5 Best 5% Interest Savings Accounts Of 2024
The finest savings accounts with 5% interest are made to assist you in achieving your financial objectives more quickly. The sooner you pay off your student loans, accumulate an emergency fund, or save for a down payment on a home, the higher your interest rate will be.
A 5.00% interest savings account is not impossible to locate, even with the national average savings account rates, according to the Federal Deposit Insurance Corporation (FDIC), hanging around 0.46% as of December 18, 2023. The top savings accounts with 5.00% yield are listed below.
Best 5% Interest Savings Accounts
To identify the best 5% interest savings accounts (or accounts with interest rates near 5.00% APY), we examined 73 online savings accounts provided by 53 nationally accessible banks and credit unions. Find out why we chose each account, weigh the benefits and drawbacks, and read reviews from specific banks.
The account information and annual percentage yields (APYs) are current as of December 18, 2023.
Honorable Mentions
These honorable mentions include competitive interest rates along with some special features and advantages, even if they didn’t make our top five. You might find an account below that’s a better fit than the top-ranked 5% interest savings accounts, depending on your banking preferences and objectives.
BMO Alto Online Savings Account
- Star rating: 4.0
- Annual Percentage Yield: 5.10%
- Minimum Deposit Requirement: $0
- Monthly Fee: $0
What We Liked
With no minimums or fees, BMO Alto’s online savings account allows for limitless transfers and withdrawals. It also provides 5.10% APY on all balances. Notably, this account is perfect for people who intend to move money frequently because it permits unrestricted withdrawals and transfers.
What We Didn’t Like
There are just two ways to fund an account using this one. Neither checks nor debit cards are available from it. Customers should be aware that BMO Alto only offers an internet platform—not an app—which is possibly the most crucial information.
Who It’s Best For
For individuals seeking a competitive interest rate that is guaranteed on any size savings amount, this account is ideal. Customers that frequently move money in and out of their savings and don’t want to be charged for doing so will likewise find it to be a wonderful fit. Because BMO Alto only provides an online interface, customers that value mobile banking will have to select an alternative account.
Bread Savings High-Yield Savings
- Star rating: 3.9
- Annual Percentage Yield: 5.15%
- Minimum Deposit Requirement: $100
- Monthly Fee: $0
What We Liked
With a 5.15% APY and a comparatively low minimum balance requirement, the Bread Savings High-Yield Savings Account has no monthly fees. Additionally, it provides limitless deposits via ACH transfers and mobile checks. This can be an excellent option if you’re searching for a straightforward savings account or if you get a lot of paper checks.
What We Didn’t Like
Customers must have at least $100 in their accounts in order to receive the 5.15% APY, even though there is no monthly maintenance cost. Checking accounts are not offered by Bread Financial, nor are checks or debit cards available with this account.
Who It’s Best For
The Bread Savings High Yield Savings Account is ideal for people who don’t need to deposit or withdraw cash and who would rather bank online. This account is perfect for regular earning and saving because of its minimal fees and high interest rate.
CIT Bank Platinum Savings
- Star rating: 3.8
- Annual Percentage Yield: 5.05% APY on balances of $5,000 or more, 0.25% APY on balances less than $5,000
- Minimum Deposit Requirement: $100
- Monthly Fee: $0
What We Liked
For customers with a minimum $5,000 balance, CIT Bank’s Platinum Savings account offers a very competitive interest rate with no monthly fees to reduce interest profits. Financing your savings can be simpler and more straightforward with CIT Bank’s checking account offerings. This account can be suitable for those who intend to maintain large savings amounts.
What We Didn’t Like
You will only receive the lesser APY if you have less than $5,000 in your Platinum Savings account. There is a $100 minimum deposit required for this account as well. Consumers who wish to bank on Android smartphones should be aware that there are conflicting reviews about the CIT Bank app on Google Play.
Who It’s Best For
The greatest savings option for those with at least $5,000 to save is CIT Bank’s Platinum Savings. If you think it could work for you, the high minimum balance needed to earn more interest could be a motivator to avoid taking money out of your savings. Select a different account if not.
