How much interest are you losing by keeping $10,000 in a traditional savings account?

We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms.

In today's unique economic climate, in which inflation is still sticky and borrowing costs remain elevated thanks to higher interest rates, there are multiple strategic moves to make to ensure that your money is protected and growing in the right interest-earning account type. But knowing what not to do right now is arguably as important as knowing what to do. All savings accounts aren't the same, after all, and where you ultimately elect to keep your money can be the difference between earning hundreds and potentially thousands of dollars versus earning just a few cents each month.

Take a traditional savings account as an example. With an average rate of just 0.38% now, savers aren't simply employing the wrong account type. They're essentially losing money by keeping their funds there versus a high-yield savings, certificate of deposit (CD) or money market account, all of which have interest rates that are exponentially higher. And a CD, in particular, guarantees a big return thanks to the account's fixed interest rate. This differential will be stark no matter the amount of money you have saved but it can be especially pronounced for those with larger, five-figure amounts such as $10,000.

To better clarify this differential, it helps to compare the interest-earnings of a $10,000 traditional savings account against the three alternatives outlined above. So, how much interest are you actually losing by keeping $10,000 in a traditional savings account? That's what we'll calculate below.

Start earning more interest on your money by opening a high-yield savings account now.

Interest earnings on savings accounts are calculated by using two primary figures: the interest rate tied to the account and the length of time in which it's maintained. While CDs have fixed rates that make interest earnings simple to calculate with precision, some speculation will be required with high-yield, money market and traditional savings accounts, all of which employ a variable rate.

Here's how much interest the first three can offer savers now, calculated against the top rates available for each, a one-year time frame and the assumption that rates stay the same and that no withdrawals are made:

By keeping $10,000 in the latter account type versus the former three, then, you will be losing between $342 and $379 over the next year. And, if rates on the other three rise during this period, this rate differential will grow even wider, though it's ha