Money market accounts and money market funds almost always pay interest once a month, even though the interest itself is calculated every single day. The daily math runs quietly in the background, and on a set date each month the accumulated total is posted to your balance as a single credit.
Daily Accrual, Monthly Payment
The gap between when interest is earned and when it shows up in your balance confuses a lot of savers. Under the federal Truth in Savings Act, implemented through Regulation DD, banks must calculate interest on the full principal in your account each day, using a daily rate of at least 1/365th of the annual interest rate (or 1/366th in a leap year).1eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) Institutions can use either the daily balance method, which applies the rate to that day’s closing balance, or the average daily balance method, which applies the rate to the average balance over the period.
So every dollar earns a return for the exact number of days it sits in the account. Deposit $5,000 on the 10th of a 30-day month, and you earn interest on that $5,000 for 20 days. Not zero because you missed the start of the cycle, and not a full month either.
What you see on your statement is different. The institution tracks each day’s accrued interest in an internal ledger, and on a single date each month it posts the full accumulated amount as one deposit entry. That is the moment the money becomes part of your available balance.
When the Monthly Credit Actually Posts
The specific crediting date depends on the institution. Some banks use the last business day of the calendar month. Others use the anniversary of the day you opened the account, so if you opened on the 15th, interest posts on the 15th. If your statement cycle ends on a particular date, your interest for the previous 30 days typically posts that same day.
Weekends and federal holidays can shift when the deposit appears. If the scheduled crediting date falls on a Sunday, the bank may not post the interest until Monday or Tuesday. That delay affects when the funds become available for withdrawal, but it doesn’t interrupt accrual — the daily math keeps running through non-business days.
A handful of institutions credit less frequently than monthly. Quarterly crediting every three months exists, and so does annual crediting, though both are uncommon for money market products. Less frequent crediting means your earned interest sits in the institution’s ledger longer before it starts compounding in your visible balance, which slightly reduces your effective return.
Why Monthly Crediting Matters: Compounding
Compounding is what happens when earned interest starts earning interest of its own. An account that compounds daily takes each day’s tiny interest amount and adds it to the balance used for the next day’s calculation. One that compounds monthly waits until the credit posts before interest starts earning on interest. Over a year, more frequent compounding produces a slightly higher return at the same base rate.
Federal law does not require any particular compounding schedule. An institution can compound daily, monthly, quarterly, annually, or not at all. Two accounts advertising the same base interest rate can produce different actual returns if one compounds daily and the other monthly. The annual percentage yield, or APY, captures this difference, because it reflects the total interest paid over a 365-day period and accounts for how often compounding occurs.1eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) When you compare money market products, compare APY rather than the base rate.
As a rough reference point, the national average money market account rate sits around 0.48% APY as of early 2026, while the highest-paying accounts offer roughly 4.22% APY. Online banks and credit unions often pay significantly more than large national banks for the same type of account.
Money Market Funds Report Yield Differently
Money market mutual funds sold through brokerages pay out on a monthly cycle too, but what they pay is technically a dividend rather than interest, and they report returns using a different benchmark: the 7-day yield. That figure takes the fund’s total income over the previous seven days, subtracts expenses, and projects what that rate would produce over a full year. The SEC requires funds to report this standardized yield so investors can make apples-to-apples comparisons across funds. Unlike APY for bank accounts, the 7-day yield fluctuates as the fund’s underlying short-term investments mature and are replaced with new ones at current rates.
The payment mechanics are the same from your side. Dividends accrue daily and are distributed to your account monthly. Many funds give you the option to have those distributions reinvested automatically, which keeps the compounding engine running without any action from you.
What You Lose If You Close Mid-Cycle
Because interest sits in the institution’s ledger until the monthly credit date, closing a money market account partway through a cycle can cost you the interest that has accrued but not yet posted. Federal regulations allow banks to include a forfeiture provision in their deposit agreements, as long as they disclose it when you open the account.1eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) If your account credits on the 30th and you withdraw everything on the 25th, the institution may treat that as closing the account and keep the 25 days of accrued interest.
Not every institution enforces forfeiture. Some pay out accrued interest through your last day. The only way to know is to read your account agreement. If you’re planning to close or transfer an account, scheduling the move just after a crediting date protects you from losing earned interest that hasn’t yet posted.
A Quick Note on Minimums
Payment frequency is only part of what determines whether you actually keep what you earn. Many money market accounts require a minimum daily or average balance to earn the advertised rate, and dropping below that threshold can trigger monthly maintenance fees that run from a few dollars to around $10. On a small balance, that fee can wipe out a month’s interest and leave you with a net loss. Under Regulation DD, banks must disclose fees, triggers, and the minimum balance needed to avoid them before you open the account.2eCFR. 12 CFR 1030.4 – Account Disclosures Reading those disclosures before you fund the account is the only reliable way to know what rate you’ll actually see posted each month.