While different national banks and credit unions offer different rates, the national average rate stands at 0.04%, according to the FDIC. Based on this low average, a 5% interest savings account is pretty rare.
Even so, finding such a great rate is not impossible – but you’ll need to be smart and play your cards right.
Accounts with high interest can make saving money much more satisfying. As a bonus, you’ll also reach your savings goals faster.
Whether you’re saving for an emergency fund, a down payment, a holiday, or anything in between, high rates can help you boost your personal finance.
Interest on deposit accounts, whether they’re a traditional savings account, money market accounts, or even high-yield savings accounts, is offered through the APY rate.
APY, which stands for Annual Percentage Yield, tells us, in percentage form, how much money we can expect our money to yield over one year.
In other words, it’s is the real rate of return you’ll earn on a savings deposit, taking into account compounding interest.
The more often the interest is compounded (daily interest compounding is the best), the better your return will be.
This article will look at several savings accounts and checking accounts, and other accounts that offer rates around the 5% mark.
Best 5% Interest Savings Accounts
Here are the best 5% interest savings accounts you can open today:
- NetSpend: 5% up to $1,000
- Digital Federal Credit Union: 6.17% up to $1,000
- Blue Federal Credit Union: 5% up to $1,000
- Mango Money: 6% up to $2,500
- Landmark Credit Union: 7.50% up to $500
- Consumers Credit Union: 4% up to $15,000
- T-Mobile Money: 4% up to $3,000
1. NetSpend: 5%
NetSpend is a prepaid card company whose primary aim is to help underbanked consumers regain control through self-banking. Founded in 1999 by the Sosa Brothers, they have a long history.
They have developed strong partnerships with some of the biggest names in the industry.
Their prepaid cards are set up so that any money transferred to the account is held at an FDIC-insured bank. Currently, they work with three different banks, including Bancorp, Metabank, and Republic Bank.
Although you can’t choose which bank your money is held in, you get FDIC insurance either way. As such, you can rest easy knowing that your money is safe. These banks are also the financial institutions that issue prepaid cards.
While prepaid cards can be controversial, there is nothing to worry about here since we will not use the card to make any purchases or payments.
Instead, our primary focus will be the bank account that holds the money and the 5% APY interest rate we will get on our deposits.
Before we get started, we need to discuss the limitations of these accounts. Understanding what these are will help us get the best return for our work.
The 5% APY is limited to the first $1,000 in each NetSpend account. As such, any balances over and above the $1,000 mark will not earn this attractive APY.
On the positive side, you can open as many as 5 NetSpend accounts for a total maximum balance of $5,000. While this might take some work, the rewards can be very lucrative since this rate is well above what most other accounts will pay.
You’ll be glad to know that there are a few alternatives that offer a high-interest rate. Be sure to keep reading to learn what the different options that might be available to you are.
As mentioned earlier, Netspend only offers 5% interest on balances of up to $1,000. Anything over and above this will earn a much lower rate of 0.50%.
While this rate is on par with some of the best rates on the market, it is way lower than what we can get. As such, depending on how much money you are looking to save, you might need to open multiple accounts.
NetSpend allows you to open a maximum of 5 prepaid debit cards. Each one of these five cards is tied to a different company; however, they all use the same NetSpend platform so that each one will work the same as the rest.
The first card that you will need to open is the Netspend prepaid debit card. Once done, you can open any of the remaining four, depending on how much you want to save. These include:
- Western Union Prepaid Debit Card
- Ace Elite Prepaid Debit Card
- Netspend MLB Prepaid Debit Card
- H-E-B Prepaid Debit Card
Step 1: Sign up to Netspend.
To get started, you first need to make sure you have a regular bank account opened elsewhere. You will need this to transfer money to your Netspend account via ACH transfer.
Some banks also allow you to link other bank accounts, including Netspend accounts, making it that much easier to do recurring transfers.
Next, you will need to sign up for your Netspend account. You can easily do this from the Netspend website without too much hassle.
Once you complete the application, you’ll need to wait for the card to arrive.
Step 2: Activate your Netspend card.
When your card arrives, alongside the physical card, you’ll also receive some documentation, including the account number and routing number linked to your Netspend account. This information is essential as it will allow you to transfer money to your Netspend account from your bank account.
Follow the provided instructions to activate your card, making sure you choose the pay-as-you-go-plan. While this plan has higher usage fees, it has no monthly service fees to eat away at the interest earned. The usage fees will not matter since we’re not actually going to use the card.
Step 3: Transfer money to your Netspend account.
Once you’ve activated the card, you can transfer money from your bank account to your Netspend account. Here, you’ll need to use the account and routing number that came with the card to ensure a successful transfer, which you can do via direct deposit.
The actual procedure will vary from one bank to the next, so make sure you will the instructions provided by your bank.
Step 4: Transfer the money to your Netspend savings account.
