If you have a large sum of money you're not quite sure what to do with, you're in luck. Many high-yield savings accounts are paying annual percentage yields (APYs) of 5.00% or higher right now, and there are lots of different banks to choose from.
These high rates were unheard of several years ago, but their prevalence now means you can earn significant interest on large sums of money. Here's how much $10,000 could become in just one year and why a savings account is a great choice, no matter how much money you have.
How much $10,000 becomes in one year
Putting $10,000 into a savings account with an APY of 5.00% means you could have about $10,511 just one year later. That's more than $500 of free money in just 12 months!
Not everyone has $10,000 to put in a savings account, but that doesn't mean you can't still earn impressive interest. Here are a few more examples of smaller sums earning a 5.00% rate over one year:
- $5,000 earns about $255
- $2,500 earns about $128
- $1,000 earns about $51
- $500 earns about $25
Of course, you'd have to leave your money in the savings account and not take any of it out for your initial sum to reach these amounts.
Why high-yield savings accounts are a great option
Many people already have savings accounts, but you're missing out if you don't have one paying a high APY right now. Here are just a few of their benefits.
1. They pay a high yield
As I mentioned above, it's not difficult to find savings accounts with rates from 4.00% to 5.00%, and some are even higher. This makes it easy for your cash to grow quickly without you having to do anything. This is an example of passive income.
2. There aren't many fees
Most high-yield savings accounts don't charge fees. That's because many of them are available from online banks that don't have the same expensive overhead costs -- like running physical branches -- that brick-and-mortar banks have. But before you open an account, check for any fees, like for monthly maintenance or not maintaining a minimum balance.
3. Low or no minimum deposit amount
There are plenty of savings accounts that have a minimum deposit of $0 or just $1. This gives you the option to open a high-yield account and then fund it when you can.
4. They're safe
Just like other bank accounts, the best high-yield savings accounts are FDIC insured, up to $250,000 per depositor per bank. If, for some reason, your bank goes out of business, you're guaranteed to get your money back. Just check that your bank has this vital coverage.
5. You have easy access to your money
You can take your money out of a high-yield savings account whenever you want. This makes them a great place to keep your emergency fund without worrying about your money being tied up in investments -- or potentially losing value.
One downside to high-yield savings accounts
The only downside to high-yield savings accounts is that the interest rate isn't guaranteed. For example, if the Federal Reserve cuts interest rates later this year, your savings account APY will likely decrease to some extent.
Still, high APYs won't disappear overnight. Even if rates drop, your money in a high-yield savings account will still earn a much higher rate than it would in a traditional savings account. This means that whether you have $10,000 to put into a high-yield savings account or $100, now is a great time to open one.
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
The Bankrate promise
| Type of savings account | Typical APY | Interest on $10,000 after 1 year |
|---|
| Savings account paying competitive rates | 5.25% | $539 |
| Savings account paying the national average | 0.58% | $58 |
| Savings accounts from various big brick-and-mortar banks | 0.01% | $1 |
Apr 2, 2024
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. Able to save more than that?
How much will $10,000 make in a money market account? ›
A money market fund is a mutual fund that invests in short-term debts. 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).
Is $10 000 a good amount of savings? ›
According to experts, having $10,000 in savings is an excellent position to be in, and there are several smart moves you can make to optimize your financial situation.
How much does a $10,000 CD make in a year? ›
Earnings on a $10,000 CD Over Different Terms
| Term Length | Average APY | Interest earned on $10,000 at maturity |
|---|
| 6 months | 2.49% | $125.15 |
| 1 year | 2.60% | $263.12 |
| 18 months | 2.21% | $336.74 |
| 2 years | 2.08% | $424.40 |
3 more rows6 days ago
The average APY on a savings account is just 0.46% -- you can do much better than this, though. 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.
How much will $30,000 make in a high-yield savings account? ›
If you keep $30,000 in a high-yield savings account for one year at 4.50% APY, you can make $1,350 in interest. The longer you let your extra cash sit in your account, the more interest you'll earn.
Can you ever lose your money with high-yield savings account? ›
High-yield savings accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation or the National Credit Union Administration. So your money is as safe as it would be in a traditional savings account.
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.
Which bank gives 7% interest on savings accounts? ›
As of June 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.
In summary, a certificate of deposit gives you steady and safe returns. Investing $15,000 in a CD could lead to substantial gains, regardless of the CD's length. However, make sure you won't need that money while the CD is active because withdrawing early usually incurs hefty penalties.
What is the highest paying money market account right now? ›
Best Money Market Account Rates
- Redneck Bank – 4.90% APY.
- First Foundation Bank – 4.90% APY.
- Sallie Mae Bank – 4.65% APY.
- Prime Alliance Bank – 4.50% APY.
- Presidential Bank – 4.37% APY.
- EverBank – 4.30% APY.
- BankUnited – 4.25% APY.
- U.S. Bank – 4.25% APY.
If you have $10,000 to invest, here's what your earnings would be at different interest rates: After one year with a regular account at 0.42%: $10,042.00. After one year with a high-yield account at 4.50%: $10,450.00. After one year with a high-yield account at 5.00%: $10,500.00.
Where to put 10k right now? ›
How to invest $10,000: 10 proven strategies
- Pay off high-interest debt.
- Build an emergency fund.
- Open a high-yield savings account.
- Build a CD ladder.
- Get your 401(k) match.
- Max out your IRA.
- Invest through a self-directed brokerage account.
- Invest in a REIT.
Let's have a look at the best ways to turn your 10k into 100k:
- Invest in Real Estate. ...
- Invest in Cryptocurrency. ...
- Invest in The Stock Market. ...
- Start an E-Commerce Business. ...
- Open A High-Interest Savings Account. ...
- Invest in Small Enterprises. ...
- Try Peer-to-peer Lending. ...
- Start A Website Blog.
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.
Can you loose money in a high-yield savings account? ›
While losing your money in a high-yield savings account isn't likely, you'll want to be aware of FDIC limitations and other potential risks we've rounded up to help you maximize the interest you can earn — and avoid hitting limits, triggering fees or missing lower rates that can eat into it.
How much is 5% interest on $10,000? ›
For example, let's say you invest $10,000 in a simple-interest account that earns 5%. You'll earn an estimated $500 in interest and your account will be worth $10,500 after a year.
How much return can you expect from a high-yield savings account? ›
While the average return on a traditional savings account is just 0.46%, some HYSAs offer rates over 5%. A return like that can help you reach your savings goals faster.
