PhotoAlto/Ale Ventura/GettyImages; Illustration by Hunter Newton/Bankrate
A savings account is often the best place to set aside money for emergencies and short-term financial goals. It offers easy access to your money, and some savings accounts today even earn interest rates that beat inflation.
Standard savings accounts typically earn a variable annual percentage rate (APY), which can fluctuate over time depending on economic conditions and interest rate increases or decreases by the Federal Reserve.
However, not all savings accounts are the same, as interest rates often vary widely between banks. Here we show you how much you can currently earn with a large sum of $100,000 per year in a high-yield savings account compared to lower-yield accounts.
For illustrative purposes, our example interest rates remain the same, although in reality many banks change their savings account interest rates once or more per year. Our examples also assume that no funds are deposited into or withdrawn from the account during the year.
| Type of savings account | Typical APY | Interest on $100,000 after 1 year | Total amount on the savings account after 1 year |
|---|---|---|---|
| Savings account with low interest rates | 4.60% | $4,600 | 104,600 USD |
| Savings account pays national average | 0.59% | $590 | 100,590 USD |
| Savings accounts at various large branch banks | 0.01% | $10 | 100,010 USD |
National average interest rate for savings accounts
The national average annual percentage rate for savings accounts is currently 0.59 percent as of August 19. If you have $100,000 in a savings account with that rate, you’ll earn about $590 after a year, for a total of $100,590.
- Account type: Savings account
- Total deposit amount: 100,000 US dollars
- APY: 0.59%
- Total interest after one year: $590
- Total account balance after one year: 100,590 USD
While that average APR of 0.59 percent is 59 times higher than the 0.01 percent that big branch banks often pay, it’s still less than eight times what you could earn with a highly competitive account.
Competitive interest rates on savings accounts
The best widely available high-interest savings accounts currently earn an annual interest rate of around 4.60 percent. A sum of $100,000 in an account with this interest rate will earn around $4,600 after a year, for a total of $104,600.
- Account type: Savings account
- Total deposit amount: 100,000 US dollars
- APY: 4.60%
- Total interest after one year: $4,600
- Total account balance after one year: 104,600 USD
You’re likely to find such high interest rates at online banks. Some very competitive accounts even earn an annual interest rate of 5 percent or more.
Savings account interest rates of major banks
Large banks with many branches often offer low interest rates, often close to 0 percent. If you keep a larger amount of money in such a savings account, you will only receive a fraction of the interest you would get in a competitive account.
A balance of $100,000 in an account with an annual percentage rate of just 0.01 percent will only earn you about $10 in interest after a year.
- Account type: Savings account
- Total deposit amount: 100,000 US dollars
- APY: 0.01%
- Total interest after one year: $10
- Total account balance after one year: 100,010 USD
Examples of banks with savings accounts that currently earn 0.01 percent annual interest are Chase Bank and Bank of America. A competitive yield of 4.60 percent is 460 times higher than such a rock-bottom yield.
Where to find the best high-yield savings account
It’s worth shopping around to find an account with the best return – especially if you’re depositing an amount up to $100,000. Accounts with high APYs can often be found at online banks like Bask Bank, CIT Bank, and Citizens Access.
Other features that may be important to you in a bank include fee-free ATM access, 24/7 phone customer support, and a highly rated mobile banking app. Don’t forget to make sure your money is in a federally insured bank or credit union.
Other accounts that beat inflation
These days, it’s not hard to find a savings account that beats the annual inflation rate, which is currently 2.9 percent. Certificates of deposit (CDs) are another type of account that can also earn returns that exceed the inflation rate. The best one-year CDs, for example, currently earn up to 5.25 percent annual interest.
Keep in mind, however, that paying taxes on savings account interest and CD interest eats into your earnings, reducing your overall return.
Conclusion
If you put $100,000 into a low-cost savings account, you might earn enough interest for a nice vacation in a year, while an account with a mediocre interest rate might not even earn you enough for a single dinner at a restaurant. You’ll thank yourself in a year for shopping around for the best interest rate.
–Freelance writer Allison Martin updated this article.
