Many Americans are saving up so they're prepared for future life expenses. Anyone with an emergency fund should consider where they keep their extra savings. By opening a high-yield savings account, you can maximize the interest you earn from your savings. Are you wondering how much money you can make with $30,000 in the bank? Let's take a look at how much you can earn with this much money in a high-yield savings account.
Earn more money with a high-yield savings account
Many banks offer savings accounts, but they're not all created equally. Banks with savings accounts that earn interest use an annual percentage yield (APY) to describe the returns a customer can expect if they keep their money in their savings account for one year.
If you have a savings account, it's essential to review the APY so you know what to expect. It's common for brick-and-mortar banks to offer low APYs for their savings accounts. Your small, local bank may offer as little as 0.01% APY. At that meager rate, you won't earn much.
But the good news is a high-yield savings account could offer much more. Many banks offer 4.00% APY or higher for these accounts.
$30,000 in savings accumulates this much interest
To determine how much interest you'll earn, multiply your initial deposit ($30,000) by the APY your bank account offers. Doing this will show you how much you'd make if you kept your cash in the bank for one year.
For the below calculations, I used a 0.01% APY for a standard savings account and a 4.50% APY for a high-yield savings account. The bank accounts on our list of the best high-yield savings accounts have APYs ranging from 4.15% to 5.05% -- so I chose a rate in between.
The following calculations assume a $30,000 deposit with no additional deposits made to your account:
I don't know about you, but I'd rather earn $1,350 than $3. Beyond opening a bank account with a higher APY, boosting your earnings potential takes no additional work. Talk about a win!
Compound interest is on your side
As you can see, you can earn a significant amount of cash by keeping $30,000 in the bank for one year. But you can earn even more thanks to compound interest, which is interest that you earn on interest. The longer you keep your cash in your bank account, the more you'll earn.
To give you an idea how you can benefit from compound interest when you have a savings account, here's how much money you'll make if you keep $30,000 in a high-yield savings account for anywhere from one to five years.
Again, the calculations below assume you make no additional contributions beyond the initial deposit. You'll earn even more if you continue to make deposits into your account.
Here's a breakdown of the potential earnings:
Wow! That's $7,385.45 earned in five years, assuming the APY doesn't change. Keep in mind that APYs can change over time, so your APY likely won't stay the same rate forever.
Do this to earn more interest
If you have $30,000 saved up, congratulations! That's a massive accomplishment. But make sure you're keeping it in an account that earns interest. Check the APY so you feel confident that you're earning as much interest as possible. If you're not earning at a great rate, consider opening a high-yield savings account to boost your bank account balance without doing any extra work. Money earned from interest can be a win for your personal finances.
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