Right now is an especially great time to have cash in the bank. The reason? You can earn a much higher rate on your savings than we've seen in years. Whether you're interested in certificates of deposit, money market accounts, or high-yield savings accounts (HYSA), banks and credit unions have sweetened their APYs. It's not difficult to earn a return of 4%, 5%, or higher on your savings.
Let's take a look at how much you can expect to earn on $5,000 in a few different savings account options.
What happens to your $5,000 in a big-bank savings account?
Your first impulse might be just to open a savings account with the big bank around the corner from your home. Unfortunately, these tend to pay just 0.01% APY.
If you leave your $5,000 in a savings account paying such a low APY, not only will you barely make any money in interest, but you'll face another problem: If your interest rate isn't at least as high as the rate of inflation, your cash is actually losing value.
Our Picks for the Best High-Yield Savings Accounts of 2024
Capital One 360 Performance Savings 
APY 4.25% Rate infoSee Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY)is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening. Open Account for Capital One 360 Performance Savings OnCapital One'sSecure Website. Member FDIC. | APY 4.25% Rate infoSee Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY)is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening. | Min. to earn $0 |
CIT Platinum Savings
APY 4.85% APY for balances of $5,000 or more Rate info4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY Min. to earn $100 to open account, $5,000 for max APY Open Account for CIT Platinum Savings OnCIT'sSecure Website. Member FDIC. | APY 4.85% APY for balances of $5,000 or more Rate info4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY | Min. to earn $100 to open account, $5,000 for max APY |
American Express® High Yield Savings
APY 4.25% Rate info4.25% annual percentage yield as of September 13, 2024 Open Account for American Express® High Yield Savings OnAmerican Express'sSecure Website. Member FDIC. | APY 4.25% Rate info4.25% annual percentage yield as of September 13, 2024 | Min. to earn $0 |
Here's what you'll make after one year with your $5,000 in an account paying the typical big-bank rate of 0.01%, along with an account paying the current average rate across all savings accounts of 0.45%:
| Starting amount | APY | Interest earned in a year |
|---|
| $5,000 | 0.01% | $0.50 |
| $5,000 | 0.45% | $22.55 |
Data source: Author's calculations
You could maybe buy a gumball with that $0.50. And $22.55 would certainly buy you lunch. But who wouldn't want to make more money? The options to do so are out there.
How about a high-yield savings account instead?
Here are three breakdowns of your earnings after one year with $5,000 in an account with a higher APY, based on our favorite high-yield savings accounts:
| Starting amount | APY | Interest earned in a year |
|---|
| $5,000 | 5.31% | $272.66 |
| $5,000 | 5.26% | $270.02 |
| $5,000 | 5.05% | $258.97 |
Data source: Author's calculations
According to the Consumer Price Index, the most recent inflation figure was 3.0% as of June 2024. You're handily beating that with any of the savings rates in this second table. And in terms of real money, earning more than $250 on your saved cash in a year is sweet indeed.
Other HYSA features to look for
As important as they are, it's not all about rates when you go looking for a new home for that $5,000. Here are a few other features to target:
- An easy-to-use banking interface: Opening a new high-yield savings account with an online-only bank (these tend to offer the highest APYs) is like zooming into the future. Whether you prefer to bank via mobile app or web browser, pick a bank with a clean layout and tools that are easy to find.
- Buckets: This is my favorite feature of my own HYSA -- I love being able to save for multiple goals within the same bank account. Depending on your bank, the feature might be called "pockets," "vaults," or "jars," rather than "buckets."
- Money access: You're not likely to get an ATM card with your HYSA, but you should be able to easily link a checking account to transfer money in and out when you need it.
- Decent customer service: People like to complain on the internet, but it's still worth checking out user reviews for a bank you're considering. If you see the same problem repeated in many reviews, it's probably a legitimate issue for that bank.
- FDIC insurance: Never ever do business with a bank that isn't a member of the FDIC. FDIC insurance coverage means that up to $250,000 of your money in that HYSA is safe and will be returned to you in the event of bank failure.
Ready to find a new home for your $5,000 now that you've seen how much money you can make on it with one of the best HYSAs? Go forth and conquer.
