The average savings account rate for national banks and credit unions stands at 0.43%, according to the FDIC, but some online banks and credit cards offer high-yield savings accounts with 5% APY.
Accounts with high interest can make saving money more satisfying and help you reach 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 finances.
We’ve rounded up and reviewed the best 5% interest savings accounts (or really close to it) to help you make the most of your savings.
Best 5% Interest Savings Accounts
Here are the best 5% interest savings accounts you can open an account with today:
- UFB Direct: 5.25% APY
- Valley Direct: 5.25% APY
- CloudBank 24/7: 5.26% APY
- Mission Valley Bank: 5.12% APY
- M1 High-Yield Savings Account: up to 5.00% APY
- Newtek Bank Personal High-Yield Savings Account: 5.00% APY
- Adda Bank: 4.85% APY
Many savings accounts promote a high APY, but there's a catch—they cap the balance you can earn that APY on. The following savings accounts allow you to earn attractive APYs on your entire account balance.
1. UFB Direct: 5.25% APY
UFB Direct is a growing division of Axos Bank, but it specializes 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 5.25% APY is on your entire balance.
Plus, in our experience, UFB Direct has been consistently increasing its APY as the Fed hikes its rate, so we expect that to continue to increase.
Unlike some 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 its 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 Direct - 5.25% APY
A growing division of Axos Bank, UFB Direct’s competitive interest rates set it apart from the competition, making it a great option to help grow your savings. Earn 5.25% APY on all balances.
2. Valley Direct: 5.25% APY
Valley National Bank was founded in Wayne, New Jersey, in 1927. Today, it has branches in New Jersey, New York, Florida, and Alabama. It offers a wealth of personal and business bank accounts, as well as loans and financial planning services.
The FDIC-insured bank provides competitive high-yield savings and CDs nationwide through its digital banking platform, Valley Direct. You can enjoy 5.25% APY with Valley Direct’s savings account.
There are no minimum balance requirements or monthly fees on the account. Once you deposit your first dollar, you’ll start earning money.
You can open a Valley Direct account online in less than five minutes. If you’re 18 or older, you can apply with a valid government ID and your Social Security Number. All in all, Valley Direct’s HYSA is one of the most competitive options being offered directly through a traditional bank.
3. CloudBank 24/7: 5.26% APY
CloudBank 24/7 is a digital banking division of Third Coast Bank, SSB. The FDIC-insured bank provides CDs, money market deposit accounts, and high-yield savings accounts.
The bank offers a rewarding 5.26% APY on its high-yield savings account through a partnership with Raisin.
This APY applies to all savings balances, with a $1 minimum account balance requirement to earn interest. The account has no monthly maintenance fees, and you get 24/7 access to your account on the Raisin platform.
CloudBank notes that it is extremely committed to cybersecurity, using measures like two-factor authentication, Cloudflare technology, and encryption. It also holds SOC 2 certification from the American Institute of Certified Public Accountants for its notable security tactics.
4. Mission Valley Bank: 5.12% APY
Mission Valley Bank opened its doors in 2001 in the San Fernando Valley and has two California branches. It offers a handful of personal and business bank accounts, as well as credit and debit cards.
The Mission Valley Bank Savings Account backed by Raisin offers a competitive 5.12% APY on all account balances. Like OceanFirst, it requires a $1 opening deposit and has no transaction limits.
The account is free and you can access your funds 24/7 on the Raisin platform. While the bank may be more localized and less recognizable than its competitors, it’s worth considering a high-yield savings account regardless of where you live.
And if you want to do business with a bank that cares about philanthropy, Mission Valley proudly supports a range of nonprofits in the Valley through its Give Where You Live initiative.
5. M1 High-Yield Savings Account: up to 5.00% APY
M1 Finance is a popular robo-advisor that has recently branched into loans, credit card rewards, and interest-bearing checking and savings accounts.
The highest rates and premium features are reserved for M1 Plus members. M1 Plus costs $10 per month and provides access to a competitive high-yield savings account. Members earn up to 5.00% APY on all savings account balances.
You can automate contributions to the savings account and manage your investments and savings in one place with the M1 Finance app. You can also instantly transfer funds from your M1 Checking account
The savings account is backed by B2 Bank, and funds are FDIC insured up to $5 million.
While the monthly fee might be a drawback for some savers, it could be well worth the cost if you also invest and spend with M1 Finance. And when you refer a friend, you get 6 months of membership for free.
6. Newtek Bank: 5.00% APY
Formerly the National Bank of New York City, Newtek Bank is a Member FDIC institution that has zeroed in on a few highly competitive banking products.
Newtek specializes in business checking and savings accounts, CDs, and personal high-yield savings accounts.
