Photo by Alto/Ale Ventura/GettyImages; Illustration by Hunter Newton/Bankrate
A savings account is a great place to set aside money for emergencies or short-term financial goals. They give you easy access to your funds, and some even offer interest rates that exceed inflation.
A standard savings account typically offers a variable annual percentage yield (APY), which can fluctuate over time depending on economic conditions and whether the Federal Reserve raises or lowers interest rates.
However, not all savings accounts are created equal, as interest rates often vary widely from bank to bank. Here, we compare high-yield vs. low-yield savings accounts to show you how much you could earn if you put aside $100,000 right now in a year.
For illustration purposes, this example assumes that the interest rate remains the same, but in reality many banks change their savings interest rates at least once a year, and this example assumes that no money is added to or withdrawn from the account during the year.
| Types of regular savings accounts | Typical APY | $100,000 in interest after one year | Total amount in savings account after one year |
|---|---|---|---|
| Competitive interest savings accounts | 4.60% | $4,600 | $104,600 |
| Savings account payments are the national average | 0.59% | $590 | $100,590 |
| Regular savings accounts at various major brick-and-mortar banks | 0.01% | 10 dollars | $100,010 |
National average savings account interest rate
The national average APY on savings accounts is 0.59 percent as of August 19. If you put $100,000 in a savings account at that rate, you’ll earn about $590 in interest after one year, for a total of $100,590.
- Account type: Regular savings account
- Total Deposit: $100,000
- Annual interest rate: 0.59%
- Total interest after one year: $590
- Total account balance after one year: $100,590
This average APY of 0.59 percent is 59 times the 0.01 percent that large brick-and-mortar banks often pay, but it’s still less than eight times what you’d get in a highly competitive account.
Competitive savings interest rates
Most widely available high-yield savings accounts currently offer an annual interest rate of about 4.60 percent. If you put $100,000 in an account with that rate, after one year you’ll earn about $4,600 in interest, for a total of $104,600.
- Account type: Regular savings account
- Total Deposit: $100,000
- Annual interest rate: 4.60%
- Total interest after one year: $4,600
- Total account balance after one year: $104,600
You’re more likely to find these high interest rates with online banks, with some of the most competitive accounts offering annual interest rates of 5 percent or more.
Major banks’ regular deposit interest rates
Larger banks with significant branch footprints tend to offer low interest rates close to 0%, so if you put a large amount of money in such a savings account, you’ll only earn a fraction of the interest you would get from a more competitive account.
If you put $100,000 in an account that pays 0.01 percent annual interest, after a year you’ll only earn about $10 in interest.
- Account type: Regular savings account
- Total Deposit: $100,000
- Annual interest rate: 0.01%
- Total interest after one year: 10 dollars
- Total account balance after one year: $100,010
Examples of banks that currently offer savings accounts with an annual interest rate of 0.01 percent include Chase and Bank of America. A competitive 4.60 percent yield is 460 times higher than the lowest such yield.
Where to Find the Best High Yield Savings Accounts
It’s a good idea to look for an account that offers the highest interest rate, especially if you’re putting away a large sum like $100,000. High APY accounts can often be found with online banks like Bask Bank, CIT Bank, and Citizens Access.
Other features that may be important in a bank include fee-free ATM access, 24/7 customer phone support, and a highly-rated mobile banking app. Don’t forget to make sure your funds are deposited with a federally insured bank or credit union.
Other accounts that outperform inflation
These days, it’s not hard to find savings accounts that beat the annual inflation rate (currently 2.9%). Certificates of Deposit (CDs) are another type of account that can potentially earn you an above-inflation rate yield. For example, the best one-year CDs currently earn up to 5.25% APY.
But keep in mind that paying taxes on savings account interest and CD interest will eat into your earnings, reducing your overall return.
Conclusion
$100,000 in a competitive savings account could earn you enough interest to buy a nice vacation in a year, but one with a low interest rate wouldn’t even cover one meal out. In a year, you’ll be glad you shopped around for the best rate.
–Freelance writer Allison Martin This article has been updated.
