Saving $10,000 is a huge milestone, and it's worth celebrating. That kind of money can solve a lot of problems. But it also raises some important questions, like where's the best place to keep that kind of cash?
A savings account might seem like the obvious option, but it's not always the best move. Here's what you need to know to decide if it's right for your money.
Benefits of keeping your $10,000 in a savings account
First things first: There's nothing wrong with keeping $10,000 in a savings account. If you're working with a reputable bank, your money will have Federal Deposit Insurance Corporation (FDIC) insurance up to $250,000 per person per account ($500,000 for joint accounts). This protects your money even if the bank fails. So there's no risk of loss as long as you protect your personal and banking information.
Keeping your money in a savings account can also help you earn interest over time. Interest rates vary depending on economic conditions. Currently, they're pretty high, with some of the best high-yield savings accounts offering rates exceeding 4.50%. That could earn you $450 or more in a year with a $10,000 initial deposit.
Our Picks for the Best High-Yield Savings Accounts of 2024
Capital One 360 Performance Savings 
APY 4.25% Rate infoSee Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY)is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening. Open Account for Capital One 360 Performance Savings OnCapital One'sSecure Website. Member FDIC. | APY 4.25% Rate infoSee Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY)is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening. | Min. to earn $0 |
CIT Platinum Savings
APY 4.85% APY for balances of $5,000 or more Rate info4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY Min. to earn $100 to open account, $5,000 for max APY Open Account for CIT Platinum Savings OnCIT'sSecure Website. Member FDIC. | APY 4.85% APY for balances of $5,000 or more Rate info4.85% APY for balances of $5,000 or more; otherwise, 0.25% APY | Min. to earn $100 to open account, $5,000 for max APY |
American Express® High Yield Savings
APY 4.25% Rate info4.25% annual percentage yield as of September 12, 2024 Open Account for American Express® High Yield Savings OnAmerican Express'sSecure Website. Member FDIC. | APY 4.25% Rate info4.25% annual percentage yield as of September 12, 2024 | Min. to earn $0 |
Using a savings account keeps your money accessible as well. This is extremely important if that $10,000 is part of your emergency fund or is for a large purchase you plan to make in the next couple of years. You usually don't want to invest this money because markets can be unpredictable in the short term. If you need to withdraw your cash when your investments are down, you'd have to settle for a loss. A savings account enables you to withdraw your money worry-free at any time.
The drawback to keeping your $10,000 in a savings account
Though savings account interest rates are high right now, they aren't guaranteed to stay that way. And even the best savings accounts probably won't earn you as much as investing would over the long term.
A certificate of deposit (CD) might be a better choice if you're worried about savings account interest rates falling throughout 2024. CDs give you a guaranteed interest rate for the entire term, which could be anywhere from a few months to several years, depending on the CD you choose. If you lock in a high CD rate now, you could potentially earn more in interest with one of these accounts than you could with a savings account over the next few years.
But you should note that you typically cannot touch money in a CD until the end of the CD term. If you access yours early, you'll usually pay a penalty equal to several months of lost interest. So it's not the right place for your emergency fund or cash you plan to use before the CD term ends.
Investing your savings is another option, but as mentioned above, market volatility makes this a poor choice for the money you plan to use soon. It can be a great option, though, for money you don't expect to use for years. The -- one of the most popular market indexes -- has a compound average annual growth rate of 10.7% over the past 30 years.
If you invested your $10,000 and it earned about 10% per year over the next 10 years, you'd wind up with close to $26,000. No savings account will earn you that much over that time.
It doesn't have to be all or nothing
There are pros and cons to all of the above options. If you're not comfortable putting all your eggs in one basket, consider spreading your money around. Keep some in a savings account and put the rest in a CD, brokerage account, or retirement account. This can help you earn higher yields while also keeping some of your cash readily accessible. Think through all your options and go with the approach that you're most comfortable with.
FAQs
The median balance for all transaction accounts (checking accounts, savings accounts, money market accounts, call accounts, and prepaid credit cards) is just $8,000, according to the Federal Reserve's Survey of Consumer Finances. So, if you have $10,000 saved up, you're ahead of the curve.
