5% Interest Savings Accounts: The Best APYs

Who Should Get a 5% Interest Savings Account?

A 5% interest savings account is a great choice for most people. It’s an excellent way to get the most from spare cash you want to keep on hand for emergencies or when saving up for something specific, like a vacation or new car. Rather than letting this cash sit without earning anything, you can get a pretty decent return and reach your goals faster.

“ I think opening a 5% savings account is a great way to take advantage of high APYs without the volatility of other investments. You have complete control over your money, and you can move it around as you see fit—whether that’s paying bills or splurging on a vacation—without penalty. ”

— Kristy Snyder

While there are better investment options with higher returns, savings accounts with 5% interest are a safe and reliable option for the casual consumer. You can withdraw and deposit new funds as required, which could come in handy if rates with your current bank drop and you want to find a new account to move your money to.

Ideally, you shouldn’t use a 5% interest savings account as your sole long-term investment. Instead, make sure you’re investing as much as possible in a tax-advantaged individual retirement account. You should also consider investing in mutual funds and exchange-traded funds, which give you exposure to a diverse range of investment options, including stock, bonds and real estate.

Our Top Picks for the Best Savings Accounts With 5% APY

1. BrioDirect

Best for Large Initial Deposits

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APY

5.00%

Min. Balance

$5,000

Monthly Maintenance Fee

None

Why We Chose It

BrioDirect earns one of the highest interest rates on our list of the best 5% interest savings accounts, but you have to make a $5,000 deposit to open the account and earn the highly competitive rate. If you have a large deposit to get started, the BrioDirect High-Yield Savings account might be a great choice. You can make your deposit by ACH transfer from an external bank account, check or wire.

Pros and Cons

No monthly maintenance fee
Easy and fast application process
Mobile and online banking availability

Must maintain $25 minimum balance to earn high APY
No checking account option

2. Newtek

Best for Ease of Opening

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APY

5.25%

Min. Balance

Monthly Maintenance Fee

Why We Chose It

The Newtek Bank Personal High Yield Savings takes just two minutes to open and doesn’t require a minimum deposit, making it one of the fastest ways to get started with your new 5% interest savings account.

Pros and Cons

No monthly maintenance fees
No minimum deposit
Takes two minutes to open

Limited to six withdrawals per month
Can only make deposits on mobile app if you have a business account
Need to have external account to open savings

3. My Banking Direct

Best for Great Rates

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APY

5.00%

Min. Balance

$500

Monthly Maintenance Fee

None

Why We Chose It

The My Banking Direct High Yield Savings Account earns a 5.00% APY on any balance over $1. There are no monthly account fees, though you’ll need at least $500 to open the account—making it one of our more consumer friendly 5% interest savings accounts. You’ll also get the same advantages as Flagstar Bank, N.A. customers, like online and mobile banking through the Flagstar Mobile Banking app, access to CDs and a checking account, which includes bill pay, Zelle and mobile checking deposit.

Pros and Cons

Earn a competitive APY on all balances over $1
Mobile and online access
No account fees

No ATM card
$500 opening minimum is higher than many competitors
No physical branch locations

4. Pibank

Best for Easy Setup

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APY

5.50%

Min. Balance

Monthly Maintenance Fee

None

Why We Chose It

Pibank offers an attractive 5.50% APY with no strings attached and no minimum balance requirements, making it ideal for individuals looking for strong returns without having to make a large initial deposit. With the simple account setup and lack of fees, this a straightforward option for consumers looking to reach their longterm savings goals.

