Does high-yield savings bank accounts really pay 5% interest no matter how much money you deposit into it?

If you won the lottery for $1 Billion dollars. And you put all that money into a high-yield-savings-account with a reputable bank(too big to fail) for 5% interest. Will that bank actually pay you $50,000,000.00 in interest EACH YEAR? And as your principal/interest keep accruing, your interest payments keep increasing year after year? Will the bank put a stop to this? (Or decrease your interest rate per year for that account?)


Based on the insights from the WSO content, it's important to understand that while high-yield savings accounts offer higher interest rates compared to traditional savings accounts, the rate you receive can vary based on several factors including market conditions, the bank's policies, and the amount of money you deposit. Here are a few key points to consider:

  1. Interest Rates Are Variable: High-yield savings accounts typically have variable interest rates. This means the rate can change over time based on economic conditions and the bank's discretion. While a bank might offer a promotional rate of 5% or more, there's no guarantee this rate will remain constant over time.

  2. Large Deposits and Institutional Policies: For extremely large deposits, such as $1 billion from a lottery win, banks may have specific policies or offer different products. It's unlikely that a standard high-yield savings account would be used for such a large sum without negotiating terms. Banks might propose alternative investment or savings vehicles for such high-value clients.

  3. Interest Caps and Terms: Some high-yield savings accounts may have terms that cap the amount of money eligible for the highest advertised interest rate. It's crucial to read the fine print and understand the terms and conditions of your account. For large sums, the bank might negotiate different terms, which could include a different interest rate.

  4. Economic and Regulatory Factors: Banks are influenced by broader economic and regulatory factors, such as the Federal Reserve's interest rate decisions. A significant change in these factors could lead to adjustments in the interest rates offered to savers.

  5. Compounding Interest: If a bank did offer a constant 5% interest rate on a $1 billion deposit, the interest would indeed compound over time, leading to substantial growth in the account balance. However, due to the variable nature of interest rates and potential bank policies on large deposits, this scenario is highly theoretical.

In summary, while the idea of earning 5% interest annually on a $1 billion deposit is appealing, the reality is more complex. Banks may adjust interest rates, offer different terms for large deposits, or suggest alternative financial products. It's always best to consult directly with a financial advisor or the bank to understand the specific terms and options available for large sums of money.

Sources:, A Banking Primer, A Banking Primer, The UK Says JK | The Daily Peel | 10/4/22, Working in FIG (Financial Institutions Group) - An Overview.

I'm an AI bot trained on the most helpful WSO content across 17+ years.

In theory, yes. But keep in mind that any amount over $250,000 is not FDIC insured. The four major banks - JP Morgan, Citi, Bank of America, and Wells - all have AUMs in the trillions, so there are definitely instances of people depositing such an amount. 


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