Best 5% interest savings accounts of July 2024
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 4:49 p.m. UTC May 22, 2024
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Sky-high inflation has hammered the personal finances of many households for the better part of three years. The one bright spot, though, is that you are now in a position to earn a high yield on your cash, even as much as 5% on savings accounts.
All terms and annual percentage yields (APYs)are accurate as of May 22, 2024.
Best 5% interest savings accounts
- TAB Bank High-Yield Savings.
- Bask Bank Interest Savings Account.
- Bread Savings High-yield Savings Account.
- Salem Five Direct eOne Savings.
- Popular Direct Select High-Yield Savings.
Why trust our banking experts
Our team of experts evaluates hundreds of banking products and analyzes thousands of data points to help you find the best product for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- Nearly 350 savings accounts reviewed.
- 4 levels of fact checking.
- Nearly 70 data points analyzed.
TAB Bank High-Yield Savings
Bread Savings High-yield Savings Account
Salem Five Direct eOne Savings
Popular Direct Select High-Yield Savings
Compare the best 5% savings accounts
Methodology
The best high-yield savings accounts help you counteract the high inflation that has tormented households throughout much of the past three years. With a little bit of work, you can put your cash to work in an account that will net you a yield of at least 5%.
In order to come up with this ranking, we focused almost entirely on yields. After all, if you’re searching for accounts with at least a 5% yield, you’ll likely be willing to sacrifice in person banking, for instance.
Still, banks should be rewarded for charging little in the way of fees, providing excellent customer service and delivering a positive digital product. Therefore we incorporated those features as well.
One note: For this ranking, we did not include accounts that are geared toward young savers, such as the Digital Federal Credit Union Primary Savings account. Not only are these accounts directed towards young adults, but the banks typically cap the high yield you can earn. For instance, the Primary Savings account offers a yield of 6.17% APY on the first $1,000, after that, earn 0.15% APY.
The weights are as follows:
- Yield: 75%
- Digital experience: 6%
- Customer service: 6%
- Fees: 5%
- Compound schedule: 5%
- Minimum deposit requirement: 3%
Choosing the best 5% savings account
Getting a high APY is important for your long term savings, however your choice of a savings provider should go beyond the interest rate. Other considerations include:
- Fees.
- Deposit requirements.
- Balance requirements.
- Access to ATMs.
- Presence or lack of branches.
- Customer service reputation.
Not all savings accounts are created equal, said CPA Tony Molina, head of community at investment and banking platform Wealthfront.
“They can have big differences, like how much FDIC insurance they offer, what account fees they charge and which features they make available,” Molina said. “But arguably the most consequential difference between accounts is how much interest they pay you for your savings.”
Molina added that if you leave money in a low-yield account, “you could be leaving hundreds — if not thousands — of dollars of free money on the table.”
He also advised against picking a financial institution that makes you “jump through hoops” to score its highest yield. In this regard, watch out for minimum balance, minimum deposit, maximum deposit or direct deposit requirements that you must meet to qualify for the top interest rate.
How to get 5% interest on your savings
To get 5.00% interest on your savings, compare rates from traditional banks, online banks, credit unions and other financial institutions.
Certified financial planner Jay Zigmont, founder of life and financial planning firm Childfree Wealth, said that an online bank might be the ideal place to land a 5.00% interest rate for savings.
“Online banks are able to give higher interest because they don’t have a brick-and-mortar storefront, which saves on expenses,” said Zigmont, adding that you should ensure an online bank where you plan to park your money is federally insured.
Still, “in the current rate environment, looking at rates before selecting a savings account is very important,” said Lori Gravitt, assistant vice president and branch manager at Addition Financial Credit Union.
Nonetheless, Christopher Naghibi, executive vice president and chief operating officer of First Foundation Bank, cautioned against constantly chasing high interest rates for your savings.
“Hopping around from bank to bank for an extra quarter of a point [of interest] is not economically viable for most people unless they have millions of dollars in cash,” he said.
Alternatives to a 5% interest savings account
Alternatives to a 5.00% high-yield savings account include a certificate of deposit (CD) and money market account. In some cases, CDs and money market accounts pay interest rates of 5.00% or more.
Keep in mind that a CD normally requires you to stash money for a set period, such as six months or five years. If you withdraw money before that period ends, you could be hit with a financial penalty.
Financial advisor Jeremy Bohne, founder of Paceline Wealth Management, said that interest rates for a savings account or money market account could decline over time. Therefore, he suggests considering high-quality bonds, which may supply a fixed rate of 5.00% or more.
Frequently asked questions (FAQs)
At this point, the bank with the highest interest rate on savings is 5.27% APY.
Molina said that if you’re collecting less than 5.00% interest on your savings, “you’re missing out on huge opportunities to earn more on your short-term cash.”
Simply put, a high-yield savings account pays a better-than-average interest rate on your savings. In other words, the rate should be well above the national average rate as of June 17, 2024 of 0.45% for savings accounts, according to the Federal Deposit Insurance Corporation (FDIC).
Overall, online banks tend to deliver the best rates for high-yield savings accounts — perhaps 5.00% or more. But it’s still worth checking out rates at traditional banks, credit unions and financial technology companies.
A sky-high interest rate might not be your sole factor in determining where to deposit your savings, however.
Assuming you don’t rack up fees or deposit more money along the way, a savings account with a $10,000 balance and a 5.00% APY could grow to $12,840.03 in five years. That’s a gain of $2,840.03, based on interest that’s compounded daily.
To figure out how much interest you can potentially earn with a savings account, use our savings calculator.
APY, or annual percentage yield, refers to the amount of interest earned in a year’s time on a bank account based on how much the interest rate is and how often the interest is compounded (such as daily or monthly).
Compound interest is interest earned on the previous interest paid. For example, if you have $10,000 deposited at 5.00% you’d earn $41.67 in interest in the first month. Your new balance would be $10,041.67. Next month, you’d earn interest not only on the original $10,000, but also on the additional $41.67.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
