Having extra money in a savings account can make receiving an unexpected bill less stressful. Even $1,000 saved can be a win for your personal finances. If you're saving up, keep your extra cash in a high-yield savings account so you don't miss out on the chance to earn interest. Interest can help you reach your savings goals sooner. Discover how much money you can earn by keeping $1,000 in a high-yield savings account.
Boost your bank account balance by earning interest
Since most checking accounts don't earn interest, keeping your savings there is not ideal. If you have a savings account, review the annual percentage yield (APY). The APY is how much interest you can expect to earn by keeping your money in your savings account for a year.
Many traditional banks offer meager APYs. APYs as low as 0.01% are common. However, you can boost the interest that you earn by opening a high-yield savings account. Many of the best online banks are offering APYs of 4.00% or more. If your savings account isn't offering a competitive interest rate, you may want to consider opening a new account elsewhere.
How much interest can you earn with $1,000 in savings?
Did you know the average American has just $4,500 in their savings account, and a significant percentage of us has less than that? Research from The Ascent shows that 35% of Americans have $1,000 or less saved. The good news is that even with $1,000, you can earn interest.
You can calculate just how much interest by taking your initial $1,000 deposit amount and multiplying it by the APY. This will show you how much interest you'll earn if you keep the money in your savings account for one year.
Let's look at why it pays to keep your extra cash in a high-yield savings account instead of a savings account offering only 0.01% APY. For my calculations, I settled on a 0.01% APY for a standard savings account and a 4.40% APY rate for a high-yield savings account. The best high-yield savings accounts have APYs ranging from 4.00% APY to 4.95%.
The calculations below assume an initial $1,000 deposit with no additional deposits made:
The longer your money sits, the more you earn
Savings accounts earn compound interest -- interest on the interest you've already earned! You can continue earning more money by keeping your money in the bank. How much can you make over time with $1,000 in the bank? Let's find out.
My calculators assume you make no additional contributions beyond your initial $1,000 deposit. But you can earn even more if you make more deposits.
Here's a breakdown:
Earning $240 in five years without doing extra work sounds like a win to me.
Pay attention to APYs
If you keep your extra savings in a savings account, check the APY. Moving your money into a high-yield savings account with a generous APY can allow you to boost your account balance faster. As your money sits, it will earn interest -- even if you don't make additional deposits. You can earn even more by making regular contributions to your savings account. No matter how much you have saved, any extra interest earned is a win for your wallet.
These savings accounts are FDIC insured and could earn you 11x 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 could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.
FAQs
Key Takeaways. Earn a 4.00% APY or higher by moving your savings into a high-yield account. This can make at least $40 over 12 months on a $1,000 investment. When choosing a high-yield account, look for one that provides a competitive APY without fees, steep balance requirements or APY caps.
How much will 100k make in a high-yield savings account? ›
At a 4.25% annual interest rate, your $100,000 deposit would earn a total of $4,250 in interest over the course of a year if interest compounds annually. Annual total: $104,250.
How much will $5000 make in a high-yield savings account? ›
A $5,000 balance could earn as much as $268 in a year with the highest-yield savings account on our radar -- and over $200 even with a slightly lower rate. Also consider customer service, FDIC insurance, and accessibility when you pick an account.
How much can I make off a high-yield savings account? ›
Shopping around for a top APY means you can earn 10 to 12 times more than the national average rate, which is less than half a percent. $5,000 in one of today's best high-yield savings accounts could earn as much as $136 in just six months—compared to about $11 with an average rate.
How much will 10k make in a high-yield savings account? ›
Here's what your returns on a $10,000 balance could look like
| 0.46% APY | 5.30% APY |
|---|
| After 1 Year | $46.00 | $530.00 |
| After 5 Years | $232.13 | $2,946.19 |
| After 10 Years | $469.64 | $6,760.37 |
Dec 30, 2023
Losing money in an HYSA is rare, but it can happen.
This type of deposit account is available through many banks and credit unions, particularly online financial institutions. An HYSA works like a traditional savings account, except it offers a much higher annual percentage yield (APY).
Can you live off of a high-yield savings account? ›
It's possible, but it isn't realistic for everyone. Living off of interest relies on having a large enough balance invested that your regular interest earnings meet your salary needs. Rest assured that you don't need to earn a million dollar paycheck to reach your goal.
What is the catch to a high-yield savings account? ›
High-yield savings accounts may have variable interest rates, which may impact earnings. While they aim to offer higher interest rates than traditional savings accounts, these rates may fluctuate over time due to changes in the financial market or the financial institution's policies.
Do millionaires use high-yield savings accounts? ›
Millionaires Like High-Yield Savings, but Not as Much as Other Accounts. Usually offering significantly more interest than a traditional savings account, high-yield savings accounts have blown up in popularity among everyone, including millionaires.
What happens if I deposit $100,000 in my bank account? ›
Depositing a big amount of cash that is $10,000 or more means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.
How much interest would you make on a $5,000 CD? We estimate that a $5,000 CD deposit can make roughly $25 to $275 in interest after one year. In comparison, a $10,000 CD deposit makes around $50 to $550 in interest after a year, depending on the bank.
How much will $20,000 make in a high-yield savings account? ›
How much $20,000 earns you in a savings account
| APY | Interest earned in one year |
|---|
| 3.50% | $700 |
| 4.00% | $800 |
| 4.50% | $900 |
| 4.75% | $950 |
3 more rowsMar 31, 2023
Earnings on a $10,000 CD Over Different Terms
| Term Length | Average APY | Interest earned on $10,000 at maturity |
|---|
| 1 year | 1.81% | $181 |
| 2 years | 1.54% | $310.37 |
| 3 years | 1.41% | $428.99 |
| 4 years | 1.32% | $538.55 |
1 more row6 days ago
4.5% APY: A 4.5% CD or high-yield savings account will yield $2,250 in interest on your $50,000 investment in one year. 4.75% APY: Opting for a 4.75% CD or high-yield savings account will earn you $2,375 in interest over the course of a year.
How long do you need to keep money in a high-yield savings account? ›
A high-yield savings account can be a great place to store your emergency savings. Most experts suggest that you should keep between three and six months' worth of expenses in your emergency account at all times.
How much interest can you make on 100k? ›
Competitive savings account rates
The best widely available high-yield savings accounts currently earn an APY of around 4.85 percent. An amount of $100,000 in an account earning this rate will earn around $4,850 after a year, for a total of $104,850. Online banks are where you're likely to find such high rates.
What is a good return on a 100k investment? ›
If you have $100,000 to invest for income, you can earn anywhere from a fraction of a percentage point to nearly 10% on your money. Some interest-earning investments are guaranteed safe by the U.S. government, others are subject to market fluctuations.
Is 100k in savings account good? ›
There's no one-size-fits-all number in your bank or investment account that means you've achieved this stability, but $100,000 is a good amount to aim for. For most people, it's not anywhere near enough to retire on, but accumulating that much cash is usually a sign that something's going right with your finances.
