How much interest can you earn on $50,000 in one year? (2024)

When it comes to managing your finances, maximizethe return on your savingsis crucial. Whether you're saving for a rainy day, a future purchase, or retirement, you want to make your money work for you.

And now is a good time to do that, as the Fed's recent rate hikes have created big opportunities for savers. At this point, it's not uncommon to find interest-bearing accounts offering promotionsAPYs of 5.5% or moreon your money. This is especially true fora little online, because these banks have lower overhead costs than brick-and-mortar banks, and the savings are passed on to customers in the form of higher rates.

Still, it is important to know exactly how much you can earn with your money if it is deposited into one of these accounts. So how much interest can you earn over the course of a year if you deposit $50,000 into one of these accounts – and what are the best account options to consider?

Discover your best savings options here and start earning more interest.

How much interest can you earn on $50,000 in one year?

In general, there are two low-risk account options that currently offer the highest interest on your savings:Deposit slips(cd's) onesavings accounts with high returns. Both are good options to consider, but there are a few differences to keep in mind before calculating potential interest income:

Deposit slips

CDs are a low-risk investment option offered by banks and credit unions. They offera fixed interest ratefor a specific period, which usually varies from several months to several years. With a fixed interest rate you always receive the same interest on your moneyCD term, regardless of what happens to the broader rate environment. It can be an attractive option if you are concerned about a drop in interest rates in the near future.

The interest rate on a CD is also usually higher than that of a bondordinary savings account- especially now. In today's increased speed environment, the APYs can be on CDsas high as 6%(or in some casesmore), and short-term CDs offer some of the highest prices available today.

However, it is important to note that most CDs require you to leave your money in the account for the entire term. In this case, you must agree to leave your money untouched for 12 months; otherwise you would probably be confrontedearly withdrawal penalties, which could affect your earnings.

Find the best prices you can get for your savings here.

Savings accounts with high returns

High-yield savings accounts are another way to earn interest on your savings while keeping your money readily available. Unlike CDs, you can deposit or withdraw money at any time. AndAPYs on high-yield savings accountscan be as much as 5.5% or more, so now is a good time to consider opening this type of account with your $50,000.

However, interest on high-interest savings accounts can vary from account to account – and rates are usually variable. This means that rates can increase or decrease based on the overall rate environment. It can be a good thing when interest rates rise, but when interest rates fall, the interest on your high-yield savings account goes down, and in return, you earn less interest on your money.

The potential earnings on a $50,000 deposit

Now let's see how much interest you can earn in a year on $50,000 at different interest rates:

• 4,25% APY:If you invest your $50,000 in a CD or high-yield savings account with an interest rate of 4.25%, you will earn $2,125 in interest in a year.
• 4,5% APY:A 4.5% CD or high-yield savings account earns $2,250 in interest on your $50,000 investment in one year.
• 4,75% APY:If you choose a 4.75% CD or high-interest savings account, you'll earn $2,375 in interest over the course of a year.
• 5% APY:With a 5% CD or high yield savings account, your $50,000 will earn $2,500 in interest within a year.
• 5,25% APY:A 5.25% CD or high interest savings account will earn you $2,625 in interest in a year.
• 5,5% APY:If you choose a 5.5% CD account or a high-yield savings account, it will earn $2,750 in interest annually on your $50,000 investment.
• 5,75% APY:A 5.75% CD or high yield savings account will earn you $2,875 in interest in a year.
• 6% APY:The highest rate on our list, a 6% CD or high-yield savings account, will earn $3,000 in interest over a year.

In short

Earning interest on your savings is a smart way to put your money to work for you, and the amount you can earn varies depending on the interest rate, deposit amount, and savings vehicle you choose. CDs offer a fixed interest rate for a set term, while high-yield savings accounts offer more flexibility. The interest you can earn per year on €50,000 can range from €2,125 to €3,000, depending on the interest rate.

Ultimately, your choice between CDs and high-yield savings accounts should fit your financial goals and your need for liquidity. But regardless of your choice, both options offer a safe and reliable way to earn interest on your savings.