Once the funds reach your Netspend account, you will need to move them to the Netspend savings account, where you’ll be able to earn the 5% interest rate.
The first thing you’ll need to do is activate the savings account, which you can easily do from the Netspend app.
You can do this by clicking on Move Money and then on Savings Transfer. You’ll then have the option to activate your Savings account.
Once activated, you’ll be able to transfer your money from the Netspend debit card to the Netspend savings account.
Keep in mind that you might be charged an inactivity fee if your account stays dormant for too long. To make sure you’re not charged this fee, set up an automatic transfer of $1 to your account every 2-3 months.
Once everything is set up, you will need to repeat the process for every card until all five or done, or you reach your maximum budget – whichever comes sooner.
Netspend is not the only place where you can get a 5% interest rate on your savings. In fact, in our research, we found quite a few other options, some of which have even higher rates. Let’s have a look at what these alternatives are.
2. Digital Federal Credit Union: 6.17%
DCU, short for Digitial (Federal) Credit Union, is a credit union based in Massachusetts. They serve customers in all of the 50 states and have some 900,000 members.
While they offer a wide range of financial products and services, our primary interest lies with their Primary Savings account, which comes with a whopping APR of some 6.17%.
This APR is only applicable on balances of up to $1,000.00. Anything over this amount will see the interest rate drop to 0.25%, which isn’t a terrible interest rate (but it’s not great either).
With the full rate on offer, you’ll make $63.64 per year, provided you keep the entire $1,000 in your account.
The account has no monthly service fee, and there is no minimum amount required to earn the full APY.
With DCU being a federal credit union, you get insurance on your account through the NCUA, so it’s as safe as it can ever be.
They also offer a mobile banking app, which is available for both Android and Apple devices. The inclusion of an app should make managing your money relatively easy.
How To Open a DCU Account
To open the account, you’ll need to meet their membership application criteria, which are pretty relaxed.
There’s a long and extensive list of participating employers, communities (Massachusetts-based), and condominium associations.
Suppose you do not qualify for any of these. In that case, you can join a participating organization such as Reach Out for Schools, with memberships starting at just $10.
Your donation will help fund classrooms and programs for the benefit of students, so it’s all going towards a good cause.
3. Blue Federal Credit Union: 5.00%
Blue Federal Credit Union is a credit union based in Cheyenne, Wyoming.
Founded in 1950 by a group of civilians at F.E. Warren Air Force Base, it services both military personnel and community members. It has over the years grown to a total of 5 branches.
Blue FCU offers several different deposit account and other financial products and services.
However, their Accelerated Savings account is the one we are after, offering an APY of 5.00% on balances of up to $1,000.
The APY rate drops off once your balance surpasses the $1,000 mark, coming in at a respectable 2.08% on balances between $1,000 and $5,000 before continuing to drop off until it reaches the minimum rate of 0.25%
How To Open a Blue FCU Account
Joining Blue FCU is easy. Membership is open to relatives of existing members and employees and members of participating employers and organizations, respectively.
If you don’t make the cut, you can donate $5.00 to the Blue Foundation, which you can conveniently do alongside your membership application.
4. Landmark Credit Union: 7.50%
Landmark Credit Union is a regional federal credit union with 34 branches in Wisconsin and Illinois.
The credit union is also a member of CO-OP Shared Branches, which adds a further 5,000+ branches to their portfolio.
How To Join Landmark CU
To join the credit union, you need to be living in one of the counties they service or work with a partner business.
You’ll need to open a VIP Savings Account and deposit a minimum of $5 to establish a membership.
Once in, you can look forward to an APY of 7.50%, courtesy of their premium checking account.
This rate is only valid on balances of up to $500. However, the account has no monthly service fee or minimum balance requirements.
5. Mango Money: 6.00%
Mango Money works similarly to Netspend in that they offer prepaid cards with the ability to open a savings account.
The rate on offer stands at 6.00%, with a minimum balance requirement of $25.00. The rate is applicable on balances of up to $2,500, after which it drops down to 0.10%.
There is a monthly fee of $5.00, which you can avoid by depositing a minimum of $800 a month.
Frequent deposits will also help you avoid the inactivity fee, which stands at $8.00. Closing the card costs $10.00 with any balance issued via check.
6. Consumers Credit Union: 4.00%
Consumers Credit Union is a federal credit union based in Michigan. Anyone who lives works, or prays in the Lower Peninsula is eligible to become a member.
Shares start at $25, which equates to the minimum deposit requirement to open an account. Unlike bank accounts, however, this share makes you a part-owner of the credit union.
While the credit union offers a wide range of financial products and services, its Serious Interest Checking account is the APY rockstar.
The APY rate starts at 4.00% which is lower than the others, but it is applicable on balances of up to $15,000. It drops off to 0.020% for any amount over and above this threshold.
While there is no monthly maintenance fee, the minimum deposit requirement for this account is $1,000.
Members get quite a few perks, including discounts from local stores and restaurants, free ATM withdrawals from over 30,000 ATMs, and many others, including features common with checking accounts.
7. T-Mobile Money: 4.00%
An account with T-Mobile Money can earn you an APY of 4%. While this is lower than the other offers we reviewed, you can make this (still) great rate on balances of up to $3,000. Balances over and above the $3,000 threshold earn an APY of 1.00%
To get this rate, you need to qualify, which can take a bit of work.
Firstly, you need to be a T-Mobile customer with a postpaid wireless plan. You also need to register for perks using your T-Mobile ID and make ten qualifying purchases through your T-Mobile Money card by the end of the month.
On the bright side, the account comes with no maintenance fees and no minimum balances.
Other perks include no overdraft fees and fee-free withdrawals from over 55,000 Allpoint ATMs.
However, this shouldn’t matter much to us since we want to use the account to save money, not spend it. Funds are insured by the FDIC up to $250,000 through Customers Bank.
What Do Other Banks Offer?
As we mentioned earlier, the average APY rate in the US is much lower than 5%. It is nowhere near that amount.
We also discussed how while a high APY is beneficial, a higher APY does not always mean a better account.
There are many other things to consider, with banks that offer lower account rates typically making up for it in other areas.
Now let’s look at some of the best savings rates on offer by top financial institutions in the country.
While these might fall short of the 5% mark, these accounts typically offer other benefits, which you might not necessarily find in other accounts.
- Ally Bank: 0.50% APY on their Online Savings Account
- Axos Bank: 1.00% APY on their Rewards Checking Account
- Capital One: 0.40% APY on their Savings Account
- American Express: 0.40% APY on their High Yield Savings Account
- Bank of America: 0.01% APY on their Savings Account
- CIT Bank: 0.40% APY on their Savings Builder account with a $25,000 minimum deposit or $100 monthly deposits with a $100 opening deposit requirement
- CitiBank: Citi® Savings Account offers an APY that varies between 0.04 and 0.13%, depending on the account balance
- Comenity: 0.55% APY on their High-Yield Savings Account
- Synchrony: 0.50% APY on their High-Yield Savings Account
- Vio Bank: 0.53% APY on their High Yield Online Savings Account
What To Look For In A Savings Account
As we discussed earlier, a high APY (Annual Percentage Yield) rate is nothing short of amazing.
Still, there are many other things that you need to consider. After all, even the best account comes with requirements and restrictions that can limit how much money you can earn.
Here are the top things to consider when looking for an account with a great interest rate
Member FDIC or NCUA?
Both FDIC and NCUA insure account holders up to $250,000. If something happens to the financial institution, they will make good on any money you had in the account.
Monthly Maintenance Fees
Many accounts come with monthly maintenance fees. More often than not, however, they also offer a waiver so that you do not have to pay the fee if you meet specific requirements.
Understanding what these requirements are, which can differ from one account to another, can help you make sure you can avoid this fee.
Minimum Balance Requirements
Many accounts come with a minimum balance requirement to earn a specific interest rate. These account balance requirements typically need to be met on a per statement cycle basis or daily.
Minimum deposit requirements indicate how much money you need to deposit to qualify for the account. Understanding the minimum deposit amount of an account can help you determine if you are eligible for a particular account or consider something else.
Online and Mobile Banking
Online banking is not something reserved for online banks alone. Most traditional banks and credit unions offer online banking portals and mobile banking apps that let you bank from the comfort of your own home or while on the move.
Which account offers a 5% interest rate?
Both Netspend and Blue Federal Credit Union offer an APY of 5%. However, this is not the highest rate on offer, and many others offer even higher rates.
These include Mango Money, which offers an APY of 6%, Landmark Credit Union, which offers an APY of 7.50%, and Digitial (Federal) Credit Union, which provides an APY rate of 6.17%.
What is the highest interest rate?
The highest rate on offer from all of the financial institutions researched is Landmark Credit Union.
They are offering an APY of 7.50%, which is substantially higher than 5%.
5% Interest Savings Accounts Are Out There
Though 5% interest may sound too good to be true, you can definitely achieve this.
Many financial institutions are offering higher interest rates than the average, in some cases surpassing that rate many times over.
Traditionally, you could only get the best interest rates with savings accounts. Today, however, we have all types of account offering excellent rates including high-interest savings account, money market account, and even dedicated ATM cards.
These offers ultimately give savers more choices.
One thing to look out for is savings account offers such as welcome or sign-up bonuses. These types of offers can give your savings a serious boost, often worth hundreds of dollars, which can be challenging to achieve with an APY rate alone.
Saving money is always a good thing! Remember that there are many ways to measure what the best high-yield savings account is.
Ultimately, it’s how best it fits your requirements and goals to make it the best for you.