This Is How Much Money You Can Make With $10,000 in a High-Yield Savings Account

Unless you've managed to avoid the internet for the past decade or so, you've probably heard about high-yield savings accounts and their potential for growing your wealth. But it's one thing to say that a high-yield savings account could make you a lot of money and it's another to see it in action. 

Looking at the numbers is the best way to understand what kind of difference a high-yield savings account could make for you. Let's check out how much you could earn if you deposited $10,000 in one today.

What will your $10,000 turn into?

How quickly your savings grows depends on your savings account annual percentage yield (APY). A higher APY means more money for you. Right now, the best high-yield savings accounts offer around 5.00% APY. 

That would put $500 in your pocket in a year if you start with a $10,000 initial balance. And if you earned that rate for a second year, you'd earn $500 more on your initial $10,000 balance plus another $25 on the $500 you earned in your first year. 

Our Picks for the Best High-Yield Savings Accounts of 2024

Capital One 360 Performance Savings APY 4.25% Rate info See 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 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	APY 4.25% Rate info See 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
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of August 23, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of August 23, 2024	Min. to earn $1
UFB Portfolio Savings Account APY 5.15% Rate info To ensure you keep getting the highest rate at UFB, you'll need to keep an eye on their rates. Occasionally, the bank launches new accounts with higher rates. Existing accounts need to contact the bank to request being moved to one of these new accounts. Min. to earn $0 Open Account for UFB Portfolio Savings Account On UFB's Secure Website. Member FDIC.	APY 5.15% Rate info To ensure you keep getting the highest rate at UFB, you'll need to keep an eye on their rates. Occasionally, the bank launches new accounts with higher rates. Existing accounts need to contact the bank to request being moved to one of these new accounts.	Min. to earn $0

However, savings account interest rates aren't fixed over time like certificate of deposit (CD) rates, and they're not usually this high either. The Federal Reserve has hiked interest rates in an attempt to curb high inflation. This leads banks to raise interest rates on their loans and savings products too. But when the Fed begins to lower rates again, as it's projected to do later this year, savings account interest rates will drop too.

What does the future hold for high-yield savings accounts?

It's difficult to predict how much interest you'll get from your high-yield savings account because we don't know when or how sharply interest rates will drop. During the pandemic, when the Federal Reserve slashed interest rates, high-yield savings account rates dipped to about 0.30% to 0.40%. That would only earn you $30 or $40 on a $10,000 balance in a year.

That might not sound like much, but it's important to remember that many brick-and-mortar banks still limit their savings account customers to just 0.01%. That would only grow your $10,000 balance by $1 per year.

No matter how far high-yield savings account interest rates drop, you'll still come out ahead compared to keeping your money in a traditional savings account. You also won't have to worry about monthly fees, since the online banks that offer high-yield savings accounts typically don't have them. There are no balance requirements either, so your money should only grow with time.

How should you use your high-yield savings account?

A high-yield savings account is the best choice for your emergency fund and cash you plan to spend within the next few years. It enables you to increase your wealth while keeping it accessible. But a high-yield savings account isn't the best choice for long-term savings.

You're better off investing these in a retirement or taxable brokerage account. There is a risk of loss when you do this, but you also have the opportunity to grow your money a lot more than you could with even the best savings accounts. So if you don't see any pressing need for the cash in the next five to seven years, consider moving your money out of savings and into an investment account so you can grow it even faster.