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

Want to build your savings? Now is really the best time to focus on this personal finance goal, thanks to the availability of high-yield savings accounts. Let's take a look at how much money you could earn as interest on a $5,000 savings balance, as well as the features to target if you need a new place to keep your cash safe and growing.

"High yield" are the keywords to finding a great savings account

"A savings account is a savings account," you might scoff. But you heard it here first: Not all savings accounts are created equal. These days, I have two savings accounts, and the difference in APY (annual percentage yield, or how much interest you can earn in a year) between them is striking.

My savings account with a big national bank pays just 0.01% APY, while my savings account with an online-only bank is currently paying an APY of 4.20%. And to add insult to injury, the big bank account also charges a monthly maintenance fee if my account balance drops below $300. The FDIC keeps track of average rates on consumer bank accounts, and as of this writing, the average APY across all savings accounts is 0.46%.

Let's break down the numbers

Say you have $5,000 ready to plug into a savings account. Here's what that balance would look like in a year if you opt for a big bank savings account, a high-yield account with the same rate as mine, or an account paying the current national average.

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

SoFi Checking and Savings APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet. Min. to earn $0 Open Account for SoFi Checking and Savings Member FDIC.	APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.	Min. to earn $0
Citizens Access® Savings APY 4.50% Min. to earn $0.01 Open Account for Citizens Access® Savings Member FDIC.	APY 4.50%	Min. to earn $0.01
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of June 1, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of June 1, 2024	Min. to earn $1

If you're going by interest earnings alone, we have a clear winner here. And I'll point out that 4.20% is actually less than what you could earn on a savings account -- as of this writing, the top APY on The Motley Fool Ascent's list of the best high-yield savings accounts is 5.36%. $5,000 in an account there earns you $268 in a year.

It's important to note, however, that rates on savings accounts are variable, which means they fluctuate with larger market conditions. My account that earns 4.20% was actually earning 4.35% just a few months ago. So keep this variability in mind -- and capitalize on a high APY while you still can. If the Federal Reserve cuts the federal funds rate later this year, as is predicted, the rates on consumer bank accounts will fall, too (the two aren't directly linked, but they tend to move in concert).

What else should you look for?

As you've already seen, it's worth taking the time to find a savings account with a high APY -- these days, 4% to 5% options are pretty widely available. But the rate isn't the only consideration! Here's what else to look for.

FDIC insurance

Don't keep money with any bank or credit union that isn't insured. For banks, they should fall under FDIC insurance. For credit unions, the equivalent agency is the NCUA. Each protects up to $250,000 per depositor, per account ownership category, and per bank, in the event of bank failure.

Accessibility

The biggest downside of an online-only bank? If you want to deposit cash, you need another bank you can do that with, and then you'll have to transfer the cash over. It's not ideal. Thankfully, a lot of online banks have robust ATM networks, so you can access your cash by linking a checking account to your savings, transferring cash, then using an ATM. Yes, there are extra steps involved, but it can be worth it for the higher APY.

Fees (or ideally, lack thereof)

One of the biggest perks of an online bank is the lack of fees, like a monthly maintenance fee. It's 2024 -- do we really need to pay to keep money in the bank? No, we do not, so check the fee schedule for any account you're considering.

Full-featured mobile app

One of the best qualities of my online bank is its mobile app. It's easy to use, allows me to separate money into sub-accounts so I can save for different goals, and shows me charts tracking my savings and interest earned over time. I recommend seeking a bank that offers a great mobile app.

Customer service

If you like being able to stroll into a bank branch and talk to a teller, you might find an online bank to be a big adjustment. Thankfully, many of them have 24/7 customer service available by chat and by phone. Explore customer service availability before opening an account with a bank.

Right now, it's possible to earn real interest on your savings. If you want in, jump on the high-yield savings account bandwagon today.