Putting money in a savings account allows you to have funds available for emergencies or to save for short-term purchases. You can also earn interest when you invest your money in a savings account, though.
Let's say you have a pretty good balance -- around $10,000 -- in your savings account. Here's how much you might earn with this much cash in savings.
Here's what your returns on a $10,000 balance could look like
If you have $10,000 in savings, the amount of interest you can earn on that balance is going to depend on the annual percentage yield (APY) your savings account pays. The FDIC reports that the national average interest rate on savings accounts is 0.46% as of mid-December 2023. However, if you have a high-yield savings account, you could earn up to 5.30% APY.
The table below shows the amount of interest you could earn over time both if you had an account at a bank paying the national average rate and if you found a competitive high-yield savings account paying 5.30%, assuming interest is compounded annually.
| 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 |
|---|
Data source: Author's calculations.
As you can see, you can earn a pretty substantial amount of interest -- especially over a long time period -- but you'll need to find the right bank account in order to make that happen. You should also know that savings account APYs aren't fixed -- they change over time. If rates go down in 2024, as many people expect they will in the new year, you may not get that 5.30% APY. But the rates on a high-yield savings account are always going to be higher than the national average rate.
Take the time to find the right savings account to maximize your interest
When you put your money into a savings account, your potential returns are always going to be more limited than if you invested in a brokerage account and put your money into the stock market. That's because you are not taking on any risk of loss, up to FDIC insurance limits, as long as your account is FDIC insured.
That doesn't mean the account you pick doesn't matter, though. A high-yield savings account should provide the same safe place to put your money as a savings account paying a much lower APY does, as long as you make sure that your account has FDIC coverage. And, like a savings account paying a much lower rate, your money should still be accessible, so you can withdraw it whenever you want.
The big difference, though, is that the high-yield account is going to give you the chance to earn a lot more interest. You can earn more in a single year than you would after a decade if you find an account paying 5.30% instead of 0.46%. Of course, you will want to consider factors like customer service, fees, and the process of transferring funds -- but plenty of great accounts offering impressive yields also excel in other aspects of the customer experience.
The more money you have in savings, the more it matters that you find the right account -- but even if you have much less than $10,000 set aside, it's worth taking the time to try to maximize your returns. That's especially true as you have a lot to gain and nothing to lose if you just take the time to look for an account offering the most competitive rates.
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
Simple Interest Examples
You want to know your total interest payment for the entire loan. To start, you'd multiply your principal by your annual interest rate, or $10,000 × 0.05 = $500. Then, you'd multiply this value by the number of years on the loan, or $500 × 5 = $2,500.
How much is 5% interest on $10,000? ›
Simple Interest Examples
You want to know your total interest payment for the entire loan. To start, you'd multiply your principal by your annual interest rate, or $10,000 × 0.05 = $500. Then, you'd multiply this value by the number of years on the loan, or $500 × 5 = $2,500.
Is $10 000 a good amount of savings? ›
There's nothing wrong with keeping $10,000 in a savings account. But it might not earn you the highest yields. CDs and brokerage accounts could be better homes for your cash in some situations.
How much will $10,000 make in a money market account? ›
Currently, money market funds pay between 4.47% and 4.87% in interest. With that, you can earn between $447 to $487 in interest on $10,000 each year. Certificates of deposit (CDs). CDs are offered by financial institutions for set periods of time.
What happens if you put $10,000 in a high-yield savings account? ›
Opening a high-yield savings account could allow you to earn more interest from your savings. If you stash $10,000 in a high-yield savings account for one year at 4.50% APY, you can earn $450. The longer the money sits in your account, the more interest you'll earn.
How much interest is on $10000? ›
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
If you put $10,000 into a high-yield savings account, you can earn from $300 to $420 in a year — assuming your variable high-yield savings rate remains above 3.00%. Several banks are offering rates between 4.35% to 5.27% APY.
How to turn 10k into passive income? ›
Passive income ideas:
- Create a course.
- Write an e-book.
- Rental income.
- Affiliate marketing.
- Flip retail products.
- Sell photography online.
- Buy crowdfunded real estate.
- Peer-to-peer lending.
To potentially turn $10k into $100k, consider investments in established businesses, real estate, index funds, mutual funds, dividend stocks, or cryptocurrencies. High-risk, high-reward options like cryptocurrencies and peer-to-peer lending could accelerate returns but also carry greater risks.
What percentage of people have 10k in savings? ›
Most Americans have $5,000 or less in savings
| Savings account balance | Percentage of respondents |
|---|
| $500 to $1,000 | 8% |
| $1,001 to $5,000 | 22% |
| $5,001 to $10,000 | 8% |
| $10,000 to $20,000 | 7% |
3 more rowsOct 18, 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 | 1.53% | $308.34 |
| 3 years | 1.38% | $419.74 |
| 4 years | 1.29% | $526.07 |
1 more rowMar 20, 2024
Here are some ways to flip $10,000 fast:
- Flip items (buy low, sell high)
- Start a blog.
- Start an online business.
- Write an email newsletter.
- Create online courses or teach online.
- Invest in real estate with EquityMultiple.
The Bank Secrecy Act requires banks to report deposits over $10,000. Breaking up your $10,000 deposit into smaller deposits will likely still trigger a report. If you need to deposit a large amount, it's best to just do it -- if you're not engaging in illegal activity, you have nothing to worry about.
Can you ever lose your money with high-yield savings account? ›
Safety: As noted, most high-yield savings accounts are either FDIC or NCUA insured for up to $250,000. Moreover, as deposit accounts, they're not susceptible to the ebbs and flows of the market, so there's little to no chance you'll lose the money you deposit into one.
How much money is too much in a savings account? ›
How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.)
What is the downside of a high-yield savings account? ›
The cons of high-yield savings accounts
Interest rates on high-yield savings accounts are variable and can fluctuate at any time, so while a bank may advertise a high annual percentage yield (APY) when you apply, it likely won't last forever.
How much is $10,000 for 5 years at 6% interest? ›
Summary: An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.
What is 5% interest rate on $1000? ›
5% = 0.05 . Then multiply the original amount by the interest rate. $1,000 × 0.05 = $50 . That's it.
What is the simple interest on $10000 at 5 interest for 3 years? ›
Simple Interest Formula
Thus, if simple interest is charged at 5% on a $10,000 loan that is taken out for three years, then the total amount of interest payable by the borrower is calculated as $10,000 x 0.05 x 3 = $1,500.
What is 6% interest of $10000? ›
Compounding investment returns
If you invested $10,000 in a mutual fund and the fund earned a 6% return for the year, it means you gained $600, and your investment would be worth $10,600.
