How much will $1,000 make in a high-yield savings account?
If you deposit $1,000 into a high-yield savings account with a 4.5% annual percentage yield (APY), you’ll earn a little more than $45 in interest after one year. With an APY of 5%, your interest earnings would be about $51 after one year.
According to the FDIC, the average yield on a regular savings account is 0.36% as of July 2024. These high-yield APYs are significantly better than this average savings account rate, which would only earn you around $4.50 after one year.
You can compare the earnings on a $1,000 deposit with different APYs in the table below.
| APY | Interest earned annually on $1,000 | Total ending balance |
|---|---|---|
| 0.36% | $3.61 | $1,003.61 |
| 4.25% | $43.34 | $1,043.34 |
| 4.50% | $45.94 | $1,045.94 |
| 5.00% | $51.16 | $1,051.16 |
| 5.25% | $53.78 | $1,053.78 |
| 5.50% | $56.41 | $1,056.41 |
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
The calculations in the table above assume:
- There are no account fees
- The interest rate is fixed for the term
- Interest is compounded monthly
- You make no deposits or withdrawals during the 12-month period
How much can I earn with our top banks?
Our top picks for the best savings accounts have APYs that greatly exceed those of regular savings accounts. See how much you can earn on a $1,000 deposit in one year with our top bank choices in the table below.
APYs are correct as of July 2024 and may vary by location. The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
The calculations in the table above assume:
- There are no account fees
- The interest rate is fixed for the term
- Interest is compounded monthly
- You make no deposits or withdrawals during the 12-month period
How much could I earn by 65 with $1,000 in a high-yield savings account?
If you deposit $1,000 into a high-yield savings account with a 4.5% APY at age 20, you will have earned nearly $6,100 in interest by the time you turn 65.
Each year your money stays in a high-yield savings account, the interest accrued from previous years also earns interest. This means that your money is generating more interest year after year. To maximize the power of compound interest in a high-yield saving account, start saving as early as possible.
In the table below, you can see how your total savings will increase over time based on the age at which you begin saving.
| Starting age | Years to 65 | Interest earned | Total ending balance |
|---|---|---|---|
| 20 | 45 | $6,093.82 | $7,093.82 |
| 25 | 40 | $4,706.08 | $5,706.08 |
| 30 | 35 | $3,589.82 | $4,589.82 |
| 35 | 30 | $2,691.93 | $3,691.93 |
| 40 | 25 | $1,969.69 | $2,969.69 |
| 45 | 20 | $1,388.74 | $2,388.74 |
| 50 | 15 | $921.44 | $1,921.44 |
| 55 | 10 | $545.55 | $1,545.55 |
| 60 | 5 | $243.20 | $1,243.20 |
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
The calculations in the table above assume:
- The APY is fixed at 4.50% and does not change
- Interest is compounded annually
- You make no additional deposits nor withdrawals
- There are no account fees
To learn more about how much you could earn over time, try using our savings calculator.
How to maximize saving $1,000 in a high-yield savings account
The advantages of keeping money in a high-yield savings versus a regular savings account are apparent. Of course, a higher APY generates more growth, but there are other ways to maximize the power of a high-yield savings account.
Here are some ways to make your money work harder for you.
Compound interest
The table above shows that $1,000 invested at 4.5% from age 20 to 65 will generate $6,093.82. If you invest that money only from age 40 to 65, the interest generated is $1,969.69. If you wait until age 60 to invest and keep the money in your high-yield savings account for five years, you will receive $243.20 in interest.
The power of compound interest is substantial. While most high-yield savings accounts have a variable interest rate, this basic example shows how important it is to start saving as soon as possible.
You should also know the difference between an account that compounds interest daily and one that compounds interest monthly, quarterly or annually. When interest compounds more frequently, more interest accumulates over time.
Low or no fees
The APY, fees and minimum account balance requirements vary from bank to bank. Consider each of these factors before looking at how to open a high-yield savings account. Many banks with high-yield savings accounts do not have a maintenance fee. Some of those with a monthly or annual fee will waive the fee if a minimum account balance is maintained.
The fee is automatically deducted from your account balance. This means you pay the fee with the interest that your money earned. Because of this, it’s advisable to avoid HYSAs that charge monthly or annual fees.
Automate payments
Automating deposits to your high-yield savings account is another smart way to maximize growth. By setting up an automatic deposit, your HYSA receives regular infusions of additional money. There’s no possibility that you’ll overlook making a planned deposit, so the funds will consistently grow. Each deposit increases the total interest generated and boosts the power of compounded interest.
Alternatives to high-yield savings accounts
A high-yield savings account outperforms a regular savings account, but it doesn’t compare to the average yield of the S&P 500. Over the last 20 years, the annual return on the S&P 500 has averaged 7.7%. However, a high-yield savings account is a no-risk place to park your funds. While the APY will vary, your FDIC-insured balance is up to $250,000 per depositor and account. In comparison, you could potentially lose all of your funds if you make a bad stock market investment.
There are a few alternatives to high-yield savings accounts. CDs and money market accounts are also FDIC-insured.
CDs
If you buy a CD, you’ll typically choose a term from six months to five years. If you withdraw your funds before the end of the term, you are responsible for an early withdrawal fee. According to the FDIC, the average yield on a 60-month CD is 1.43%. The average yield on a 6-month CD is 1.81%.
With a high-yield savings account, you generally have a limited number of monthly withdrawals, and no fee is associated with withdrawals. Because a fee is charged when you cash out a CD early, some people may be less inclined to withdraw their funds held in a CD. This can be advantageous for people who tend to dip into their savings.
Money market accounts
The average yield on a money market account is currently 0.67%. This exceeds the APY on a regular savings account. However, it’s far lower than the APY for a CD or high-yield account.
With a money market account, there isn’t a limit on the number of monthly withdrawals you can make. You may also be able to access your funds via an ATM or write checks from the account. In these ways, a money market account can be a smart place to store cash that you don’t need at the moment but may need access to soon or at a moment’s notice.
