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If you've worked hard to build an emergency fund and have a few thousand dollars saved up, you may be looking for the best place to keep your money. Stashing extra cash in a high-yield savings account is an excellent strategy because you can earn interest.
Earning money from interest is an easy way to boost your bank account balance without doing extra work. Let's do the math to see how much you can earn in interest with $3,000 in a high-yield savings account.
Earn more with a high-yield savings account
A high-yield savings account is a savings account that offers a higher interest rate than a traditional savings account. Many of the bank accounts on our best high-yield savings accounts list have generous APYs.
Keeping your money in these accounts could earn you a sizable amount of extra cash. Rates vary by bank account and can change at any time, but the best high-yield savings accounts currently have APYs of 4% or more. And you'll often find the highest rates offered by online banks.
We took a few current rates offered by banks on our best high-yield savings account list and did the math so you could see how much interest you can earn by keeping $3,000 in a high-yield savings account for one year.
| Starting balance | APY | Interest earned in one year | Balance after one year |
|---|
| $3,000 | 4.65% | $139.50 | $3,139.50 |
| $3,000 | 5.26% | $157.80 | $3,157.80 |
| $3,000 | 5.31% | $159.30 | $3,159.30 |
Data source: Author's calculations
As you can see, paying attention to the APY offered by your bank is beneficial. A higher rate will result in you earning more interest in the long run. It's also advantageous to keep your extra savings in the bank long-term.
Of course, if you need to use some of your savings for an emergency expense, you should. It's better to use your saved cash than rack up credit card debt. But unless you have a use for your extra savings right now, it's best to keep it in the bank to maximize the interest you earn.
Pay attention to APYs
If you're keeping your savings in a traditional savings account, like one offered through your local bank, you're likely earning less interest. According to the FDIC, the average savings account interest rate was 0.45% APY as of July 15, 2024.
That's a much worse rate than what many of the best high-yield savings accounts offer now. We did the math to show you what you'd earn after one year with $3,000 in a bank account with 0.45% APY:
| Starting balance | APY | Interest earned in one year | Balance after one year |
|---|
| $3,000 | 0.45% | $13.50 | $3,013.50 |
Data source: Author's calculations
As you can see, you'll earn more by keeping your savings in a high-yield savings account. Opening an online bank account is easy, and you can do it anytime.
Earn more with regular contributions
You can earn more interest by making regular contributions. After depositing your initial $3,000, you can add more money to your bank account. Over time, the interest you earn will increase. Even contributing $20 or $50 a month can make a difference.
To make saving easier, we recommend automating the process. You can log into your bank's website or mobile app to set up automatic transfers from your checking account to your high-yield savings account so money is regularly contributed to your account. This strategy may help you stay on top of your savings goals.
Maximize the interest you earn
Now you know where to keep your extra savings. Whether you have $500, $1,000, $3,000, $5,000, or $10,000 saved, any interest earned is a win for your wallet. Ensure you maximize your interest earnings with a high-yield savings account.
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