What would a 6% high-yield savings account interest rate earn in a year?
Today's high interest rates can be painful to deal with if you have credit card debt or if you're otherwise borrowing money. However, if you're focused on saving money, today's high interest rate environment works to your advantage by making it possible for you to earn a larger return on your idle cash. And a high-yield savings account is a compelling way to do so.
Though most leading high-yield savings accounts offer returns ranging from 4.35% to 5.25%, there's the occasional anomaly that may lead to an even higher return. For example, Mango is currently offering savers a 6% APY.
Not only do today's high APYs protect the value of your savings against a backdrop of persistent inflation, they can actually increase the value of your savings on an inflation-adjusted basis - even if those APYs are variable.
But what exactly does earning a 6% APY mean in terms of earned interest? How much money could you make in a year on your savings account if you have a 6% APY? That's what we will calculate below.
Open a high-yield savings account to put your cash to work now.
What would a 6% high-yield savings account interest rate earn in a year?
"Earning any amount of interest on your cash is obviously better than leaving it in a checking account that earns you zero," explains Larry Bassuk, president and co-founder of the business lending platform Idea Financial. "Moving your money to a high-yield savings account is a smart and relatively easy way to benefit from the present high interest-rate environment." But how much money could you earn in a year by opening a high-yield savings account at 6%?
The amount of money you could earn depends on the amount of money you have in the account. The more money you save, the more of a return your savings will generate for you. That said, interest rates on high-yield savings accounts are variable and subject to change often. So it's difficult to predict with precision how much you could earn in a year. Here are the returns you can expect to earn on varying deposit amounts with a 6% interest rate, assuming that the rate remains the same throughout the 12 months:
- $1,000: $60 (for a total of $1,060 after one year).
- $2,500: $150 (for a total of $2,650 after one year).
- $5,000: $300 (for a total of $5,300 after one year).
- $7,500: $450 (for a total of $7,950 after one year).
- $10,000: $600 (for a total of $10,600 after one year).
- $15,000: $900 (for a total of $15,900 after one year).
- $20,000: $1,200 (for a total of $21,200 after one year).
- $25,000: $1,500 (for a total of $26,500 after one year).
Open a high-yield savings account now to earn more with your savings.
Why you should open a high-yield savings account now
There are a few reasons you should open a high-yield savings account right now. Among the most pressing are:
- Inflation continues: Inflation was up in February, coming in at 3.2%. Not only was that figure higher than January's inflation rate, it's more than a full percentage point above the Federal Reserve's 2% target. So, if you're not earning a return of 3.2% or above on your savings, it's losing buying power. A high-yield savings account can help.
- Traditional savings accounts don't pay enough to beat inflation: According to the FDIC, the average savings account earns just 0.47% a year. That means traditional savings accounts are actually losing money compared to high-yield ones. So, high-yield savings accounts are an attractive alternative.
- High-yield savings accounts are safe: High-yield savings accounts typically come with FDIC or NCUA insurance. So, even if the bank you open your account with goes out of business, you'll be protected.
- High-yield savings accounts are liquid: High-yield savings accounts make the perfect home for emergency savings because they don't lock your funds up. In fact, you can usually tap into your account up to six times per month. Though, any additional withdrawals over this limit may be met with penalties.
Open a high-yield savings account to take advantage of the above benefits now.
The bottom line
You could earn anywhere from $60 to $1,500 or more in a year with a high-yield savings account that offers 6% annual returns. That is, as long as the variable interest rate on the account doesn't adjust downward during that year. Nonetheless, opening a high-yield savings account now could be beneficial. Not only do these accounts typically outpace inflation, they offer safety and liquidity - all of which are valuable factors when considering a home for your savings. Open a high-yield savings account now to take advantage of today's high rates while they're still available.
