High-Yield vs. Regular Savings
The gap between an ordinary savings account and a high-yield one is large. The FDIC's national average savings rate was 0.37% in September 2026, while the top accounts in Bankrate's survey paid about 4.00%. On $10,000 for a year, that's $37 of interest versus $400.
The FDIC weights its average by each bank's share of deposits, so the rates at the largest banks count the most. Most of the top-paying accounts in Bankrate's survey are at online banks.
How Much Interest Each Balance Earns
At 4.00% APY, with no further deposits:
| Balance | First month | One year | One year at 0.37% |
|---|---|---|---|
| $5,000 | $16 | $200 | $19 |
| $10,000 | $33 | $400 | $37 |
| $25,000 | $82 | $1,000 | $93 |
| $50,000 | $164 | $2,000 | $185 |
| $100,000 | $327 | $4,000 | $370 |
When the Rate Changes
A high-yield savings rate isn't locked in. Banks adjust it as market rates move, including after the Federal Reserve changes its benchmark rate. Leaving $20,000 for three years at 4.00% earns $2,497. If the rate falls a full point after the first year, it earns $2,067, $431 less. Use the "APY after the first year" box to try your own scenario.
If you want a guaranteed rate for money you won't need for a while, a CD locks it in. The best 1-year CDs paid 4.30% on September 24, 2026. The CD calculator shows what a term earns and what breaking it early would cost.
Taxes on Savings Interest
Interest is taxed as ordinary income in the year it's paid, federally and in most states. Banks send Form 1099-INT when you earn $10 or more in a year, but all of it is taxable either way. Because the tax comes due every year, a 22% federal bracket turns a 4.00% APY into about 3.12% after federal tax.
Frequently Asked Questions
How much interest will $10,000 earn in a high-yield savings account?
About $400 in a year at 4.00% APY, or roughly $33 a month. At the national average savings rate of 0.37% it would earn about $37.
Are high-yield savings rates fixed?
No. The rate is variable, and the bank can change it at any time. Savings rates generally rise and fall with the Federal Reserve's interest rate decisions. A CD is the way to lock in a rate for a set term.
Is interest from a high-yield savings account taxable?
Yes. It's taxed as ordinary income in the year it's paid to you, at your federal rate and, in most states, your state rate. Banks send Form 1099-INT when you earn $10 or more, but the IRS says to report all interest even if no form arrives.
Are high-yield savings accounts safe?
At an FDIC-insured bank, deposits are insured to at least $250,000 per depositor at each bank; credit unions have the same coverage through the NCUA. Many of the highest rates come from online banks, and their deposits carry the same FDIC coverage as a branch bank's.
Should I choose a high-yield savings account or a CD?
A CD locks a rate for a set term; the best 1-year CDs paid 4.30% on September 24, 2026, but breaking one early costs a penalty. A high-yield savings account pays a little less and can change, but you can withdraw anytime. Money you might need soon, like an emergency fund, belongs in savings; money with a known date can earn more in a CD.
Is there a limit on withdrawals?
Federal rules used to limit savings accounts to six convenient withdrawals or transfers a month. In April 2020 the Federal Reserve let banks stop enforcing that limit. Check your account terms for any limits or fees your bank sets.