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
Compound Interest FD Formula
Let us assume, you invest ₹10,000 for 3 years at 10% interest rate compounded quarterly. Thus, compound interest earned over 3 years comes to ₹13,449 - ₹10,000 = ₹3,449.
How much interest will I get on $10,000 a year in a savings account? ›
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
Compound Interest FD Formula
Let us assume, you invest ₹10,000 for 3 years at 10% interest rate compounded quarterly. Thus, compound interest earned over 3 years comes to ₹13,449 - ₹10,000 = ₹3,449.
Is $10,000 a good amount to have in savings? ›
There's nothing wrong with keeping $10,000 in a savings account. But it might not earn you the highest yields.
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.
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 |
|---|
| 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 rowApr 24, 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.
A stocks and shares ISA is likely to be most suitable. That is unless you will turn 55 within 30 years, in which case a pension might be a better tax wrapper for you. If you're unsure about the time horizon, you could invest in both a pension and a stocks and shares ISA.
How to make interest on $10,000? ›
If ups and downs make you nervous, it might be an idea to go for a simple savings account. Something like fixed rate bonds provide much greater security and certainty, and typically offer higher interest than current accounts, so you'll know how much your £10k is going to be worth at the end of the policy term.
How much is $10000 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.
FDIC and NCUA insurance limits
So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account. After all, if you have money in the account that's over this limit, it's typically uninsured. Take advantage of what a high-yield savings account can offer you now.
What amount of savings is considered wealthy? ›
According to Schwab's 2023 Modern Wealth Survey, its seventh annual, Americans said it takes an average net worth of $2.2 million to qualify a person as being wealthy. (Net worth is the sum of your assets minus your liabilities.)
What is a good monthly retirement income? ›
Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
How much will a 1 year CD earn? ›
18, 2023, the average interest rate for a 1-year CD is 1.76%, more than double the 0.45% average rate reported for savings accounts. The best CD rates, as you'll see below, are considerably higher, with some APRs exceeding 5%. Here's a closer look at how CD accounts work and how much you can earn from a CD investment.
How much does a 1 year CD pay? ›
How to Find the Best 1-Year CD
| Institution | Rate (APY) | Term |
|---|
| TotalDirectBank | 5.35% | 12 months |
| CFG Bank | 5.31% | 12 months |
| Rising Bank | 5.31% | 12 months |
| First Internet Bank | 5.31% | 12 months |
12 more rowsThe average 5-year CD yield is 1.42 percent APY, according to Bankrate's national index survey of banks and thrifts on Apr. 24, 2024, but Bankrate's team shopped around to find some of the best CD rates available nationwide. Compare these offers, then calculate how much interest you would earn when your CD matures.
How much will $20,000 make in a high-yield savings account? ›
By keeping your extra savings in a high-yield savings account, you may be able to earn more interest. If you keep $20,000 in a high-yield savings account for one year at 4.50% APY, you can make $900 from interest. The longer you allow your savings to sit in your account, the more interest you'll earn.
How much interest will I get on $20,000 a year in a 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
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 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.
