How Much Interest Will You Earn on $10,000 in Savings in 2025?

When inflation started surging after the pandemic, the Federal Reserve had to react by raising its benchmark interest rate. That drove up the cost of borrowing, but it also helped savers earn more interest on the money they had in the bank.

Since inflation has cooled this year, the Fed has been cutting the federal funds rate to reverse its previous hikes. The central bank’s first interest rate cut happened in September, followed by another one in November. And with one final 2024 meeting on the calendar in December, we could see a third rate cut before the year is over.

Despite all of these rate cuts, savings accounts are still paying a nice amount of interest right now. But savings account rates could slide in the new year as the Fed’s rate cuts continue. It’s important to have realistic expectations as to how much interest you might earn.

Don’t expect the best — or the worst

Even though the Fed has cut interest rates twice this year, many savings accounts are still paying around 4%. And if yours isn’t, check out this list of the best high-yield savings accounts so you can get a better rate.

But in 2025, a savings account with a 4% APY may be hard to find. Of course, it’s hard to determine exactly how much interest rates will fall in the new year. And because of that, it’s hard to know how much interest you might earn on $10,000.

Let’s run through some scenarios. If 4% interest rates stick around all year, $10,000 in savings earns you $400 in interest.

But let’s say you’re able to get 4% interest on your savings for the first three months of the year, but from that point on, you’re looking at 3%. That gives you about $325 in interest earnings for 2025.

Now, let’s say 4% interest rates hold steady for three months, but 3% interest rates only stick around for three months also, after which they fall to 2% for the rest of the year. In that case, you’re looking at about $275 in interest for 2025.

The good news is that because interest rates are expected to start off strong, and they’re not expected to plunge to negligible levels, you stand to earn a nice amount of interest on a $10,000 deposit either way. But if you want more of a sure thing, there’s a way to get it.

A CD could be a better bet for 2025

If you have $10,000 in the bank that’s serving as your emergency fund, then it needs to stay in your savings account. But if that $10,000 is beyond what you need for emergency situations, then you may want to put it into a CD.

The nice thing about CDs is that your interest rate is guaranteed. That’s a good thing at a time when rates are expected to fall.

In fact, say you’re able to lock in a 12-month CD at 4.25%. On $10,000, that guarantees you $425. Seeing as how one of the scenarios above only has you earning $275 on your $10,000, that’s a pretty big difference.

If you want a guaranteed interest rate on your money, check out this list of the best CDs and open one at the end of 2024 or the start of 2025. In fact, you may want to open a 24-month CD if you’re not quite ready to invest your money but also want to lock in a great rate a little bit longer.

Remember, too, that if you don’t open a CD, as interest rates fall, it’s important to keep tabs on what different savings accounts are paying in 2025. The nice thing about a savings account is that you’re not committing to keep your money in a single place. This means you’ll have the flexibility to move it around if you find a better rate.