How much money is too much to keep in your savings account? ›
Gaines reiterates that even most high-yield savings accounts lose value to inflation over time. “More than two months' worth of living expenses in a savings account is too much given the ability to earn around 5% from easily accessible money market accounts that should not fluctuate in price.”
What is considered a good amount in savings account? ›
You should keep enough money in checking to cover your monthly bills with some wiggle room – about a month of expenses. That's much lower than the three to six months' worth of expenses you should keep in your savings account for emergencies. Read: Best Checking Accounts.
How much money does the average person keep in their savings account? ›
According to the Federal Reserve's 2022 Survey of Consumer Finances (SCF), Americans' average (mean) household savings account balance is $62,410. However, the median savings account balance of $8,000 might be a more accurate representation.
What percentage of Americans have $10,000 in savings? ›
Majority of Americans Have Less Than $1K in Their Savings Now
| How Much Do Americans Have in Their Savings Accounts? | | |
|---|
| $501-$1,000 | 11.30% | 12.58% |
| $1,001-$2,000 | 10.60% | 9.81% |
| $2,001-$5,000 | 10.60% | 10.64% |
| $5,001-$10,000 | 9.20% | 9.51% |
4 more rowsMar 27, 2023
The best place to invest 10k includes different types of tax-free investments, such as pensions, stocks and shares ISAs and lifetime ISAs. You can choose what to invest in within these products. Each tax-free investment type comes with an annual allowance, and you choose how to invest your ISA allowance.
What's the most money you should keep in a savings account? ›
Most financial experts suggest you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000.
What is a safe amount to keep in savings? ›
Many personal finance experts recommend saving at least three to six months' worth of expenses.
Is it safe to keep a large amount in a savings account? ›
Quite the contrary, having extra money in a savings account can provide a sense of financial security and stability. Savings accounts are low-risk and easily accessible, making them an attractive option for individuals who want to keep their money safe while earning some interest.
Is $20,000 a good amount of savings? ›
Depositing $20,000 in a savings account is wise when you have a plan for the money, such as a near-term expense or rainy day fund. For long-term goals, like retirement, you might be better served by opening a brokerage account or certificate of deposit (CD).
Reserve 20% of your income for savings, including contributing to retirement funds and building an emergency fund. This ensures you are prepared for unexpected expenses and can work towards your long-term financial goals.
How much is too much to put in savings? ›
At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.
How many people have $1000 in their savings account? ›
Key Takeaways. More than one in four Americans (28%) have savings below $1,000. This is the case for 32% of Gen Zers, followed by Millennials at 31%, Gen X at 27% and Baby Boomers at 20%.
Should you keep a lot of money in your savings account? ›
Generally, experts recommend saving three to six months' worth of living expenses in an emergency fund. Ginty, however, suggests that people with children or dependents save more than that. “If you're a single parent, I'd recommend at least six months, but somewhere between six and 12 months.
Is 100000 too much to have in a savings account? ›
While $100,000 is a lot to have in your savings account, it could be the right move if you need that much for your emergency fund and upcoming savings goals. If you want to buy a house, then you may need that much or more saved for a down payment and other costs of homeownership.
Is 10k good for a savings account? ›
There's nothing wrong with keeping $10,000 in a savings account. But it might not earn you the highest yields. CDs and brokerage accounts could be better homes for your cash in some situations.
Is $10,000 considered a lot of money? ›
For most, $10,000 is a lot of money. Typically, that amount of money doesn't just appear out of thin air without some financial strain. However, if you think about $10,000 as saving a little over $27 each day, it becomes much more realistic.
How much interest will I get on $10,000 a year in a savings account? ›
According to data from the FDIC, the average savings account earns 0.46% APY. Currently, however, the best high-yield savings accounts offer APYs of around 5.00%. If you deposit $10,000 into one of these high-yield savings accounts, you'll earn $500 in interest in a year.
What is a lot of money to have in savings? ›
Most financial experts suggest you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000.
