This Is How Much Money You Can Make With $5,000 in a High-Yield Savings Account

It’s a good time to have money in a savings account. Granted, it’s important to have savings at all times, because you never know when an emergency expense or situation might arise. But it’s so beneficial to have a loaded savings account right now because interest rates are still sitting at a high. 

Many banks — particularly online ones — are offering an APY of 4% or higher for a high-yield savings account. Given that you could barely get over 1% a few years back, that’s huge. 

But while you might earn a nice amount of interest with, say, $5,000 in a high-yield savings account, your interest earnings aren’t guaranteed. And if you don’t need that money for emergency fund purposes, then you may want to move it out of a savings account and put it elsewhere. 

How much interest can you earn on a $5,000 deposit today?

Two factors will determine how much interest you can earn on $5,000 in savings. The first is your specific bank, and the second is the extent to which interest rates fall.

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

Capital One 360 Performance Savings APY 4.25% Rate info Circle with letter I in it. 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. Member FDIC.	APY 4.25% Rate info Circle with letter I in it. 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
CIT Platinum Savings APY 4.85% APY for balances of $5,000 or more Rate info Circle with letter I in it. 4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY Min. to earn $100 to open account, $5,000 for max APY Member FDIC.	APY 4.85% APY for balances of $5,000 or more Rate info Circle with letter I in it. 4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY	Min. to earn $100 to open account, $5,000 for max APY
American Express® High Yield Savings APY 4.25% Rate info Circle with letter I in it. 4.25% annual percentage yield as of September 8, 2024 Member FDIC.	APY 4.25% Rate info Circle with letter I in it. 4.25% annual percentage yield as of September 8, 2024	Min. to earn $0

The Federal Reserve is expected to lower its benchmark interest rate in September. And that rate cut is projected to be the first of several. So while your high-yield savings account may be offering you a 4.25% APY today, later this year, your APY might fall to 3.95%. And by mid-2025, you may be looking at 3.25% — or possibly less.

In the absence of a crystal ball, it’s impossible to know. But you shouldn’t expect the APY you’re getting today to stick around for much longer.

That said, if you’re getting a 4.25% APY on a $5,000 deposit now and that rate somehow stays in place, then after 12 months, you’re looking at $212.50 in interest. With a 4% APY, you’re looking at $200. But again, since savings account rates are expected to fluctuate a lot in the coming year and dip, it’s hard to calculate exactly how much money you can make on $5,000.

A better way to grow your money than a high-yield savings account

Any money you have earmarked for your emergency fund should sit in a savings account, regardless of what interest rates look like. You need a safe home for that cash, and you need to be able to access it at a moment’s notice. But if you have $5,000 beyond what you need for your emergency fund, then it pays to take it out of your savings account this month and put it into either a CD or a brokerage account. 

Opening a CD is a smart move if you want to keep your money in the bank for five years or fewer. A window that short isn’t enough time to invest in stocks because you’re taking the risk of the market tanking and you not having enough time to ride out a downturn.

But since CD rates are so high right now, you might still get a 5% APY on a 12-month term. For a $5,000 deposit, that’s a guaranteed $250 in interest.

Meanwhile, if you invest your $5,000, there’s no telling what it might be worth in a year. And there’s a chance that 12 months from now, your $5,000 could be worth a lot less. 

But you should know that over the past 50 years, the stock market’s average annual return has been 10%, which accounts for strong years and years with market crashes alike. So if you invest $5,000 at a 10% yearly return for the next 25 years, you could end up growing it into a little over $54,000.

Even if interest rates fall quite a bit in the next year, you can still earn a decent amount of money by keeping $5,000 in a high-yield savings account. But if that money isn’t for emergencies, then it could benefit you to move it someplace where you can earn a lot more.