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Want to boost your bank account balance? Stash your cash in a high-yield savings account. Find out how much interest you can earn with $2,500 in the bank. 

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You never know when an unexpected bill will come your way. That’s why keeping money in an emergency fund can be beneficial. If you have money set aside for emergencies, you should keep it in a high-yield savings account to maximize the interest you earn.

Do you want to know how much interest you can make with $2,500 in the bank? Below, I’ll explain how much you can earn with this sum in a high-yield savings account. It may be more than you realize!

Earn more interest with a high-yield savings account

Banks that offer interest-earning savings accounts use an annual percentage yield (APY) to describe the returns one can expect if they keep their money in their savings account for one year. It’s essential to pay attention to the APY that is offered.

Many brick-and-mortar banks offer low APYs for their savings account. Your local bank may offer as little as 0.01% APY. While you will earn some money, it won’t be substantial.

However, a high-yield savings account can offer much more. Many online banks offer 4.00% APY or higher for these accounts. How much money can you make by stashing $2,500 in a high-yield savings account? Let me show you.

$2,500 in savings generates this much in interest

To determine how much interest you’ll earn, multiply your initial deposit ($2,500) by the APY. This will show you how much you’d earn if you keep it all in your bank account for one year.

For the following calculations, I used a 0.01% APY for a standard savings account and a 4.50% APY for a high-yield savings account. The bank accounts on our best high-yield savings accounts list have APYs ranging from 4.15% to 5.05% — so I settled somewhere in between.

These calculations assume a $2,500 deposit with no additional deposits made to your account:

Account type Interest earned after one year Savings account, 0.01% APY $0.25 High-yield savings account, 4.50% APY $112.50
Source: Writer’s calculations

$112.50 sounds much better than $0.25 to me. Beyond opening a bank account with a higher APY, boosting your earnings potential takes no additional work. That’s a major win!

You can earn more with compound interest

The above calculations show how much interest you can earn, keeping $2,500 in the bank for one year. But you can earn even more thanks to compound interest, which is interest that you earn on interest. You can earn more interest by keeping your money in the bank for a long time.

To better illustrate the benefit of compound interest, I’ll show you how much money you’ll make if you keep your initial $2,500 deposit in a high-yield savings account for anywhere from one to five years.

Again, the following calculations assume you make no additional contributions after the initial deposit. You can earn even more if you continue to make deposits into your account.

Here’s a breakdown of the potential earnings:

Year Starting balance Interest earned Ending balance 1 $2,500 $112.50 $2,612.50 2 $2,612.50 $117.56 $2,730.06 3 $2,730.06 $122.85 $2,852.91 4 $2,852.91 $122.38 $2,981.29 5 $2,981.29 $134.16 $3,115.45
Source: Writer’s calculations

That’s $615.45 earned in five years, assuming the APY doesn’t change. It’s worth noting that APYs can change over time, so your APY likely won’t stay the same rate forever.

Take this one step to boost your savings account balance

You’re missing out on interest if you’re not keeping your money in a high-yield savings account. Make sure you’re getting rewarded for your hard work as you work to reach your savings goals. Opening a high-yield savings account is an easy way to maximize the interest you earn. Any extra money earned can make a significant difference in improving your personal finances.

These savings accounts are FDIC insured and could earn you 12x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 12x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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