This Is How Much Money You Can Make With $20,000 in a High-Yield Savings Account

Unless you've been chilling on a deserted island, you've probably heard about the great rates on some high-yield savings accounts. The operative word here is "some." While some banks are offering high rates, others have kept their rates stubbornly low.

Here, we look at what you can expect if you shop around; find a generous rate on a risk-free, high-yield savings account; and deposit $20,000.

The right financial institution matters

As mentioned, not all banks are created equal, and not all offer high rates. Fortunately, there are plenty of great savings accounts that do.

For the sake of this illustration, we've chosen to use UFB Secure Savings Account rates. UFB is a division of Axos Bank, one of the most established online banks in the U.S. The fact that UFB has no branches means that it has low overhead, which allows the bank to offer a rate of 5.25% APY on all high-yield savings account balances.

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

Capital One 360 Performance Savings APY 4.25% Rate info 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 Open Account for Capital One 360 Performance Savings Member FDIC.	APY 4.25% Rate info 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
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of July 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 July 1, 2024	Min. to earn $1
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

Before we dive in, here are a few other UFB perks we like (and features you'll want to look for in a bank):

• No monthly maintenance fees
• No minimum deposit is required to open an account
• Access to your funds 24/7
• FDIC insured up to $250,000 per individual and $500,000 for joint accounts
• Interest is compounded daily

How much could you earn?

It's important to note that interest rates on high-yield accounts are variable. That means the rate could go up or down at any time. Let's assume that the rate on your account remains unchanged for 24 months. Here's what would happen to your $20,000 deposit.

It's important to beat inflation

A good savings account should help your money grow faster than the inflation rate. Considering that the annual inflation rate in the U.S. was 3.5% for the 12 months ending April 2024, this account accomplishes the needed goal. Better yet, it achieves the goal of beating inflation without risk to your initial deposit.

Given the number of banks, credit unions, and other financial institutions out there, it can take time to figure out which is right for you. The best bank is one that can help you achieve your financial goals by taking risks you're comfortable with.

Suppose you're looking for a financial institution with a great rate on a high-interest savings account. In that case, you may also want to decide if you're comfortable having a savings account with one bank and a checking account with another. Having as many accounts as you would like spread out among financial institutions is fine, but if you'd rather have all your basic accounts under one roof, that's okay, too. We all have different preferences.

Thanks to the internet, you can quickly learn what a financial institution offers, from checking accounts to safe deposit boxes and investment accounts. Ideally, any bank you work with charges no (or low) fees, is federally insured, and offers a remarkable rate of return.