The difference between parking $1 million in a default savings account and making one informed move with that money is worth more than $40,000 a year right now. That is not a projection or a hypothetical. It is the gap between the lowest- and highest-paying options available to ordinary savers and investors in early 2026, based on published rates from federal agencies and market data.
Below is a concrete breakdown of what $1 million actually earns across the most common vehicles, with verified numbers and the tradeoffs that come with each.
Savings accounts: the baseline
The FDIC national rate data for January 2026 puts the national average savings account rate at traditional brick-and-mortar banks between 0.01% and 0.10% APY. Some individual traditional banks pay slightly above this range, but the national average sits squarely in that band. On $1 million, that works out to between $100 and $1,000 a year. To put that in perspective, a single month of groceries for an average American household costs more.
High-yield savings accounts at online banks tell a very different story. According to rate aggregators tracking FDIC-insured institutions, many online banks have been offering rates in the 4.00% to 4.50% APY range in early 2026. At 4.25%, $1 million generates $42,500 per year. That is real, spendable income, but it comes with a caveat: these rates are variable and move with the federal funds rate. They can drop with little notice.
There is also an insurance question. FDIC coverage caps out at $250,000 per depositor per insured bank. Anyone with $1 million in cash typically spreads it across four or more institutions to stay fully covered.
Certificates of deposit
CDs remove the guesswork. You lock in a fixed rate for a set term, and that rate holds regardless of what the Fed does next. The FDIC’s January 2026 national averages for CDs at traditional banks lag behind what online banks and credit unions offer, which is typical.
A competitive 1-year CD from an online issuer has been available in the 4.25% to 4.50% APY range in early 2026. At 4.40%, $1 million locked into a 1-year CD produces $44,000 in interest over 12 months. Longer terms (3-year, 5-year) may carry slightly different rates depending on where markets expect interest rates to head, but the core appeal is the same: certainty.
The tradeoff is liquidity. Pulling money out before maturity triggers an early withdrawal penalty, which varies by bank but can eat into several months of interest. Brokered CDs, purchased through a brokerage account, offer a workaround: they can be sold on the secondary market before maturity, though at a potential loss if rates have risen since purchase. They sometimes carry slightly higher yields than direct-issued bank CDs as well.
Treasury securities
U.S. Treasury securities carry the full faith and credit of the federal government, which makes them the benchmark for “risk-free” income. The Treasury Department publishes daily yield curve rates covering everything from 4-week bills to 30-year bonds.
In early 2026, short-term Treasury bills (3-month to 1-year maturities) have been yielding 4.1% to 4.4%. A $1 million position in 1-year T-bills at 4.30% produces about $43,000 in annual income. Move further out on the curve and the numbers shift: 10-year Treasury notes have been yielding in the 4.3% to 4.6% range, which translates to $43,000 to $46,000 per year on $1 million. The 30-year bond has offered slightly more yield, but it carries substantially more interest-rate risk for anyone who might need to sell before maturity.
There is a tax angle here that matters. Treasury interest is exempt from state and local income taxes. For someone living in a high-tax state like California or New York, that exemption can add hundreds or even thousands of dollars in after-tax value compared to a CD or savings account paying a similar nominal rate.
For investors worried about inflation eroding their returns, Treasury Inflation-Protected Securities (TIPS) adjust their principal based on the Consumer Price Index. The Treasury’s real yield curve shows what investors earn above inflation. When the real yield is positive, your purchasing power is growing. When it is negative, inflation is quietly eating into your returns even as interest payments arrive.
Savings bonds: I bonds and EE bonds
Series I savings bonds carry a composite rate of 4.03%, effective from November 1, 2025, through April 2026, according to TreasuryDirect. On $1 million, that rate would theoretically produce $40,300 per year. But here is the catch: individual electronic I bond purchases are capped at $10,000 per person per calendar year. A married couple filing jointly can buy $20,000 combined, plus an additional $5,000 per person in paper bonds purchased with a tax refund. Nobody is putting $1 million into I bonds in a single year.