Accountholders get 5.00% APY on all account balances, with no limits or transaction requirements. The only stipulation is that you need to have at least $0.01 in your account to earn interest.
You can make six withdrawals from your savings account each month. And there are no monthly fees or minimum balance requirements.
Newtek’s high-yield savings account is available nationwide, and you can easily apply online.
7. Adda Bank: 4.85% APY
Adda Bank is a subsidiary of Bank34, which was founded in 1934. Bank34 is headquartered in Scottsdale, Arizona, and has additional branches in Alamogordo and Las Cruces, New Mexico.
You can open several accounts with Bank34, including checking, savings, CDs, and IRA accounts. The bank also provides business accounts, loans, and merchant payment processing.
Its high-yield savings account, branded as an Adda Bank product, is one of the most advantageous products it has to offer. You can open the account directly on the Raisin platform. Once you fund your account with at least $1, you’ll be eligible for 4.85% APY, with no transaction limits.
Adda’s high-yield savings accounts are available nationwide, and your funds are FDIC-insured through Bank34.
BONUS: Varo: 5.00% APY up to $5,000
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.
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 and have a positive balance in your Varo Bank and Savings Accounts at the end of the month.
Additional balances above $5,000 earn Varo’s base 3.00% APY.
Summary of the Best 5% Savings Accounts
|Bank||APY||Mo. Fees||Min. Dep.|
|UFB Direct||5.25% APY||$0||$0|
|Valley Direct Bank||5.25% APY||$0||$0|
|CloudBank 24/7||5.20% APY||$0||$1|
|Mission Valley Bank||5.12% APY||$0||$1|
|M1 HYSA||up to 5.00% APY||$10||$0|
|Newtek Bank||5.00% APY||$0||$0|
|Adda Bank||4.85% APY||$0||$1|
Alternative to 5% Savings Account: U.S. Treasury Bonds
Treasury bonds aren’t savings accounts, but their rates are every bit as competitive.
According to the U.S. Department of the Treasury, the current interest rate for Series I Savings Bonds issued between May 1, 2023, and October 31, 2023, is 4.30%.
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.
What Do Other Banks Offer?
As we mentioned earlier, the national 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 some of these might fall short of the 5% mark, these accounts may offer other benefits that are important to you:
- Ally Bank: 4.25% APY on their Online Savings Account
- Axos Bank: up to 3.30% APY on their Rewards Checking Account
- Capital One: 4.30% APY on their Savings Account
- American Express: 4.30% APY on their High Yield Savings Account
- Bank of America: up to 0.04% APY on their Advantage Savings Account
- Bread SavingsTM: 5.00% APY on their High-Yield Savings Account
- CIT Bank: 4.65% APY on their Savings Connect account
- CitiBank: 4.35% APY on their Citi® Accelerate Savings account
- Digital Federal Credit Union: 6.17% on balances of up to $1,000 with their Primary Savings account
- Mango Money: 6% on balances of up to $2,500 with their Mango Savings™ account
- Synchrony: 4.75% APY on their High-Yield Savings Account
- Vio Bank: 1.10% APY on their High Yield Online Savings Account
What Is A 5% Interest Savings Account?
A 5% interest savings account is a deposit account that earns an annual percentage yield of at least 5.00% on the account balance. If you put $500 in a savings account with a 5% APY, you would earn $25 in interest.
The best 5% savings accounts allow you to earn their highest interest rates on your total account balance without imposing management fees or account minimums.
All in all, 5% interest savings accounts are a safe and efficient vehicle for reaching short-term savings goals quickly.
Where Can I Get A 5% Interest Savings Account?
Most banks don’t offer anywhere near 5.00% APY on their savings accounts, and these rates can be hard to find. Online banks and credit unions usually offer higher rates than traditional brick-and-mortar banks.
We regularly search for the highest interest rates with the lowest account requirements and frequently update our guide. You can keep up with this list to find current 5% interest offers.
We also recommend viewing all of the offers available on Raisin. The fintech platform partners with several reputable banks and credit unions to offer some of the most competitive savings, MMA, and CD rates on the market.
How Does a 5% Interest Savings Account Work?
5% interest savings accounts earn a 5.00% APY. The annual percentage yield is the amount of interest your money earns over one year.
These accounts usually take advantage of compounding interest. That means the interest you earn on your initial amount is added to the principal balance, so future interest is calculated based on your new, higher balance.
As time goes on, your account balance grows at an increasing rate. For example, if you have $100 in a savings account with a 5% interest rate, after one year, you’ll earn $5 in interest. That $5 gets added to the $100, making your new balance $105.
The next year, the 5% interest is calculated based on your new balance, resulting in more interest. This compounding effect continues as long as you leave your money in the account, allowing your savings to grow faster over time.
