How Much Will $10,000 Make in a High-Yield Savings Account? (2024)

FAQs

How Much Will $10,000 Make 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.

In fact, rates on high-yield savings accounts are currently hovering around 5%, and you may be able to find something even higher if you shop around for an online bank. On a $10,000 deposit, that would equate to $500 after one year.

$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? We'll show you how much you can earn with today's record rates.

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.

If you have any extra cash right now that you would like to use to build up an emergency fund, a high-yield savings account offers a chance to earn compound interest while still giving you easy access to your cash. Your money will also be protected and federally insured up to $250,000 in 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.

An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.

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.

Not the best choice for long-term savings – High-yield savings accounts offer much better interest rates than traditional savings accounts, but often, you won't earn enough over the long-term to account for inflation. Investments may be a better option for a longer-term, greater yield.

There's no rule on the exact amount to have in your high-yield savings account. The amount of money you should store in these accounts depends on various factors. However, the general rule of thumb is that you should have liquid access to enough cash to cover between three and six months of your expenses.

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.

Interest can compound annually, quarterly, monthly, or even daily—the more often interest compounds, the faster your balance grows. For example, say you deposited $10,000 in a high-yield savings account with a 3% APY that compounds annually. At the end of a year, you'd have $10,300.00 in your account.

Answer: If a $10,000 investment earns an interest of $500 in one year, the rate of return is 5%.

While the national average return on a traditional savings account is just 0.46%, in 2024, many high-yield savings accounts offer interest rates over 4% (or more). These rates can help you reach your savings goals more quickly and avoid leaving money on the table.

5.5% APY: Choosing a 5.5% CD or high-yield savings account will result in $2,750 in interest on your $50,000 investment annually. 5.75% APY: A 5.75% CD or high-yield savings account will earn you $2,875 in interest in one year.

The higher your annual percentage yield (APY), the faster your money grows and the better return you earn on your money. The national average APY on savings accounts is just 0.47%. That's over 10 times less than the 5-plus percent APY and around 6% APY that the highest-yield savings accounts offer.