If you have $50,000 of savings in the bank, congratulations! You have more cash on hand than most Americans — the typical American bank account balance (including savings and checking) is $8,000. So when your savings account reaches $50,000, it’s an occasion to celebrate, but also a time to think about making a few changes.
This is a wonderful problem to have, but there’s such a thing as having too much cash. Keeping $50,000 in the bank might not be the most appropriate decision for your overall personal finances, especially if the interest rate on your savings account goes down after the recent Federal Reserve rate cut.
Let’s look at a few smart moves to consider when your savings reaches $50,000.
1. Choose a high-yield savings account
First of all, if you have $50,000 in the bank, you should keep it in the highest-yield savings account or money market account you can find. As of Sept. 26, 2024, the best savings accounts still offered up to 5.30% APY.
Our Picks for the Best High-Yield Savings Accounts of 2024
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Capital One 360 Performance Savings 
APY 4.10%
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APY 4.10%
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Min. to earn $0 |
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American Express® High Yield Savings 
APY 4.25%
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APY 4.25%
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Min. to earn $0 |
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Discover® Online Savings 
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Min. to earn $0 |
If you’re keeping $50,000 in a zero-yield checking account or a low-APY savings account, you’re missing out on significant earnings. Here’s how much you’d earn with $50,000 of cash at a few different APYs for one year:
| APY | 0.01% | 0.46% (National Average) | 4.00% | 4.25% | 5.00% | 5.30% |
|---|---|---|---|---|---|---|
| Yield | $5 | $230 | $2,000 | $2,250 | $2,500 | $2,650 |
Data source: Author’s calculations
It matters where you keep your savings. Some banks offer pitifully low APYs on savings, but you can still find some great yields from the best savings accounts. Earning a high yield on your savings is especially important when you’ve built up a higher balance.
Put your cash to work and earn the highest APY you can find. Even if the Fed keeps cutting interest rates and savings accounts APYs go down further, you’re better off earning some yield instead of zero.
2. Re-evaluate your emergency savings fund
Here’s where the “too much cash” problem comes in. Is $50,000 of cash really the right amount for you to keep in savings? Many people dream of having an emergency savings fund with three to six months’ worth of expenses. It can provide priceless peace of mind.
If you have $50,000 of savings, you might be fine using that entire amount as your emergency fund. You might be risk-averse and don’t want to get caught with zero cash on hand in case of a job loss or downturn in the economy. If it helps you sleep better at night to keep that full $50,000 of savings in cash in an FDIC-insured savings account, feel free to do that.
But many people might not need $50,000 in savings. Even in a worst-case scenario like a loss of income or medical emergency, could you pay for living expenses with unemployment benefits, part-time gig work, or borrowing from your 401(k)? What if you could use some of that $50,000 for other financial goals and invest it more aggressively for long-term growth?
3. Check your retirement savings plan
And speaking of long-term growth: If your cash savings has reached $50,000, it’s worth taking another look at your long-term investments. Ask yourself:
- Are you saving enough for retirement? (Vanguard recommends saving 12% to 15% of your income for retirement, including employer matches.)
- Are you getting your full employer match to your 401(k)?
- Are you maxing out your traditional IRA or Roth IRA?
- Are you investing appropriately for your long-term goals by buying stocks, or are you building up a stockpile of cash?
You might want to stop saving more cash and start investing a bigger percentage of your income into stocks, bonds, and other long-term growth assets. Too much cash can be a drag on the rest of your investment performance, especially if the Fed keeps cutting rates (and driving down yields on savings accounts and CDs).
4. Prioritize short-term goals
If your retirement savings are generally on track, you might use this occasion of your savings reaching $50,000 to take another look at your short-term goals. These could include:
- Do you want to buy a home? How much of this cash could go toward a down payment?
- Do you need to buy a new car in the next few years?
- Do you want to pay for a big life event (wedding, kids’ college, etc.) soon?
- Any other big purchases or home renovations on the horizon?
Consider putting some of the $50,000 of cash savings toward different financial goals for specific time frames. For example, if you think you’ll be in the market for a new car in two years, you could put $10,000 into a two-year CD and lock in a high APY on that money.
You don’t have to keep all of your cash savings in one account; you can put the money into a few different accounts to try to earn high yields for different financial goals.
Bottom line
Building up $50,000 of cash savings is a great achievement. You worked hard for that money, so your money should work harder for you. Ensure you’re earning the highest yield on your savings account, or consider opening a CD for medium-term goals beyond your emergency fund. And think carefully about how cash fits into your overall financial plan.