Varo Savings Account
- Star Rating: 3.8
- Annual Percentage Yield: 3.00% to 5.00%
- Minimum Deposit Requirement: $0.01
- Monthly Fee: $0
What We Liked
With so many advantages, the Varo High-Yield Savings Account can assist you in achieving your financial objectives. It offers a round-up tool and the ability to transfer money automatically from paycheck to account, in addition to earning 3.00% APY without any monthly fees and up to 5.00% APY by fulfilling certain requirements each month. A mobile-only bank with a big ATM network and a well-reviewed mobile app, Varo Bank caters exclusively to online customers.
What We Didn’t Like
Customers of the Varo High-Yield Savings Account can earn up to 5.00% APY each month by fulfilling certain requirements, or 3.00% APY without paying a monthly fee. Also, in order to be eligible to receive 5.00% APY, you must fulfill two requirements: You must have a positive balance in each of your Varo accounts at the end of each month and receive at least $1,000 in direct deposits.
Who It’s Best For
Varo’s features are all very appealing to customers who desire savings tools integrated into their accounts without any additional costs. Varo’s mobile app is excellent, and its set-it-and-forget-it saving features make it the ideal account for mobile banking.
Methodology
Forbes Advisor examined 73 high-yield savings accounts from 53 financial institutions, including conventional brick-and-mortar banks, internet banks, and credit unions, to compile our ranking of the top 5% interest savings accounts. Within the categories of APY, fees, access, limits and limitations, customer service, and account minimums, we ranked each institution based on 12 data points.
The weights we gave each category are listed below:
- APY: 20%
- APY restrictions and limitations: 20%
- Fees: 20%
- Account minimums: 15%
- Customer experience: 15%
- Access: 10%
Therefore, the highest-ranking accounts on our list were those with the greatest APYs and the lowest fees and restrictions.
See our article on How Forbes Advisor Reviews Banks to find out more about our editorial process, rating and review methodology.
What Is a 5% Interest Savings Account?
One kind of savings account that offers an annual percentage yield (APY) of around 5% is a 5% interest savings account. A 5% interest savings account will yield $50 in interest over the course of a year for $1,000, while a regular 0.10% return savings account will only yield $1.
Savings accounts with 5% interest can help you save as much as possible, but some banks may require you to maintain a minimum level or set up direct transfers in order to receive the promised annual percentage yield. The amount of your balance that can earn the advertised rate may also be capped.
Benefits of a 5% Interest Savings Account
A savings account with 5% interest has several advantages, including:
Higher earnings
Compared to a regular savings account, which could only earn 0.01% APY, a savings account with 5% interest earns substantially more money.
Security
Savings accounts provide FDIC or NCUA insurance to safeguard your funds as well as interest accrued.
Separate savings
Maintaining your emergency fund and other savings apart from your checking account will help you avoid confusion and unintentional expenditure.
Digital banking
Online banks and fintech companies provide a large number of savings accounts with 5% interest. This indicates that most accounts allow for mobile and web access for banking while on the go.
Flexibility
You can earn a rate comparable to the most competitive certificates of deposit (CDs) with 5% interest savings accounts, but without the stringent withdrawal and deposit restrictions.
How Can I Get 5% Interest on Savings?
There are many accounts available on the market today that give 5% return on savings. Although money market accounts and CDs are also worthwhile options, high-yield savings accounts are frequently a wise choice.
Compare accounts that have a five percent interest rate first. Although we’ve already highlighted our top picks for 5% interest savings accounts, there are more options with comparable rates. Next, see what qualifications you need to fulfill in order to be eligible for 5% interest. Certain accounts might have minimum balance requirements or require direct deposit in order to be eligible for the highest advertised interest rate.
However, not every account has the same basic criteria. Select an account that yields 5% on all balances without any restrictions if you’re worried about your ability to achieve certain requirements.
To begin receiving 5% interest on your money, just open an account and deposit a small amount.
