How much interest do you get on a savings account?
According to the FDIC, the national average interest rate on savings accounts stands at 0.47% APY (as of January 16, 2024). This applies to both average and jumbo deposits, which are accounts with a balance over $100,000.
If you put $10,000 into a high-yield savings account, you can earn from $300 to $420 in a year — assuming your variable high-yield savings rate remains above 3.00%.
As of January 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions have high-interest checking accounts. Eligibility for these credit unions is limited according to geographic location and other narrow criteria.
Key Takeaways. Earn a 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.
Account | APY (Annual Percentage Yield) | Minimum Balance to Earn APY |
---|---|---|
UFB Direct Secure Savings Account | 5.25% APY | $0 |
Upgrade Premier Savings | 5.07% APY | $1,000 |
CIT Bank Platinum Savings | 5.05% APY | $5,000 |
Wealthfront Cash Account | 5.00% APY | $0 |
Top Nationwide Rate (APY) | Total Earnings | |
---|---|---|
6 months | 5.76% | $ 288 |
1 year | 6.18% | $ 618 |
18 months | 5.80% | $ 887 |
2 year | 5.60% | $ 1,151 |
That said, here's how much you could expect to make by depositing $20,000 into a one-year CD now, broken down by four readily available interest rates (interest compounding annually): At 6.00%: $1,200 (for a total of $21,200 after one year) At 5.75%: $1,150 (for a total of $21,150 after one year)
Do You Have to Pay Taxes on Your High-Yield Savings Account? You only have to pay taxes on the interest you earn on a high-yield savings account—not on the principal balance. High-yield savings account interest is taxed at ordinary income tax rates.
Lender | Savings Account | Max Interest Rate |
---|---|---|
ubank | ubank Save Account | 5.10% p.a. |
ANZ Plus | ANZ Plus ANZ Save | 4.90% p.a. |
ME Bank | ME Bank HomeME Savings Account ($0 - $100,000) | 5.55% p.a. |
Macquarie Bank | Macquarie Bank Savings Account (Amounts < $250k) | 5.50% p.a. Intro rate for 4 mths then 4.75% p.a. |
Bank | Interest Rate of Savings Bank Account | Minimum Balance |
---|---|---|
Kotak Mahindra | 3.50% - 4.00% | Rs.10,000 |
RBL Bank | 4.25% - 6.75% | Nil, Rs.1,000, Rs.10,000, or Rs.25,000, depending on the type of account |
IndusInd Bank | 3.50% - 6.00% | Nil to Rs.20,000, depending on the type of account |
Are savings accounts worth it?
Savings accounts are essential for financial health and stability. They provide a safe place to store and grow your funds while offering easy access when needed. You can use a savings account to build an emergency fund, save for large purchases, or set aside money for future needs.
Experts generally recommend a high-yield savings account as a great way to build an emergency fund, as you'll earn more interest while still having access to your cash whenever you need it.
The key selling point of a regular savings account is that they typically offer better interest rates than you'd get with a standard savings account or a current account. The catch is that the higher rate of interest usually only applies up to a certain amount that you hold in your account.
CDs can help accelerate your savings, but they're not always worth it. If there's a chance you'll need access to your money during your CD's term, consider a high-yield savings account or money market account. But if you have a pool of money you can afford to lock up, it may be worth capitalizing on high CD rates.
- Evergreen Bank Group – 5.25% APY.
- CFG Bank – 5.25% APY.
- North American Savings Bank – 5.24% APY*
- Popular Direct – 5.20% APY.
- EverBank (formerly TIAA Bank) – 5.15% APY.
- RBMAX – 5.15% APY.
- Bread Savings – 5.15% APY.
- Western State Bank – 5.15% APY.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts. CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
You'll earn $850.50 for a total of $15,850.50 after one year when you open a $15,000 1-year CD with Popular Direct when calculating the returns at current rates. A 1-year CD at LendingClub Bank or CIBC Bank USA will produce $847.50 or $843.00 in returns, respectively. Lock in strong returns with a one-year CD today.
CDs tend to offer higher yields than traditional savings and money market accounts, especially in a low-interest rate environment. A 6-month CD may be a good option if you know that you won't need access to your funds for at least six to nine months.
Interest rates for short-term CDs are very high right now – but they might start to go down soon. Putting $10,000 into a short-term CD right offers solid – if perhaps not spectacular – returns for virtually no risk. If you have money you don't think you'll need to access imminently, a short-term CD is a great choice.
CD rates are typically higher than money market account rates. (See the national average rates across deposit accounts.) Banks have an incentive to give you better rates for CDs because you promise to give up access to your money until the end of the CD term.
Should I put a million dollars in a CD?
However, federally insured banks and credit unions only insure up to $250,000 per depositor per account ownership category. If you put more than this amount in a single CD, some of your money will be at risk. You can still safely invest more than $250,000 in CDs by opening accounts at multiple financial institutions.
Open your CD as part of a retirement account
So, your income taxes will be deferred until you tap into your IRA in retirement. If you opt for a Roth IRA, your money grows tax-free. You do pay income taxes on the money you open the IRA with, but you won't pay income taxes on its growth.
The Short Answer: Yes. Share: The IRS probably already knows about many of your financial accounts, and the IRS can get information on how much is there. But, in reality, the IRS rarely digs deeper into your bank and financial accounts unless you're being audited or the IRS is collecting back taxes from you.
Banks must report cash deposits totaling more than $10,000. Business owners are also responsible for reporting large cash payments of more than $10,000 to the IRS.
Some disadvantages of a high-yield savings account include few withdrawal options, limitations on how many monthly withdrawals you can make, and no access to a branch network if you need it. But for most people, these aren't major issues.
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