How To Open A 5% Interest Savings Account
Opening a 5% savings account is a quick, straightforward process. Online banks excel at offering a user-friendly platform that’s easy for applicants to navigate. You can apply for most accounts in a few minutes.
Regardless of which bank or credit union you choose, here are some general steps to follow to open a 5% interest savings account:
- Visit the bank’s website: Take a look at the bank you’ve chosen’s website to get a better understanding of the account’s features and requirements, then click the prompt to open an account.
- Provide personal information: During the online application process, you’ll be prompted to enter personal information, including your name, address, date of birth, and social security number. You may also need to upload a copy of your government-issued ID or answer security questions.
- Agree to terms and conditions: Read through the bank’s terms and conditions and click on the checkbox to indicate that you agree to them. Take note of fees, withdrawal limits, and other important account details.
- Receive confirmation: After submitting your application, you’ll receive a confirmation email or message from the online bank with details about your new account, including your account number and login information.
- Fund your account: Once you’ve completed the application form, you need to fund your account. Most online banks allow you to transfer funds electronically from an existing bank account or by mailing a check.
Benefits Of A 5% Interest Savings Account
There are several advantages to opening a 5% interest savings account. Here are a few of the biggest benefits to consider.
- Competitive rates: A 5% interest rate on your savings is much higher than what most traditional savings accounts offer. This means that your money will grow faster, allowing you to reach your financial goals sooner.
- Compound interest: Thanks to compound interest, your savings account balance will not only earn interest on the initial amount you deposited but also on the accumulated interest. Over time, this compounding effect can lead to significant growth.
- Inflation protection: Inflation diminishes the purchasing power of your money over time. A 5% interest rate gives you a better chance of keeping up with or even surpassing the inflation rate, ensuring that the value of your savings doesn’t decline.
- Financial security: Saving money is essential to maintaining financial security. By opening a 5% interest savings account, you’re taking a proactive step towards creating a safety net for unexpected expenses or future financial goals. These accounts are a great spot for storing an emergency fund.
- Flexibility: Many 5% interest savings accounts give you easy access to your funds, making them an ideal choice if you need liquidity. This flexibility ensures that you can withdraw money when you need it without facing excessive penalties or restrictions.
- Low risk: Compared to other investment options, a 5% interest savings account carries minimal risk. Unlike stocks or real estate, where values can fluctuate drastically, a savings account provides a stable and secure way to grow your money steadily.
- Ease of use: Opening a 5% interest savings account is a straightforward process, and most of these accounts come with easy online account management. With convenient online banking features, you can easily monitor your savings, make transactions, and set up automatic transfers.
- Diversification: Diversifying your investment portfolio is crucial for minimizing risk. By allocating a portion of your savings to a 5% interest account, you’re creating a balanced mix of investments, reducing your exposure to potential losses in other riskier assets.
Like any financial product, 5% interest savings accounts also have some potential drawbacks to consider. While they can help shield your savings against inflation, they might not always keep pace with it. Interest rates on these accounts are also subject to fluctuation and could be reduced at any time.
Bottom line—A high-yield savings account is a valuable addition to your portfolio, but it shouldn’t be your only vehicle for future savings. If you’re investing for long-term goals like retirement, other investments offer higher potential returns.
Tips For Maximizing Your 5% Interest Savings Account
Opening and funding a high-yield savings account is a great first step, but with a few additional steps, you can maximize your savings even more.
- Set up automatic deposits: If at all possible, set up automatic deposits into your savings account to ensure a consistent flow of funds into your account and maximize your savings potential.
- Monitor interest rates: Keep a close eye on the interest rates being offered by different financial institutions. This will help you identify the best possible rate for your savings account.
- Compare account fees: Carefully review and compare the fees associated with different savings accounts. Some accounts may have monthly maintenance fees that can eat into your interest earnings. Look for accounts with minimal or no fees and avoid actions that trigger fees on your account.
- Take advantage of promotions: Keep an eye out for promotional offers from banks. Sometimes, banks offer sign-up bonuses or promotional interest rates for a limited time. Taking advantage of these offers can further maximize your savings.
- Avoid early withdrawals: Resist the temptation to withdraw funds before you reach your savings goals. Early withdrawals may result in penalties or reduced interest rates, ultimately jeopardizing your savings potential.
- Regularly review your account: Periodically review your savings account to ensure it’s still the best option for your needs. Interest rates and account terms can change over time, so it’s important to stay informed and make any necessary adjustments.
- Set clear savings goals: Establish clear savings goals to stay motivated and focused on growing your account. Whether it’s saving for a down payment, a vacation, or an emergency fund, having specific goals will help you prioritize your savings and make smarter financial decisions.
