Banks do far more than serve as a repository for your hard-earned cash. Depending on the bank, they can do quite a bit more — starting with helping you grow your wealth .
Whether you’re searching for a new bank with better benefits or curious to know how much you could make by leaving your cash untouched in a high-interest account, keep reading.
We’ll show you exactly how much your savings can earn at the right bank with the right interest rate.
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$10,000 in a big bank earning almost nothing
Interest earned in one year at a rate of 0.01%: $1
For better or worse, big banks typically don’t have to jockey for new customers. The name recognition alone of a national bank is enough of a draw that big banks don’t have much incentive to offer competitive perks like high-yield savings accounts .
As a result, many big banks offer interest rates as low as 0.01%. If you have $10,000 in savings, you’ll earn $1 a year (based on a simple interest calculation, not compounding interest).
Worse, many big banks charge a monthly or yearly savings account maintenance fee — so storing your savings in a low-interest savings account with a big bank could lose you money.
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$10,000 in a bank earning the national average rate
Interest earned in one year at the current national average rate of 0.46%: $46
The Federal Deposit Insurance Corporation (FDIC) is the independent federal agency that backs bank account deposits and oversees banks and credit unions.
The FDIC also calculates monthly interest rate caps for banking products, which include savings accounts, money market accounts, certificates of deposit (CDs), and interest checking accounts.
For March 2024, the FDIC monthly rate cap for savings accounts is 0.46%. If you deposit $10,000 in an account with that interest rate, you’ll earn $46 in one year.
Again, this is a simple interest calculation. If your savings account earns compound interest (and most do), your interest also earns interest. Whether your interest compounds monthly, quarterly, semi-annually, or annually impacts the amount of interest you’ll earn.
$10,000 in a competitive high-yield savings account
Interest earned in one year at the competitive rate of 4.00%: $400
Many non-traditional, new, or online banks use high-yield savings (and even checking) accounts to get new customers interested in their banking services.
While 4.00% is considered a competitive rate — especially compared to almost comically low big-bank rates — it’s entirely possible to find high-yield savings accounts with even higher rates.
Of course, you should carefully vet banking options to ensure you choose the best bank for you, not just the bank with the highest interest rate.
If you open a high-interest savings account with a rate of 4.00%, deposit $10,000, and don’t touch that money for an entire year, you’ll earn $400 worth of simple interest on your principal deposit (about $408 if compounded daily).
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$50,000 in a big bank earning almost nothing
Interest earned in one year at a rate of 0.01%: $5
Earning $5 on a deposit of $50,000 is better than earning either nothing or $1 … but not by much, especially if you’re paying a monthly service fee just to keep the account.
$50,000 in a bank earning the national average rate
Interest earned in one year at the current national average rate of 0.46%: $230
There’s more than one reason to leave your savings untouched for as long as possible, but one is definitely that the more money you’re able to deposit, the higher your return will be.
At a fixed rate of 0.46%, you could earn $230 in one year or over $1,000 in five years with practically no effort required.
$50,000 in a competitive high-yield savings account
Interest earned in one year at the competitive rate of 4.00%: $2,000
Yes, you read that right. Depositing $50,000 into a low-interest savings account earns you around $5 — but depositing that same amount into a high-yield account with a different bank nets you $2,000 in simple interest alone (about $2,040 if compounded daily).
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$100,000 in a big bank earning almost nothing
Interest earned in one year at a rate of 0.01%: $10
The $10 of interest you earn by depositing $100,000 with a big bank demonstrates that it isn’t necessarily the amount of money you save that counts — it’s where and how you store that money.
And if increasing your saving ability is one of the main things you look for in a bank, just know that you’ll rarely find it with a big bank’s savings account.
$100,000 in a bank earning the national average rate
Interest earned in one year at the current national average rate of 0.46%: $460
$460 isn’t the highest amount you could earn on a $100,000 savings deposit, but it’s a respectable amount to earn over a year (especially compared to $10).
If your current bank or credit union offers interest rates around the national average and has a series of other perks for long-term customers, sticking with that bank might be a wise choice for your financial future.
$100,000 in a competitive high-yield savings account
Interest earned in one year at the competitive rate of 4.00%: $4,000
$4,000 (about $4,080 if compounded daily) is an incredible amount to gain by doing nothing more than depositing cash into an account.
That's precisely why looking into a high-yield savings account with a non-traditional bank could be the smartest move you make to boost your retirement savings.
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Bottom line
There are benefits to banking with a big bank, but a high interest rate on your savings account isn’t one of them.
No matter how much money you have in savings, it’s worth looking at different high-interest account options and seeing if you can make a little extra cash.
With the right interest rate, you can boost your bank account without spending a cent.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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