How much can you earn with today's top savings accounts?
After several interest rate hikes by the Federal Reserve, savers now have the opportunity to boost their savings balances and maintain easy access without taking on any risk. But to do so, you'll need to choose the right type of savings account.
Traditional savings accounts, which are typically offered by large national banks, still earn well below 1% APY in many cases. In fact, the national average savings account rate is just 0.42% APY currently. But high-yield savings accounts with online banks can earn 10x that rate or more, with many yielding between 4.5% and 5% APY. Those higher interest rates can make a significant difference in your balance over time, depending on the amount you save.
Find out how much more you could be earning with today's top savings rates now.
How much can you earn with today's top savings accounts?
For many savers, especially those who are new to saving, the APY percentage alone may not mean much. We'll use a few examples below to illustrate just how much you can earn today with the highest-paying savings accounts.
Let's say you have a savings balance of $5,000 — just under the median for American households as of most recent data from 2019 — and decide to deposit it in a high-yield savings account. These accounts have variable interest rates, but if we're assuming that the current rates hold over the next twelve months, here's what your account balance would be after a year of saving if you're earning today's top rates:
- Popular Direct 5.05% APY: $5,252.50
- Salem Five Direct 5.01% APY: $5,250.50
- CIT Bank 4.95% APY: $5,247.50
- UFB Direct 4.81% APY: $5,240.50
One big benefit of high-yield savings accounts is the ability to make contributions over time and increase your savings balance quickly.
Consider a scenario in which you deposit $10,000 into an account earning 4.95% APY upon opening, but you also contribute another $200 monthly toward your savings. At this rate, you would have a balance of about $12,948 at year's end — including both contributions and the interest earned on your cash.
See how much you can make with some of the highest-earning savings accounts now!
How to make the most of high-yield savings
If you want to make the most of your savings, the first thing you can do is open a high-yield savings account with a great rate now.
It's easy to get overwhelmed by the myriad of options for high-yield savings today, says Trent White, CFP, founder of Omnia Wealth Management.
"If you are marking an effort to park your cash into anything with a higher yield, you are so far ahead of leaving it in a checking account where it's likely earning no interest and having its value eroded by inflation," White says.
Any number of top-earning online savings accounts can help you meet your goals, but you could lose out if you spend too much time on a decision instead of finding an account that works for your needs.
"Make a decision and move forward with it, then don't look back for some time. Have peace of mind that your money is working for you," White says.
Small differences in yield also won't make as big of a difference as developing good savings habits will in the long run.
"It takes discipline and time to save money. Be patient, make it easy to save, and then let time do its thing," says Jane Mepham, CFP, founder of Elgon Financial Advisors.
Set a savings goal — whether it's an emergency fund or just a $500 starting point — and then start setting aside what you can each month. Experts recommend setting up automated transfers to make the process easier.
Get started by comparing today's top savings rates and begin earning more now.
The bottom line
Savers today have a big advantage thanks to the large number of competitive high-yield accounts with flexible terms and no fees. Depending on your savings balance, you could earn hundreds of dollars in interest in a single year at today's high rates. To make the most of them, don't wait to get started. No one knows what the future holds for interest rates, but the sooner you begin to save, the more quickly you can begin reaching your savings goals. Start by comparing top savings rates you can qualify for today.