The Pros And Cons of a 5% Interest Savings Account
We’ve already discussed the benefits and drawbacks of a 5% interest savings account. Here’s a quick recap of some of the biggest pros and cons to consider as you contemplate opening an account.
- APY: APY is significantly higher than the national average interest rate for savings accounts.
- Compound interest: Compound interest boosts your earnings and helps you reach savings goals faster.
- Inflation protection: A 5% interest rate can help you hedge your savings from the impact of inflation.
- Accessibility: High-yield savings accounts come with liquidity, giving you easy access to your funds.
- Minimal risk: These accounts provide steady interest with minimal risk or fluctuations.
- Minimum requirements: Some accounts require you to maintain a minimum balance to get the advertised interest rate.
- Inflation risk: If the rate of inflation exceeds the interest rate, the value of your savings may erode over time.
- Opportunity cost: You could miss out on potentially higher returns from other investment opportunities.
- Tax implications: The interest earned from a savings account is generally subject to taxes.
5% Interest Saving Account vs. High-Yield Savings Account
The term high-yield savings account encompasses a range of savings accounts that offer above-average interest rates.
They’re usually offered by online banks and credit unions as opposed to traditional community or national banks. Since online banks don’t have nearly as much overhead cost as banks with branches to run, they can offer higher rates and lower fees.
HYSAs usually offer a variable interest rate. They sometimes come with minimum balance requirements or offer tiered interest based on your account balance.
A 5% interest savings account is a type of high-yield savings account that offers at least 5.00% APY. Some of these accounts offer a fixed interest rate, while others are subject to change at any time.
The best 5% savings accounts offer the full APY regardless of your account balance and have no account fees or minimum deposit requirements.
5% Interest Savings Account vs Traditional Savings Account
The biggest difference between a traditional and a 5% interest savings account is the APY they earn. According to the FDIC, the average interest rate for savings accounts earns 0.42% APY.
At that rate, a $5,000 account balance would earn $21. Meanwhile, an account with a 5.00% APY would earn $250.
Additionally, traditional savings accounts are usually offered at local banks and credit unions. They provide account holders with branch access but might lack some of the intuitive features of digital banks.
5% Interest Savings Account Calculator
Over time, a 5% interest savings account can be a major asset to help you grow your wealth.
It might surprise you how much interest can accrue when you deposit money into an account with compounding interest.
If you want to crunch the numbers to see how much you could save with a 5% interest savings account, an online savings calculator can help.
The savings calculator uses your savings rate, APY, and target savings goal for retirement to tell you how long it will take you to reach financial freedom.
Just enter 5.00% as your expected investment annual return and fill in the other fields to see how much your savings will grow over time.
Frequently Asked Questions
Where can I find the best rates for my savings?
Currently, Raisin offers some of the best savings rates in the industry. The fintech platform features several savings accounts that offer 5.00% APY or higher. All of Raisin’s partner banks and credit unions are insured by the FDIC or NCUA, so your funds are protected.
How can I get the best interest rate for my savings?
Here are some tips to get the best interest rate on your savings:
- Look at online banks and credit unions
- Compare rates from multiple banks
- Focus on accounts with no minimum balance requirements
- Factor in account fees that can eat away at interest
- Also consider money market accounts
Can I get 7% interest on a savings account?
Currently, no US banks offer 7% interest savings accounts. The closest offer is from Landmark Credit Union, which provides a 7.50% APY on the first $500 in your Premium Checking Account.
What is the monthly fee for a 5% interest savings account?
The monthly fees on a 5% interest savings account can vary from one bank to the next. Some banks that impose account fees waive them when you enroll in paperless billing or complete qualifying tasks. The best high-yield savings accounts don’t charge any maintenance fees at all.
The BankBonus team has analyzed dozens of banks in order to provide our readers with thoroughly informed and accurate reviews.
To determine the best 5% savings accounts, we evaluated digital financial platforms, online banks, credit unions, regional banks, and national banks across several metrics.
Our assessment factored in these considerations:
- Interest: We compared interest rates, caps, and requirements to earn the full APY, prioritizing banks that offer 5% APY with no strings attached.
- Fees and pricing: We also considered each institution’s fees, including monthly maintenance fees and other service charges.
- Account features: To compare accounts, we took a close look at the features, limits, and capabilities each one has to offer.
- Brand reputation: The bank accounts we recommend have been carefully vetted to ensure they are legitimate, secure, and backed by NCUA or FDIC insurance.
- User Experience: Additionally, we considered the ease of use and availability of resources on each bank’s website and factored in reviews of the mobile apps from the Apple App Store and Google Play Store.
- Customer service: In our review process, we also explore their customer service channels, hours of availability, and third-party reviews.