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
Putting $10,000 into a savings account with an APY of 5.00% means you could have about $10,511 just one year later. That's more than $500 of free money in just 12 months! Not everyone has $10,000 to put in a savings account, but that doesn't mean you can't still earn impressive interest.
How much interest will $10 000 earn in a savings account? ›
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.
What happens if you put $10,000 in a high-yield savings account? ›
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 100000 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.
What is 5 interest on $10,000 for 1 year? ›
For example, let's say you invest $10,000 in a simple-interest account that earns 5%. You'll earn an estimated $500 in interest and your account will be worth $10,500 after a year.
How much interest will I get for $10,000? ›
Monthly Interest Payout for an FD of ₹10,000
| Deposit Amount | Interest Rate (p.a.) | Monthly Interest Payout |
|---|
| ₹10,000 | 7.50% | ₹63 |
| ₹10,000 | 8.00% | ₹67 |
| ₹10,000 | 8.50% | ₹71 |
| ₹10,000 | 9.00% | ₹75 |
5 more rowsCons of high-yield savings accounts
- Withdrawal limits. All savings accounts used to charge customers fees if they made more than six monthly withdrawals. ...
- Withdrawals might require a few extra hoops. ...
- Minimum balance requirements. ...
- Rates fluctuate. ...
- Not a good fit for long-term savings.
Summary: An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.
How much interest will $1,000 earn in 20 years? ›
For example, with an initial balance of $1,000 and an 8% interest rate compounded monthly over 20 years without additional deposits, the calculator shows a final balance of $4,926.80. The total compound interest earned is $3,926.80.
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.
What are the cons of a high-yield savings account? Variable rates. Interest rates on these accounts can and do fluctuate, which means the APY you started with could potentially drop. Keep your eye on such changes and remember that the money is yours; at any time, you can move it to a bank that offers a higher rate.
Is $10,000 too much to keep in a savings account? ›
The first thing you might wonder is whether it's even safe to keep that much cash in a savings account, and it definitely is. All reputable savings accounts carry up to $250,000 of Federal Deposit Insurance Corporation (FDIC) insurance per person, per bank, per ownership category.
How to turn 100k into 1 million? ›
If you keep saving, you can get there even faster. If you invest just $500 per month into the fund on top of the initial $100,000, you'll get there in less than 20 years on average. Adding $1,000 per month will get you to $1 million within 17 years. There are a lot of great S&P 500 index funds.
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 money do I need to invest to make $4000 a month? ›
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
How much can I make if I invest 10k? ›
If you invest $10,000 and make an 8% annual return, you'll have $100,627 after 30 years. By also investing $500 per month over that timeframe, your ending balance would be $780,326. Exchange-traded funds (ETFs) and mutual funds are both excellent investment options.
How much will $5000 make in 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.
How much will $10,000 make in a money market account? ›
How much you can make in the best money market accounts
| Account | National average money market account | Sallie Mae Money Market |
|---|
| Deposit amount | $10,000 | $10,000 |
| APY | 0.68% APY | 4.65% APY |
| Earnings after six months | $33.94 | $229.86 |
| Earnings after 1 year | $68 | $465 |
3 days ago
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.
