Banking / Savings Account
GOBankingRates works with many financial advertisers to showcase their products and services to our audiences. These brands compensate us to advertise their products in ads across our site. This compensation may impact how and where products appear on this site. We are not a comparison-tool and these offers do not represent all available deposit, investment, loan or credit products.
6 min Read
Written by Andrea Norris
Edited by Melanie Grafil
PeopleImages / iStock.com
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
If you have money sitting in a traditional savings account earning less than a 1.00% APY, your money isn’t working as hard as it could be for you. High-yield savings accounts can pay several times higher. To give you an idea of the earning potential, here’s a look at how much $1,000 will make in ahigh-yield savings accountand some of the features to consider when choosing one.
Key Takeaways
- Earn 4.00% APY or higher by moving your savings into a high-yield account. This can make at least $40 over 12 months on a $1,000 investment.
- When choosing a high-yield account, look for one that provides a competitive APY without fees, steep balance requirements or APY caps.
- Some online banks offer APYs of 5.00% or higher but don’t discount offerings with APYs under 5.00% that may have fewer fees or account requirements.
How Much Will $1,000 Make in a High-Yield Savings Account?
If you put $1,000 in a high-yield savings account with an APY of 4.50% or higher and leave it for one year, you will earn a minimum of about $45. Currently, you can find many high-yield options with rates between 4.00% and 5.00% and some over 5.00%. These rates are several times higher than the latest national average savings account rate of 0.46%.
Consider the difference in one-year earnings on a $1,000 investment at various APYs, as shown in the following table:
| APY | Interest Earned |
|---|---|
| 0.45% | $4.51 |
| 4.30% | $43.86 |
| 5.15% | $52.73 |
These calculations assume:
- The variable APY doesn’t drop
- Interest is compounded monthly
- You make no additional deposits or withdrawals
- The account has no fees
Of course, savings account APYs are variable, and not every bank offers fee-free accounts. Plus, you might make additional deposits throughout the year. Ultimately, though, moving your money to a high-yield savings account will allow you to earn quite a bit more than a traditional savings account.
High-Yield Savings by Age
Here’s a look at how an initial investment in a high-yield savings account can grow over time, from early adulthood into retirement. This highlights the impact of starting early and the advantages that compound interest offers as you age.
These calculations assume:
- The variable APY of 4.50% doesn’t drop
- Interest is compounded annually
- You make no additional deposits or withdrawals
- The account has no fees
Starting at 20 Years Old
- Initial investment: $1,000
- Years until age 60: 40 years
- Compound interest: Your investment could grow to approximately $5,816.36.
At 25 Years Old
- Initial investment: $1,000
- Years until age 60: 35 years
- Compound interest: Expect a growth potential of $4,667.35.
Starting at 30 Years Old
- Initial investment: $1,000
- Years until age 60: 30 years
- Compound interest: Anticipate growth to nearly $3,745.32.
Make your money work for you
Get the latest news on investing, money, and more with our free newsletter.
By subscribing, you agree to our Terms of Use and Privacy Policy. Unsubscribe at any time.
Thanks!
You're now subscribed to our newsletter. Check your inbox for more details.
At 35 Years Old
- Initial investment: $1,000
- Years until age 60: 25 years
- Compound interest: Your investment could grow to approximately $3,005.43.
Starting at 40 Years Old
- Initial investment: $1,000
- Years until age 60: 20 years
- Compound interest: Your savings could grow to roughly $2,411.71.
At 45 Years Old
- Initial investment: $1,000
- Years until age 60: 15 years
- Compound interest: Potential growth is approximately $1,935.28.
Starting at 50 Years Old
- Initial investment: $1,000
- Years until age 60: 10 years
- Compound interest: This stage could see your savings expand to $1,552.97.
At 55 Years Old
- Initial investment: $1,000
- Years until age 60: 5 years
- Compound interest: Your investment could grow to approximately $1,246.18.
60 Years Old
- As you reach 60, it’s time to consider other investment options or savings accounts suitable for retirement.
- Opening a high-yield savings account can be a great strategy for to keep your savings intact. It offers a stable and secure place to maintain funds while still accruing some interest, albeit without the long-term growth potential of earlier investments.
What Is a Good High-Yield Savings Account?
A good high-yield savings account has the following characteristics:
- An APY significantly above the national average.
- No fees or easy-to-meet account requirements to avoid fees.
- No high balance requirement to receive the high-yield APY.
- No balance cap on earning the high-yield APY.
When choosing a high-yield savings account option, carefully read the account terms and conditions. Some financial institutions have APYs under 5.00% but no fees or minimum balance requirements. Some banks with APYs above 5.00% may charge fees, require a larger minimum balance to receive the highest rate or only pay the high-yield APY on a portion of the account balance.
Final Take
If your money is in a traditional savings account, you’re potentially missing out on an easy earning opportunity that high-yield accounts provide. However, looking pasthow much you’ll makeon a $1,000 investment is essential when choosing a high-yield savings account. A high APY won’t make you much if you can’t meet account or balance requirements or if fees are eating up your earnings.
FAQ
Here are the answers to some of the most frequently asked questions regarding high-yield savings accounts.
- How much interest will I get on $1,000 a year in a high-yield savings account?
- If you deposit $1,000 in a high-yield savings account with an APY of 4.50%, compounded annually, you would earn approximately $45 in interest in one year. This calculation assumes the APY remains constant and no additional deposits or withdrawals are made.
- How much could you make by depositing $1,000 into a high-yield savings account?
- The amount you can make by depositing $1,000 into a high-yield savings account depends on the APY and the length of time the money is invested.
- For instance, at an APY of 4.50% compounded annually, you would make about $92 in interest in two years. Over longer periods, the compound interest would significantly increase the total earnings.
- How much money can you earn with a high-yield savings account?
- The earnings from a high-yield savings account depend on the initial deposit, the APY, and the duration of investment. Generally, these accounts offer higher interest rates compared to traditional savings accounts.
- For example, an investment of $1,000 at a 4.50% APY would yield about $45 in interest in the first year and would continue to grow due to compound interest.
- Is it worth putting money into a high-yield savings account?
- Yes, for most people, it is worth putting money into a high-yield savings account, especially if their funds are currently in a standard savings account with a lower interest rate.
- High-yield accounts offer higher interest rates, making them a good option for saving money while earning a decent return with low risk. However, individual financial goals and circ*mstances should be considered before making a decision.
Information is accurate as of June 18, 2024.
The article above was refined via automated technology and then fine-tuned and verified for accuracy by a member of our editorial team.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- Investor.gov. "Compound Interest Calculator."
- FDIC. 2023. "National Rates and Rate Caps."