FAQs
But you shouldn't expect the APY you're getting today to stick around for much longer. That said, if you're getting a 4.25% APY on a $5,000 deposit now and that rate somehow stays in place, then after 12 months, you're looking at $212.50 in interest. With a 4% APY, you're looking at $200.
What happens if you put $5000 in a high-yield savings account? ›
But you shouldn't expect the APY you're getting today to stick around for much longer. That said, if you're getting a 4.25% APY on a $5,000 deposit now and that rate somehow stays in place, then after 12 months, you're looking at $212.50 in interest. With a 4% APY, you're looking at $200.
How much interest will $5000 earn in a savings account? ›
How much you can earn on $5,000 in a savings account
| Account type | Interest rate | Interest earned after 1 year |
|---|
| Traditional savings account | 0.46% | $23 |
| HYSA | 5% | $250 |
Aug 16, 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 $1000 make in a high-yield savings account? ›
If you deposit $1,000 into a high-yield savings account with a 4.5% APY, you'll earn just over $45 in interest after one year. At 5% APY, you'd earn about $51. If you deposit $1,000 into a high-yield savings account with a 4.5% APY at age 20, you'll earn almost $6,100 in interest by age 65.
Can I lose my money in a high-yield savings account? ›
As long as you're banking with an FDIC-protected bank, you're not risking losing your money when you deposit it into a high-yield savings account. However, the rate of inflation can be higher than your APY, resulting in a negative real return, or the return after taxes and inflation are taken into account.
What is the downside of a high-yield savings account? ›
Limited growth. While you can grow your money with a high-yield savings account, it's not the best way to generate long-term wealth for retirement because the yield often doesn't keep up with inflation. As a result, working with a broker or robo-advisor to develop an investment portfolio is better for long-range plans.
How much will $50,000 make in a high-yield savings account? ›
How much of a difference does this make? If you deposit $50,000 into a traditional savings account with a 0.46%, you'll earn just $230 in total interest after one year. But if you deposit that amount into a high-yield savings account with a 5.32% APY,* your one-year interest soars to over $2,660.
Is $5,000 a good savings? ›
The FDIC recommends keeping at least six months' expenses in an emergency fund. While $5,000 in savings is nothing to scoff at, it probably isn't enough for most people to meet that criteria.
Which bank gives 7% interest on savings accounts? ›
As of September 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions offer high-interest checking accounts: Landmark Credit Union Premium Checking with a 7.50% APY and OnPath Credit Union High Yield Checking with a 7.00% APY.
While high-yield savings accounts offer high APYs and zero risk, they're not the best way to grow your wealth long-term. That's because your APY can go up and down, and your yield may not outpace the inflation rate.
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.
Should I move all my money to a high-yield savings account? ›
While high-yield savings accounts offer higher interest rates than traditional savings accounts, they may not outpace inflation, potentially eroding your purchasing power over time. As a result, they're not typically recommended for long-term wealth-building or retirement savings.
What does 5000 gain in high-yield savings account? ›
Rates are high
It's not difficult to find an account that offers 4.5% to 5.5% APY or more, especially if you're willing to use an online bank or lender. A $5,000 deposit into an account with the latter interest rate would grow to $5,225 after 12 months, not accounting for compound interest or any additional rate hikes.
How much will $20,000 make in a high-yield savings account? ›
APY = Annual Percentage Yield. APYs are subject to change at any time without notice. In one year, the top high-yield savings accounts could earn roughly $1,000 in interest on a $20,000 deposit.
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.
Do you get penalized for taking money out of a high-yield savings account? ›
Flexibility; you can deposit and withdraw as needed. Typically, no monthly fees. No penalties for withdrawals.
How much is too much in high-yield savings account? ›
Gaines reiterates that even most high-yield savings accounts lose value to inflation over time. “More than two months' worth of living expenses in a savings account is too much given the ability to earn around 5% from easily accessible money market accounts that should not fluctuate in price.”
Is my money safe in a high-yield savings account? ›
Bottom Line. As long as you bank with an FDIC-insured institution, high-yield savings accounts are generally safe products that are protected from bank failure.
