It's never a bad idea to prepare for the unexpected, especially regarding your finances. Having extra cash in the bank is an excellent way to plan ahead for unexpected financial concerns. For many people, $10,000 is a solid amount of money to have in their emergency fund.
If you're saving for emergencies, you should keep your money in a high-yield savings account to maximize the interest you earn. Curious how much interest you can make with $10,000 in the bank? Below, I'll explain how much you can earn with this sum in a high-yield savings account.
Earn more interest with a high-yield savings account
Banks that offer savings accounts that earn interest use an annual percentage yield (APY) to describe the returns one can expect if they keep their money in their savings account for a year.
It's not unusual for brick-and-mortar banks to offer low APYs for their savings accounts. Your local bank could offer as little as 0.01% APY for its savings account. While you will earn something, it won't be much at that meager rate.
But a high-yield savings account could offer much more. Many online banks offer 4.00% APY or higher for these accounts. How much interest will you earn by stashing $10,000 in a high-yield savings account? Keep reading to find out.
$10,000 in savings generates this much in interest
To calculate how much interest you'll earn, take your initial deposit ($10,000) and multiply it by the APY. Doing this will show how much money you'd earn if you keep the money in your bank account for one year.
For the following calculations, I went with 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 best high-yield savings accounts list have APYs ranging from 4.15% to 5.05% -- I settled somewhere in between.
These calculations assume an initial $10,000 deposit with no additional deposits made to your account:
| Account type | Interest earned after one year |
|---|
| Savings Account, 0.01% APY | $1.00 |
| High-Yield Savings Account, 4.50% APY | $450 |
Source: Writer's calculations
$450 sounds much better than $1 to me. Beyond opening a bank account with a higher APY, boosting your earnings potential takes no additional work.
Earn even more with compound interest
The calculations above show how much interest you can earn, keeping $10,000 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 money in your savings account, the more you make.
To illustrate the power of compound interest, here's how much money you'll make if you keep your initial $10,000 deposit in a high-yield savings account for anywhere from one to five years. Again, these calculations assume you make no additional contributions after the initial deposit.
Here's a breakdown:
| Year | Starting balance | Interest earned | Ending balance |
|---|
| 1 | $10,000 | $450 | $10,450 |
| 2 | $10,450 | $470.25 | $10,920.25 |
| 3 | $10,920.25 | $491.41 | $11,411.66 |
| 4 | $11,411.66 | $513.52 | $11,925.18 |
| 5 | $11,925.18 | $536.63 | $12,461.81 |
Source: Writer's calculations
That's $2,461.81 earned in five years, assuming the APY doesn't change. It's worth mentioning that APYs can and do change, so your APY likely won't stay the same rate forever.
Do this to boost your bank account balance
You're likely missing out on interest if you don't have a high-yield savings account. If you have a significant amount of money saved up or are working on a big savings goal, you may want to open a high-yield savings account to maximize the interest you earn. Every bit of money earned from interest adds up and can help to improve your personal finances.
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 magic of high yields for your cash
Your savings account could generate hundreds or even thousands of dollars a year in earnings. Here are a few examples: $10,000 in a 5% savings account becomes $10,511 in 12 months. $20,000 in a 5% savings account becomes $21,023 in 12 months.
How much interest will $10 000 earn in a savings account? ›
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
The average money market rate is less than 1 percent. But let's say you put $10,000 in an account that earns a full 1% APY. After a year, your balance would earn 100 bucks. Put that same amount in a money market account with a 4% APY, and it would gain just over $400.
How much money can you make with a high-yield savings account? ›
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?
Can you ever lose your money with high-yield savings account? ›
You can't lose your money because, just like your regular checking and savings accounts, the money is insured by the Federal Deposit Insurance Corporation up to $250,000.
Can you live off of a high-yield savings account? ›
It's possible, but it isn't realistic for everyone. Living off of interest relies on having a large enough balance invested that your regular interest earnings meet your salary needs. Rest assured that you don't need to earn a million dollar paycheck to reach your goal.
Who has the best money market rates 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.
7 Best Money Market Funds for 2024
| Fund | Expense Ratio | 7-day SEC yield |
|---|
| Vanguard Federal Money Market Fund (VMFXX) | 0.11% | 5.3% |
| Vanguard Treasury Money Market Fund (VUSXX) | 0.09% | 5.3% |
| Vanguard Municipal Money Market Fund (VMSXX) | 0.15% | 3.3% |
| Fidelity Money Market Fund (SPRXX) | 0.42% | 5.0% |
3 more rowsThe best way to figure out exactly how much you need to contribute, and on what basis, is by using an investment calculator. In general, you will need to contribute around $1,400 per month to this account in order to reach $1 million in 20 years.
What happens if I deposit $100,000 in my bank account? ›
Depositing a big amount of cash that is $10,000 or more means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.
How much interest would you make on a $5,000 CD? We estimate that a $5,000 CD deposit can make roughly $25 to $275 in interest after one year. In comparison, a $10,000 CD deposit makes around $50 to $550 in interest after a year, depending on the bank.
How to turn 100k into 1 million? ›
There are two approaches you could take. The first is increasing the amount you invest monthly. Bumping up your monthly contributions to $200 would put you over the $1 million mark. The other option would be to try to exceed a 7% annual return with your investments.
How much interest can you make on $10,000 dollars? ›
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 much interest does $10 000 earn in a year? ›
How much interest can you earn on $10,000? In a savings account earning 0.01%, your balance after a year would be $10,001. Put that $10,000 in a high-yield savings account that earns 5% APY for the same amount of time, and you'll earn about $500.
How much will 50000 make in a high-yield savings account? ›
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.
Is it worth putting money into a high-yield savings account? ›
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.
