This Is How Much Money You Can Make With $20,000 in a High-Yield Savings Account

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

You’ll earn around $800 per year in interest if you put $20,000 in a HYSA today. But there might be better options. Keep reading to learn more. [[{“value”:”

Despite the Fed recently dropping its benchmark interest rate, high-yield savings accounts (HYSAs) are still a great place to park money you’re likely to need in the near future. Unlike stocks, which are at the mercy of market fluctuations, and certificates of deposit (CDs), which penalize you if you pull out your money before the term is up, high-yield savings accounts have virtually no risk and deliver a higher rate of return than traditional savings accounts from brick-and-mortar banks.

How much can you expect to make if you put your nest egg in a HYSA? Let’s look at the numbers.

You can earn $800 or more in 12 months if you put $20,000 in a HYSA

Interest rates have started to drop, but HYSAs are still offering solid annual percentage yields (APYs) between 4.00% and 5.00%, depending on which bank you choose. This means for every $10,000 you put in, you can earn around $400 per year; so $20,000 will earn you $800 in 12 months.

The average rate of return for the S&P 500 in 2024 so far is 15.44%, so you could earn a higher rate of return by investing. But those pesky market fluctuations mean you could also lose money over the short term.

The best place to put money you’re likely to need soon is in a HYSA in most cases. (This means your emergency fund, a house down payment if you’re planning to buy a home soon, or savings for a potential car repair.)

Not sure which savings account is right for you? Click here to learn more about our best high-yield savings accounts — and what APY you can expect.

What about the federal funds rate cut?

If you’ve been following financial news in any way, you’ve probably heard that the Federal Reserve recently cut its benchmark interest rate. That sounds like a big deal, and it is — but the actual percentage was pretty small. The Fed reduced the federal funds rate by 0.50 percentage points, from 5.33% to 4.83%.

Let’s look at what that looks like for $20,000 in a savings account:

The difference in interest earned between the new and old APYs is $100.

Keep in mind that the interest rate set by the Fed is higher than what most HYSAs offer — they tend to offer a few points less in interest. The Fed interest rate is generally closer to what you can expect to pay if you borrow money.

Consider other options to grow your savings faster

A high-yield savings account is the best place for your emergency fund and cash you plan to need in the next two to three years. The higher interest rate is a nice bonus, but it’s not always the best way to make the most of your savings.

For long-term savings, like retirement or sending the kids to college in 15 years, you’re better off opening a brokerage account and creating a diversified investment portfolio. Diversification reduces your risk by spreading it out over multiple types of investments. If you don’t plan to need the money soon, consider moving some of your savings from a HYSA to an investment account for higher long-term returns.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More