double_Line_226x142.png

High APY and low fees

Open Account

Related Articles

Piggy bank surround by cash stacks image for Best Online Savings Accounts for 2021

Best Online Savings Accounts for 2021

Interest spelled out on a calculator image for Best CD Rates

Best CD Rates

Man holding credit card and looking at computer screen laughing with woman image for What is APY and What Does it Mean for Your Savings Account?

What is APY and What Does it Mean for Your Savings Account?

Couple looking at a paper bill together at a table worried image for Is it Time to Switch Banks?

Is it Time to Switch Banks?

Featured Articles

Best Online Savings Accounts for 2021

Best CD Rates

What is APY and What Does it Mean for Your Savings Account?

Is it Time to Switch Banks?


We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Ascent Logo

The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

btn_facebook-yellow btn_twitter-yellow btn_instagram-yellow

Copyright © 2018 - 2021 The Ascent. All rights reserved.

About The Ascent
About Us Contact Us Newsroom How We Make Money Editorial Integrity Ratings Methodology
Legal
Terms of Use Privacy Policy Accessibility Policy Terms and Conditions Copyright, Trademark and Patent Information
Learn
Credit Cards Banking Brokerage Loans Recent Articles

By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Back to The Motley Fool