This Is How Much Money You Can Make With $5K in a High-Yield Savings Account

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield. APYs are subject to change at any time without notice.

KEY POINTS

  • Keeping extra money in a high-yield savings account is an excellent way to boost your bank account balance without doing any work.
  • If you stash $5,000 in a high-yield savings account for one year, you can earn $220 -- and the longer the money sits in your account, the more interest you'll earn.

Setting aside extra money can be a great way to prepare yourself financially for the unexpected. Some assume that opening a savings account isn't worthwhile because the interest earned is too little. But that's not the case if you open a high-yield savings account.

Current rates for these accounts are competitive due to recent Federal Reserve interest rate hikes. With a deposit of $5,000, you could earn significant extra money, which could help you increase your emergency savings faster. Curious how much you can make? I'll outline how much you can earn with $5,000 in a high-yield savings account below.

You can earn more interest in a high-yield savings account

For savings accounts, banks use an annual percentage rate (APY) to describe the returns you can expect if you keep your money in your bank account for a year.

Many brick-and-mortar banks offer meager rates on their savings accounts. It's not uncommon for a traditional savings account to offer rates as low as 0.01% APY. That means you could be missing out on interest.

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

APY
4.25%
Rate info Circle with letter I in it. 4.25% annual percentage yield as of July 22, 2024
Min. to earn
$1
APY
5.26%
Min. to earn
$1
APY
5.31%
Rate info Circle with letter I in it. 5.31% annual percentage yield (APY) is accurate as of 7/11/2024 and subject to change at the Bank’s discretion. 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

A high-yield savings account typically offers a higher APY than a savings account from a traditional brick-and-mortar bank. Many major online banks offer 4.00% APY or higher for their high-yield savings accounts.

So how much will you end up earning with $5,000 in savings? Let's compare the earning potential from both savings accounts to illustrate the benefit of keeping your extra money in a savings account with a higher interest rate.

How much interest you can earn with $5,000 in savings

You can calculate how much interest you can earn by taking your initial deposit amount and multiplying it by the APY. This will show you how much interest you'll earn if you keep the money in your account for a year.

For my calculations below, I went with a 0.01% APY for a standard savings account and a 4.40% APY rate for a high-yield savings account. The accounts on our best high-yield savings accounts list have APYs ranging from 4.00% APY to 4.95% -- I settled somewhere in the middle.

The calculations below assume an initial $5,000 deposit with no additional deposits made:

Account type Interest earned after one year
Savings Account, 0.01% APY $0.50
High-Yield Savings Account, 4.40% APY $220
Writer's calculations

As you can see, that's more than $200 earned in only a year on the high-yield account, compared to only $0.50 earned in a year on the traditional savings account. If you're not yet using a high-yield savings account, you may want to consider opening one so you don't miss out on the chance to earn free money without doing any extra work.

The power of compound interest

When you have a savings account, you'll earn compound interest, which is interest that you earn on interest. The longer you keep your money in your savings account, the more you'll earn.

To illustrate how much interest you can earn, here's how much money you'll make if you keep your initial $5,000 deposit in a high-yield savings account anywhere from one to five years. Again, this is assuming you make no additional contributions beyond your initial deposit.

Here's a breakdown:

Year Starting balance Interest earned Ending balance
1 $5,000 $220 $5,220.00
2 $5,220 $229.68 $5,449.68
3 $5,449.68 $239.79 $5,689.47
4 $5,689.47 $250.34 $5,939.81
5 $5,939.81 $261.35 $6,201.16
Writer's calculations

Don't miss out on the opportunity to earn interest

If you've been saving up for an expensive purchase, emergencies, or any other reason, keep your extra cash in a bank account that earns interest. Before moving your money from your checking account to a savings account, compare current savings account APYs. Opening a high-yield savings account could help you boost your bank account balance faster. For additional money management tips, review our personal finance resources.

These savings accounts are FDIC insured and could earn you 14x 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 14x 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.

Two of our top online savings account picks:

Rates as of Jul 22, 2024 Ratings Methodology
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American Express® High Yield Savings NexBank High-Yield Savings Account from Raisin
Member FDIC. Member FDIC.
Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor

APY: 4.25%

Rate info Circle with letter I in it. 4.25% annual percentage yield as of July 22, 2024

APY: 5.26%

Min. to earn APY: $1

Min. to earn APY: $1

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