The I bond rate resets every six months based on updated inflation data, as detailed on the TreasuryDirect rate-setting page. The next reset is scheduled for May 2026, and the new composite rate will depend on CPI readings that have not yet been published. The fixed-rate component stays locked for the life of the bond, but the inflation component can push the overall rate higher or lower with each reset.
Series EE bonds are a different animal. They currently pay a fixed rate of 2.50%, which on $1 million (hypothetically) would mean $25,000 per year. That looks unimpressive next to a CD or T-bill, but EE bonds come with a unique guarantee: if held for 20 years, the Treasury adjusts the value so the bond has doubled, effectively guaranteeing a minimum annualized return of about 3.5% regardless of the stated fixed rate. That makes them a long-horizon play, not a short-term income tool.
Dividend-paying stocks
Equities introduce a fundamentally different kind of math. Unlike savings accounts, CDs, and Treasuries, dividend income from stocks is not guaranteed, and the value of your principal moves every trading day.
The S&P 500, as a broad benchmark, has carried a trailing dividend yield of 1.2% to 1.4% in early 2026 based on index data published by S&P Dow Jones Indices. At 1.3%, a $1 million investment spread across the index would generate about $13,000 per year in dividends. That is far less current income than a Treasury bill or high-yield savings account. But dividend investors are typically playing a different game: they are counting on capital appreciation and rising payouts over time, not maximizing today’s cash flow.
Individual stocks can push yields much higher. Sectors like utilities, real estate investment trusts (REITs), and energy partnerships commonly yield 3% to 6% or more. A $1 million portfolio concentrated in high-yield dividend stocks at a 4% average yield would produce $40,000 a year in income, rivaling a CD. The risk, of course, is that stock prices can fall and companies can cut dividends, especially during recessions. Higher yields often signal slower growth or elevated risk.
There is a meaningful tax advantage, though. Qualified dividends from U.S. stocks are taxed at long-term capital gains rates: 0%, 15%, or 20% depending on taxable income. That is generally lower than the ordinary income tax rate applied to savings account interest, CD interest, and most Treasury income. For a high-income investor, the after-tax difference can be substantial.
The full comparison, side by side
Here is what $1 million earns annually across each vehicle, using rates available in early 2026:
- Traditional savings account (FDIC national average): $100 to $1,000 per year
- High-yield savings account (4.00% to 4.50% APY): $40,000 to $45,000 per year (variable rate, not locked in)
- 1-year CD at a competitive online bank (4.25% to 4.50% APY): $42,500 to $45,000 per year (fixed for the term)
- 1-year Treasury bill (4.1% to 4.4%): $41,000 to $44,000 per year
- 10-year Treasury note (4.3% to 4.6%): $43,000 to $46,000 per year
- Series I savings bonds (4.03% composite rate): $40,300 per year (subject to $10,000 annual purchase cap and semiannual rate resets)
- S&P 500 dividend yield (1.2% to 1.4%): $12,000 to $14,000 per year (plus potential capital gains or losses)
The spread between the worst option and the best fixed-income choices exceeds $40,000 a year on the same $1 million. That is the cost of inertia.
What shifts these numbers from here
The federal funds rate, tracked by the Federal Reserve Bank of St. Louis, is the single biggest lever affecting savings, CD, and short-term Treasury yields. If the Federal Reserve cuts rates later in 2026, high-yield savings accounts and new CD offerings will pay less. If rates hold steady or rise, current yields could persist or improve. As of spring 2026, the Fed has signaled caution but has not committed to a specific path for the rest of the year.
Inflation is the other variable that matters most. A 4.3% nominal yield on Treasuries loses real purchasing power if inflation runs at 4% or higher. TIPS and I bonds offer built-in protection, but their inflation adjustments arrive with a lag, and the CPI readings that drive those adjustments can surprise in either direction.
For dividend investors, corporate earnings and broader economic conditions will determine whether companies maintain, raise, or cut their payouts. A slowdown would pressure dividend growth across many sectors. Continued expansion would support rising distributions.
The data available through early spring 2026 makes one thing clear: the difference between a passive, default choice and a deliberate allocation is not abstract. It is tens of thousands of dollars a year, and every month spent in a low-rate account is money left on the table that does not come back.
