Here's How Much Interest You Can Earn on $10,000 in Savings

Image source: The Motley Fool/Upsplash

If you have $10,000 to your name, you're in great shape. Only 38% of U.S. adults report having money in a savings account for emergencies, according to New York Life's latest Wealth Watch survey from June.

But if you have $10,000, you have a prime opportunity to grow it with interest. Here's the amount of interest you may be able to earn, depending on where you put your cash.

When you choose a savings account

There are two main drawbacks to choosing a savings account for your $10,000. The first is that a CD might pay you more. The second is that while CD rates are set in stone, savings account rates aren't.

You may be earning a 4.50% APY on your savings account now. But if the Federal Reserve starts cutting rates -- which it's likely going to do at least once before the end of the year -- then the APY on your savings account could fall.

Now the rate on your savings account is unlikely to plummet overnight. But you can't bank on a specific savings account APY, ever. The only way to guarantee yourself a specific amount of interest on your money for a set period of time is to open a CD.

On the other hand, a savings account gives you one big benefit -- flexibility. Because you're not committed to keeping your money in the bank, you don't have to worry about early withdrawal penalties if you end up needing to take your cash out and use it.

So, let's say your savings account has a 4.50% APY and it doesn't drop in the next 12 months. That means your $10,000 deposit could earn you $450.

But let's say your 4.50% APY only lasts for three months before it falls to 4.00% for the next nine. That means you're looking at earning $112.50 over your first three months, and $300 over the remaining nine months. That's $412.50 in total.

When you choose a CD

As mentioned above, the nice thing about opening a CD is getting to lock in a guaranteed interest rate on your money. A CD is a good bet if you're sure you won't need your cash for emergency expenses, but you're also not saving for a goal that's too far off. For something like retirement that's decades away, investing your money in stocks is a better bet.

You should also make sure to read your CD's disclosures before opening one. That'll tell you what penalty you may be charged for an early withdrawal.

Many 12-month CDs are paying APYs of 5.00% today. If you open one with $10,000, you can earn $500 in interest. As you can see, that's a bit more than what you might get out of a savings account. So you'll need to decide whether the extra money is worth giving up the flexibility to take your cash out of the bank on a whim.

All told, today's interest rate environment is great for people with money in the bank. Just make sure to choose your account wisely, and then get ready to count your extra cash.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy .