While individual national banks and credit unions offer varying rates, the national average for savings accounts stands at just 0.35%, according to the FDIC. Based on this low average, a 5% interest savings account is, as you’d expect, pretty rare. Even so, finding such a great rate is not impossible (and it’s getting easier, given the rising interest rates!) – 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 traditional savings accounts, money market accounts, or even high-yield savings accounts, is advertised 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 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:
- UFB Direct: 5.02% on your entire balance
- Varo: 5% up to $5,000
- Current: 4% up to $6,000
- 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: 5.00% up to $10,000
- T-Mobile Money: 4% up to $3,000
- U.S. Treasury I Bonds: 6.89% up to $10,000
- Crypto Savings Accounts: 4-7.50%
1. UFB Direct: 5.02% on your entire balance
UFB Direct is a growing division of Axos Bank, but they specialize in just two products: mortgages and savings accounts.
This hyperfocus combined with the low overhead that comes with being an online-only bank means that they’re able to offer rates that are consistently at the top.
And these high rates aren’t just promotional deals available for the first few thousand in your account. Instead, their current 5.02% APY is on your entire balance.
Plus, in our experience, UFB Direct has been consistently increasing their APY as the fed hikes their rate, so we expect that to continue to increase in 2023.
Limitations of the APY
Unlike most of the others on this list, the UFB Direct savings account doesn’t come with caveats.
Your entire balance will earn the high yield, and you don’t need to complete any other requirements to earn it such as receiving direct deposits or paying for a premium plan.
One thing to keep in mind, however, is that you’ll need to stay diligent to keep your account earning the highest rate possible. Often when UFB Direct increases their rate, they do so under a new account name. Older accounts will be “stuck” at the lower rate, but a quick phone call to their customer service can have your account updated seamlessly.
UFB Preferred Savings
2. Varo: 3-5%
Varo is one of the most recent neobanks to get ahold of its own banking charter, so it doesn’t need to rely on a partner bank to back its accounts.
Varo offers a checking account, a savings account, cash advances, and tools to help build your credit score.
Varo is almost entirely fee-free, so you won’t pay monthly maintenance fees, transfer fees, or foreign transaction fees. It’s also part of the Allpoint ATM network, so users have access to more than 55,000 free ATMs.
Limitations of the APY
By default, Varo accounts come with a competitive APY for savings, but you can increase this to earn even more.
If you’re just starting out in your savings journey and plan to deposit $5,000 or less, you get up to 5.00% APY when you receive direct deposits of $1,000 or more each month.
Additional balances above $5,000 earn Varo’s base 3.00% APY.
3. Current: 4%
Current is a neobank based out of New York City. The company operates on the premise that banking should be accessible and affordable for everyone. Unlike traditional banks with different account categories like checking and savings, Current instead offers a hybrid account that combines the features of both.
When it comes to savings, the company really stands out.
They offer 4% interest on the first $2,000 in each of your savings “pods” (which is essentially a feature to help you organize your savings goals). What’s more, you’ll see the interest paid out to your account every. single. day.
As a Current account holder, you will have access to 3 savings pods – meaning that up to $6,000 of your savings will be earning a 4% interest rate!
That’s in addition to the other features like enhanced overdraft protection, early access to direct deposit, budgeting, and spending insights, and more.
How to Open A Current Account
Like most online banks, signing up with Current takes just two minutes and can be done entirely through their website.
You’ll need to have your SSN, home address, and cell phone number ready.
4. 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 only earn an APY of 0.50%.
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.
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 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
How to earn 5% on your savings: Step-by-step
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.
Visit NetSpend.com to learn more
5. 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 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 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.
|Citi® Citi Priority Account||up to $2000||April 4, 2023||
|U.S. Bank U.S. Bank Smartly™ Checking||up to $600||April 11, 2023||
|Chase Chase Private Client Checking℠||up to $3000||April 19, 2023||
|Fifth Third Bank Personal Checking||$275||June 30, 2023||
6. 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 accounts 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.
Visit BlueFCU.com to learn more
7. 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 its 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.
Visit LandmarkCU.com to learn more
8. 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.
Visit MangoMoney.com to learn more
9. Consumers Credit Union: 5.00%
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 Rewards Checking account is the APY rockstar with starting rates at 3.00% applicable on balances of up to $10,000. It drops off to 0.020% for any amount over and above this threshold.
With other requirements, you can earn an APY rate up to 5.00%.
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.
Read our full Consumers Credit Union review
10. 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 1.50%.
All accountholders earn 1.50% APY, but to qualify for the APY of 4%, 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 for up to $250,000 through Customers Bank.
Read our full T-Mobile Money review
11. U.S. Treasury I Bonds: 6.89%
We know what you’re thinking, and you’re right: treasury bonds are not savings accounts. But the rates are so high right now (thanks, inflation) that we couldn’t help but add it to this list.
If you’re looking to park cash in a safe spot and earn a high APY while doing so, then the I Bonds should be considered – though they won’t be the right choice for everyone!
Series I Savings Bonds are issued by the U.S. Treasury, and the interest they earn is a combination of both a fixed rate and a variable inflation rate.
The variable rate adjusts on these bonds every six months. When you purchase, you’re locking in the current rate for six months and then the new rate for the following 6 months, and so on.
You can buy I bonds at the 6.89% rate through April 30, 2023.
There are a few really important notes:
- You have to lock the money in for a year, and you won’t know what interest rate you’ll earn in the second 6 months.
- Withdrawing the money anytime sooner than 5 years will earn a 3-month penalty. For example, if you cash a bond after 24 months, you’ll only be paid the first 21 months of interest.
- You are limited to buying $10,000 per calendar year, per SSN. So, married couples can purchase $20,000 each year.
- There are no state or local taxes on your earnings, only federal.
- The best time to buy I Bonds is at the end of the month since interest is paid as if you purchased on the first of the month, regardless of when you actually bought.
Learn more about Series I Savings Bonds on the U.S. Treasury website
12. Crypto Savings Accounts: 4-7.5%
Like I Bonds, this strategy is also outside the traditional savings account, but the rates you can earn make it worth mentioning. Essentially, there are crypto platforms that allow investors and companies to take out low-interest loans against their crypto holdings.
This gives them access to cash now while still preserving their positions long-term. It’s similar to securities-based lines of credit that many financial institutions offer to individuals with large portfolios.
On the opposite side of the low-interest lending are the crypto investors who stake their coins on the platform (in other words, transfer their crypto to that exchange – similar in concept to switching brokerages), which the platform then lends out.
In exchange, the platform pays these investors interest.
Where it becomes interesting as an alternative savings account is that you can earn interest even for staking stablecoins, which are digital assets that are tied to traditional fiat currencies (like the dollar) and are designed to minimize price volatility. Popular examples are the USDC and GUSD.
Risks and Limitations with Crypto Savings Accounts
Unlike traditional savings accounts, there are definite caveats that you should consider before investing in stablecoins.
- Insurance. Your account is not insured by the FDIC, SIPC, or any other governmental program. It’s inherently riskier, and you should know and understand these risks before putting any money into an account.
- Legality. Ongoing legislation is shifting the landscape for U.S. investors. Some platforms have stopped serving U.S. investors entirely, others are only allowing existing accounts to continue (IE no new deposits), and others are only open to accredited investors.
- Compound Interest. Compounding is treated differently on each platform. Most compound daily and pay rewards weekly, but others don’t compound at all.
- Transaction Costs. Transferring crypto, whether between platforms or assets, will incur fees – similar to ATM or ACH fees. These will vary with each asset and with each platform, and even with the time of day (similar to how Uber rides cost more during peak times). Understanding these is part of doing your homework.
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: 3.60% APY on their Online Savings Account
- Axos Bank: up to 3.30% APY on their Rewards Checking Account
- Capital One: 3.40% APY on their Savings Account
- American Express: 3.75% APY on their High Yield Savings Account
- Bank of America: up to 0.04% APY on their Advantage Savings Account
- CIT Bank: up to 1.00% APY on their Savings Builder account with a $25,000 minimum deposit or $100 monthly deposits with a $100 opening deposit requirement
- CitiBank: 3.85% APY on their Citi® Accelerate Savings account
- Bread SavingsTM (formerly Comenity Direct): 4.50% APY on their High-Yield Savings Account
- Synchrony: 4.00% APY on their High-Yield Savings Account
- Vio Bank: 1.10% 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?
FDIC-insured banks and NCUA-insured credit unions offer a safety net for money deposited in their accounts. 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.
Frequently Asked Questions
Which account offers a 5% interest rate?
With rising interest rates, several institutions offer an APY of 5%: UFB Direct, Netspend, and Blue Federal Credit Union to name a few. 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%+, 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%.
What does 5% APY mean?
APY stands for Annual Percentage Yield. The metric tells us how much we can expect our money to earn over the span of one year. For example, if you put $1,000 in a 5% interest savings account, you would have $1,050 in the account after one year.
Can you lose money in a high-yield savings account?
Assuming you put your money in an FDIC-insured bank or NCUA-insured credit union and stay below the $250,000 threshold, then you will almost certainly not lose your capital.
That doesn’t mean you should set and forget, however. You should periodically check on your savings account to be certain that the rate you’re receiving is still competitive, particularly in these times of high inflation and rising interest rates.
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 accounts offering excellent rates including high-interest savings accounts, money market accounts, 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.