Getty Images
Have you checked the average interest rate on a traditional savings account lately? While rates on vehicles like certificates of deposit (CD) and high-yield savings accounts are elevated now, even following recent rate cuts, the average rate on a regular savings account is barely existent. At a rate of just 0.38% now, according to the FDIC, savers are essentially losing money by keeping their funds in one of these accounts. And, if that money is in the five-figure range, the interest-earning loss is significant.
But it doesn’t have to be. With a high-yield savings account, savers can still secure rates in the 4% to 4.50% range, making them over 900% more profitable. That’s a big difference for any sum of money, but especially so for those looking for a home for a five-figure sum like $50,000. Before getting started, however, it’s important to first calculate the interest-earning potential.
You don’t want to deposit this much money without knowing the value of doing so. So, how much interest can a $50,000 high-yield savings account actually earn now? That’s what we’ll break down below.
Start earning more interest on your money with a top high-yield savings account here.
How much interest can a $50,000 high-yield savings account earn now?
Calculating the interest earnings on a high-yield savings account, no matter the initial deposit, is impossible to do with precision as these accounts have variable rates that can and will change over time based on market conditions. In other words, while today’s rates may be favorable, they could change in both adverse and positive ways in the future, especially over extended periods.
Using today’s top available rate, however, here’s what a $50,000 high-yield savings account could earn now, assuming the rate remains the same and the principal isn’t touched:
- $50,000 high-yield savings account at 4.35% after three months: $535.10
- $50,000 high-yield savings account at 4.35% after six months: $1,075.92
- $50,000 high-yield savings account at 4.35% after nine months: $1,622.54
- $50,000 high-yield savings account at 4.35% after one year: $2,175.00
So savers can earn hundreds, if not thousands, of dollars by depositing $50,000 into a top high-yield savings account now. That said, these rates will inevitably change, so if you’re set on opening a high-yield savings account, it makes sense to start sooner rather than later to take advantage of today’s high rates while still available.
Get started with a high-yield savings account online today.
Will high-yield savings account rates fall soon?
With rates on these accounts variable and the prospect of rate cuts growing, some savers may be wondering about the potential for rates here to decline in the months to come. According to the CME Group’s FedWatch tool, there’s currently around a 90% chance that the Federal Reserve will cut its benchmark interest rate when the central bank meets in September.
But that cut, if it happens, will likely be by just 25 basis points. And the federal funds rate doesn’t directly dictate what banks offer savers on account types like this. So while a reduction may not be favorable for savers, the immediate impact, if there even is one, is likely to be muted. That said, over time, additional rate cuts will undoubtedly lead to lower rates on high-yield savings accounts, making it especially important for savers to exploit today’s high-rate climate while they still can.
The bottom line
Savers who make a $50,000 deposit into a high-yield savings account can earn hundreds and potentially thousands of dollars if they take action now. So it could be worth transferring this money out of a traditional savings account and into a high-yield one, even if rates are unlikely to remain this high for the foreseeable future. By being proactive and by shopping around for high-rate accounts online, savers can still make today’s current rate climate work in their favor.
