How Much Will $5,000 Make You in a High-Yield Savings Account?
KEY POINTS
- The average big-bank savings account will pay you just $0.50 on your $5,000 over a year.
- Target an account paying an APY of at least 5.00%, and you'll earn more than $250 on your cash.
- Other important HYSA features include a robust banking interface, solid customer service, and FDIC insurance.
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.
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 |
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 |
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.
Our Research Expert