How To Choose a 5% Interest Savings Account
Here are some factors to consider when searching for the best savings account with 5% interest that suits your needs:
Find a competitive APY
With a 5% interest rate, the optimal savings account should have an APY between 4.00% and 5.00%. If it’s less than that, you may not be receiving the greatest offer.
Look for restrictions
It is not certain that you will receive the high annual percentage rate (APY) on your entire balance in a savings account with 5% interest. To find out if the interest rate only applies to a portion of your amount and whether there are any qualifications to qualify for it, read the fine print.
Compare fees
Although it’s worth verifying, a lot of banks and credit unions provide high-yield savings accounts without any monthly fees. The interest you get will be reduced by any costs you incur.
Consider the customer experience
How simple is it to get your finances? Do deposits and withdrawals happen instantly, or do they take days? Additionally, take into account the customer service choices that a bank or credit union provides.
How To Apply for a 5% Interest Savings Account
Any of the top savings accounts with 5% interest can be opened online in 15 minutes or less. Simply adhere to these steps:
Look into banks that provide savings accounts with 5.00% interest to see which one best meets your needs.
Visit the bank’s website and begin the online application procedure there.
To open the account, provide your name, address, Social Security number, and other personal data.
If you are requested to upload a document, please use a genuine passport or driver’s license to prove your identification.
Send in your first payment.
After completing these actions, you might want to set up mechanisms that help you save money, like automatic payments into your savings account on a regular basis or round-ups.
Alternatives to 5% Savings Accounts
There are alternative ways to earn interest on savings if you don’t think a 5% percent savings account is for you. Here are some alternatives to think about:
High-yield CDs
In average, savings account rates are lower than the best CD rates. This is as a result of your agreement to swap a higher income for locking your money away for a predetermined amount of time. An inexpensive approach to start investing if you know you won’t need your money for a while is to open a certificate of deposit (CD).
Money market accounts
The greatest money market accounts have larger interest rates than conventional savings accounts, just like high-yield savings accounts. Additionally, a lot of them include checks and an ATM card, making it easier for you to access your money.
Index funds
The best 5% interest savings accounts don’t offer the same diversification or possibility for even better returns as index funds do. That being said, there’s always a chance of losing money while investing in the stock market.
401(k)
Investing consistently in your 401(k) can be a smart strategy to build long-term wealth and save for retirement. Within your 401(k) account, you can make investments in stocks, bonds, and other securities. To sweeten the pot, your employer might match your contribution.
How To Maximize APY on Savings
A 5% APY savings account is among your top bets if you want to optimize your annual percentage yield. The following advice will help you maximize the interest you earn.
Shop for the best rates
Try to choose a savings account where the interest rate is high for most or all balances. The highest interest rates are typically found with online banks. Although some banks provide promotional rates, it’s important to read the tiny print to avoid any unpleasant surprises.
Avoid fees
The interest you receive may be reduced by monthly service fees and other pointless expenses. It’s advisable to choose a free 5% APY savings account when you can, since this will relieve you of the burden of meeting waiver requirements every month, even if many banks offer ways to waive monthly account fees.
Meet APY requirements
To get the best APY on certain savings accounts, you may need to consistently fulfill specific requirements. This can entail keeping a minimum balance or reaching a predetermined monthly transaction threshold.
Automate your savings
Establish a monthly automatic transfer to move funds from your checking to savings account. This will enable you to increase your amount more quickly; generally speaking, the larger your balance, the higher your interest rate.
Take advantage of compound interest
Your funds will increase rapidly with a 5% APY because of compound interest. To benefit from this, make sure you leave your money in the account.
Bottom Line
Savings accounts with 5% interest are uncommon, and there can be conditions attached in order to get the stated rate. This can entail keeping a minimum balance or requiring a specific amount of direct payments to be made each month. There can be limitations on the percentage of your balance that is eligible for the full 5% interest rate. Do not forget to take advantage of compound interest and automatic transfers if you decide that this savings account is the one for you.