This Is How Much Money You Can Make With $5,000 in a High-Yield Savings Account
KEY POINTS
- The average savings account APY is currently 0.45% -- but high-yield accounts pay much more.
- Parking $5,000 in a savings account earning 4.5% APY will earn you $225 in a year.
- To find the best high-yield savings account, look to an online bank.
If I were to sit down and rank the best money moves I've made in the last few years, opening a high-yield savings account last year would definitely be near the top. Not only was the account incredibly easy to open, but I've made more than $1,000 on my savings this year so far, thanks to earning a generous APY.
Admittedly, I'm in the process of meeting a big savings goal, so you may not have as much saved cash as I currently do. But even if you have a smaller amount saved, say $5,000, it's still worth your time to move that money into a high-yield savings account. Here's why.
By the numbers: Regular savings account vs. high-yield savings account
Let's say you keep your hypothetical $5,000 in a traditional savings account -- perhaps one that's linked to your checking account. It only earns 0.10% APY, though. At least with a balance of $5,000, you likely aren't charged a monthly maintenance fee -- as I discovered last year, $300 is the minimum required balance on my own traditional savings account to avoid fees.
But even without a maintenance fee, your money is losing spending power in this account. The most recent Consumer Price Index Summary report noted that inflation is currently at 3.7%. But the average APY across all savings accounts is currently just 0.45%, according to the FDIC, and your traditional savings account earns far less than that.
Our Picks for the Best High-Yield Savings Accounts of 2025
| Product | APY | Min. to Earn | |
American Express® High Yield Savings
Member FDIC.
APY
3.80%
Rate info
3.80% annual percentage yield as of January 21, 2025. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.80%
Rate info
3.80% annual percentage yield as of January 21, 2025. Terms apply.
|
$0
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
Capital One 360 Performance Savings
Member FDIC.
APY
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
|
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
|
$0
|
|
Western Alliance Bank High-Yield Savings Premier
Member FDIC.
APY
4.35%
Rate info
The annual percentage yield (APY) is accurate as of Jan. 16, 2025, and subject to change at the Bank's discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
Min. to earn
$500 to open, $0.01 for max APY
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
4.35%
Rate info
The annual percentage yield (APY) is accurate as of Jan. 16, 2025, and subject to change at the Bank's discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
|
$500 to open, $0.01 for max APY
|
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
What if you were to move your money to a high-yield savings account paying an APY of 4.5%? Here's what you can expect to earn, interest-wise, over the course of a year in each account (and assuming you don't add any money to your balance):
| Funds | Traditional Savings Account: 0.10% APY | High-Yield Savings Account: 4.5% APY |
|---|---|---|
| Starting balance | $5,000 | $5,000 |
| Interest earned | $5 | $224.90 |
| Balance after a year | $5,005 | $5,224.90 |
As you can see, the difference in what you can earn is staggering -- surely an extra $220 could make a difference for your bottom line. And best of all, this money represents passive income, so you don't have to work extra hours to earn it.
Where can you find a high-yield savings account?
So you're not going to make this kind of money with a savings account at your trusty old brick-and-mortar bank. Instead, look to cyberspace for a 21st-century bank! Online banks have a few advantages over their brick-and-mortar counterparts, including offering higher APYs on savings accounts. This is because online banks have fewer overhead costs, since they don't have physical branches to maintain. These banks also have excellent remote customer service (including phone lines, email, and online chat features) and mobile apps.
One word of caution, though: If you need to deposit cash, you may have some difficulty with no physical branch to visit. If you've got an account with a brick-and-mortar bank, you can deposit cash there, then transfer it to your online bank account. Yes, this is an extra little song-and-dance to do, but I think the perks of an online bank are worth it.
Use these tips to make saving easier
It's not enough just to have the right savings account; you also need to put money into it. If you have $5,000 now, that's a great starting point, and your money could grow to become a full emergency fund, fund a dream vacation, or even buy you a home. Here's how to make saving money easier.
- Automate it: Here's where I give advice I don't follow myself. Automating my finances makes me nervous, but a lot of people have found success with it. If it's hard to set aside money to save every month, setting up an automatic transfer from checking to savings before you've spent the money you want to save can help.
- Set a goal: Give your money a job, and dream about that job. In my case, the big savings goal I have is to buy a home in 2024, so every time I add money to the account, I think about how wonderful it will be to wake up in a house I own. It makes it more fun to save.
- Get a side hustle: This is always my go-to advice, because it's easier to increase your income than to cut your spending in a big way. Money you earn from a side hustle isn't already earmarked for bills, so you can save all of it (less taxes, should you find yourself in a freelance situation where you receive a 1099 form).
Having cash savings is an excellent position to be in. Don't lose money to inflation -- move your cash to a high-yield savings account today.
Our Research Expert
Ashley Maready changed careers from museum operations and management to writing and editing in 2021. She has a passion for teaching others about better living through improving your finances.
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