Money market accounts pay interest once a month at most banks and credit unions, even though the interest itself is calculated every single day on your balance. The daily math runs quietly in the background; the deposit you actually see on your statement is the sum of those daily amounts, posted on one date each cycle.
Daily Accrual, Monthly Credit
Two things happen at different speeds inside a money market account. Interest accrues daily, and interest gets credited monthly.
Accrual is the calculation. Under the federal Truth in Savings Act, implemented through Regulation DD, banks must apply a daily periodic rate of at least 1/365th of the annual interest rate to your balance each day (1/366th in a leap year).1eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) The institution can use the daily balance method, which applies the rate to that day’s closing balance, or the average daily balance method, which applies it to the average across the period. Either way, every dollar earns for the exact number of days it sits in the account.
Crediting is the posting. On one date each month, the bank takes the running total of accrued interest and drops it into your balance as a single deposit line on your statement. That is the moment the money becomes yours to spend, transfer, or withdraw.
The practical effect: if you deposit $5,000 on the 10th and the crediting date is the 30th, you earn interest on that money for 20 days, and all 20 days of interest show up together at month-end.
When the Monthly Credit Actually Hits
The specific date depends on the institution’s internal policy. Some banks credit on the last business day of the calendar month. Others use the anniversary of your account opening, so a June 12 opening produces credit on the 12th of every month. If your statement cycle ends on the 15th, expect interest to post that day.
Weekends and federal holidays can push the deposit. A crediting date that lands on a Sunday may not post until Monday or Tuesday. Accrual keeps running through those non-business days, so you don’t lose anything; the money just becomes visible a day or two late.
A minority of institutions credit less often. Quarterly and annual crediting exist but are uncommon for money market products. The trade-off matters: interest that sits in a ledger for three months before posting compounds less than interest posted every 30 days, which slightly lowers your effective return.
Compounding Frequency and Why APY Is the Honest Number
Compounding is what turns interest into interest-on-interest. An account that compounds daily adds each day’s small accrual to the balance used for the next day’s calculation. An account that compounds monthly waits until the credit posts before that money starts earning on itself.
Federal law does not require any specific compounding schedule. A bank can compound daily, monthly, quarterly, annually, or not at all. That is why two accounts advertising the same base interest rate can produce different real returns.
The annual percentage yield, or APY, folds compounding frequency into a single figure that reflects the total interest paid over a 365-day period.1eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) When you shop, compare APY, not the base rate. As of early 2026, the national average money market account rate sits near 0.48% APY, while the highest-paying accounts offer roughly 4.22% APY. Online banks and credit unions tend to cluster at the top of that range.
Money Market Funds Follow a Different Rhythm
“Money market” refers to two different products, and the payment mechanics diverge.
A money market deposit account is a bank or credit union product. It pays interest, protected by FDIC or NCUA insurance up to $250,000 per depositor, per institution, per ownership category. Payment cycles work as described above.
A money market mutual fund is an investment product sold through a brokerage. It invests in short-term government and corporate debt, and its earnings are technically dividends rather than interest. Funds typically declare dividends daily and pay them monthly, but the yield you see quoted is not APY. The SEC requires funds to publish a 7-day yield, which takes the fund’s income over the previous seven days, subtracts expenses, and annualizes the result. That number moves as the fund’s underlying short-term holdings mature and get replaced at current rates.
If you’re comparing a bank money market account against a brokerage money market fund, remember you’re comparing APY against a rolling 7-day yield. They aren’t the same measurement, and the fund’s number can shift week to week in ways a bank rate does not.
Closing the Account Mid-Cycle
Timing matters if you plan to close or drain a money market account. Federal regulations permit banks to include a forfeiture provision in their deposit agreements, so long as the provision is disclosed at account opening.1eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) If your account credits on the 30th and you pull all funds on the 25th, the bank may treat that as a closure and keep the 25 days of accrued interest that never got posted.
Not every institution enforces forfeiture. Some pay accrued interest through the last day the account was open. The only way to know is to read your account agreement. If you have a choice about when to move the money, waiting until just after the crediting date protects what you’ve earned.
What Can Erase the Interest Before You See It
Many money market accounts use tiered rates that pay higher APYs on larger balances. A common structure pays a token rate below $1,000, a moderate rate between $1,000 and $9,999, and the advertised top rate at $10,000 and above. The exact tiers vary widely.
Some accounts require a minimum daily balance to earn the advertised rate; others average your balance across the month, which is more forgiving of short-term dips. Falling below a required minimum can also trigger a monthly maintenance fee, typically a few dollars up to around $10, which can wipe out interest on a small balance and leave you with a net loss for the month.
Under Regulation DD, banks must disclose these fees, the conditions that trigger them, and the balance level needed to avoid them before you open the account.2eCFR. 12 CFR 1030.4 – Account Disclosures Read that section of the disclosure carefully. The monthly credit only helps if the fee structure doesn’t neutralize it first.