How much can a $20,000 high-yield savings account earn this August?

High-yield savings accounts have many attractive features for savers, especially in recent years. When inflation and higher interest rates eroded the purchasing power of the dollar, savers were better able to balance those losses with returns on high-yield savings accounts. Even now, with rates on traditional savings accounts comfortably below 0.50%, savers can find high-yield savings account rates over 4% and higher. Unlike popular certificate of deposit (CD) accounts, high-yield savings accounts won’t require savers to forego access to their money, as they can still earn a high rate while still making their usual cycle of deposits and withdrawals.

This type of savings account, then, becomes a natural home for larger amounts of money. To better justify depositing a large, five-figure amount like $10,000 or $20,000, however, savers may first want to calculate their interest-earning potential. But that may be a bit tricky to do with a high-yield savings account opened this August. Below, we’ll crunch the numbers and explain why determining the precise interest earnings over time is impossible to do with precision.

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How much can a $20,000 high-yield savings account earn this August?

High-yield savings accounts have variable interest rates, making calculating the interest-earning capabilities impossible to do with precision. So, inevitably, the interest you can earn with a $20,000 deposit will change over time. That means, potentially, less interest in the upcoming months if high-yield savings account rates decline alongside a reduced federal funds rate, but it could also mean more interest if rates tick up again if the inflation battle continues. 

Here, then, is what a $20,000 high-yield savings account can earn over time, tied to a readily available interest rate and the assumption that rates will remain constant:

• $20,000 high-yield savings account at 4.35% after three months: $214.04
• $20,000 high-yield savings account at 4.35% after six months: $430.37 
• $20,000 high-yield savings account at 4.35% after nine months: $649.01
• $20,000 high-yield savings account at 4.35% after one year: $870.00

Even after just three months, savers can earn hundreds of dollars with a high-yield savings account at today’s rates and close to $900 after one year, assuming rates remain around the same point. Still, there’s no guarantee here. So if you don’t want to give up access to your money but want to earn as much interest as you can while the rate climate remains elevated, it makes sense to get started with a high-yield savings account as soon as you can.

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The bottom line

A $20,000 high-yield savings account comes with attractive returns for savers at today’s rates. That said, today’s rates are unlikely to be tomorrow’s and those are highly unlikely to be the same in September, October, November and beyond. With interest rate cuts appearing imminent (the CME Group’s FedWatch tool has a cut for September forecast at a more than 95% likelihood) and, thus, the returns savers can earn are poised to fall, too, it makes sense to be proactive. It may be a long time before you can earn this much interest with a high-yield savings account again.