Pros and Cons

No monthly maintenance fee
No minimum balance requirement
FDICinsured for up to $250,000 per signer
Simple setup

5.50% APY is subject to change at any time
Account is exclusively for savings
To close the account, it must have a $0 balance

The Pros and Cons of a 5% Interest Savings Account

5.00% APY savings accounts can be an exceptional low-risk investment to help you reach your savings goals. However, it is important to be aware of the advantages and disadvantages that can come with these accounts and the criteria contained in their respective fine print:

The Pros of a 5% Interest Savings Account

5% interest savings accounts can offer better returns on relatively smaller balances which can still help you meet your long-term savings goals.
This kind of savings account can keep your funds protected from inflation and offer greater returns over time even as inflation reduces the purchasing power of money.
There is limited risk investing in a 5% interest savings account and it is a secure option for growing your funds.
There is more flexibility offered in this kind of savings account than there is in a traditional Certificate of Deposit (CD).

The Cons of a 5% Interest Savings Account

❌ Many high-yield savings accounts have strict deposit caps that can limit your earnings or cause your interest rate to decrease.
❌ That 5% rate might be variable-rate, meaning that it is not permanent and could be subject to change due to market conditions.
❌ You must be aware of hidden fees and penalties that can arise from failure to maintain balance requirements or making multiple withdrawals within the same timeframe.
❌ There is also limited withdrawal flexibility with 5% interest savings accounts, which can make your funds less accessible.

The Savings Power Behind 5% Interest Accounts

With a 5% interest savings account, you will earn far more compounded interest on your initial deposit and compounded balance within the account. The national average for savings account rates is approximately 0.45%—significantly below what a 5% interest high-yield savings account could offer you today. In fact, with a 5% interest savings account, your money grows around 10 times faster than with a traditional savings account.

Here is a side-by-side comparison showing you the growth over 15 years for an initial deposit of $1,000 with a savings account with 5% APY vs. the national average of 0.45% APY for savings products:

Other Bank Products With 5% Interest Rates

If none of these 5% interest savings accounts are to your liking, there are several other bank products you can consider, including money market accounts, checking accounts and certificates of deposit (CD). The below options earn 5% or more, but they may have additional restrictions that don’t come with a savings account. As with any financial move, make sure you do your research before committing your money.

Vio Bank Cornerstone Money Market Savings Account

Vio Bank’s money market account comes with a 5.05% APY and no monthly fee. You can also take advantage of automatic savings transfers to help grow your money further. You just need $100 to open an account.

Consumers Credit Union Rewards Checking

It’s rare to find a checking account with 5% APY, but the Consumers Credit Union Rewards Checking delivers on balances up to $10,000. The catch: You need to make $1,000 or more each month in credit card purchases. You’ll also enjoy no monthly maintenance fees, two-day-early direct deposit and unlimited ATM fee reimbursement.

First Internet Bank 12-Month CD

If you open a 12-month CD with First Internet Bank, you’ll earn 4.42% APY. There’s a $1,000 minimum opening deposit, as well as an early withdrawal penalty of 180 days of interest. That said, you’re guaranteed this rate for a full year, which isn’t always true with a savings account.

What Is APY (Annual Percentage Yield)?

APY stands for annual percentage yield. It’s a percentage that represents your annual return on an investment. It includes the effects of compounding interest. Typically, most savings accounts compound interest daily and pay it out monthly. This interest adds to your balance over time, increasing the money you’re earning interest on. In the case of a 5% APY savings account, it means you’ll earn a total of 5% interest throughout the year.

APY is different than the interest rate. The interest rate is the amount you earn on your money without the effects of compounding and is lower than the APY. For example, the Laurel Road High Yield Savings account has a 4.50% APY and a 4.40% interest rate.

How to Choose a Savings Account With 5% Interest

Choosing a savings account with 5% interest boils down to a few main factors. You’ll want to closely compare the APY, minimum balance requirements, monthly service fees, customer service, transaction limits and any other fees before making your selection.

Look for Higher APY Savings Accounts

Higher APYs can result in better earnings, and even a few tenths of a percentage more can impact what you make. If you invested $10,000 in both a 5% APY and a 5.25% APY account, the 5.25% account would earn $25 more over a year.

Ensure You Meet and Understand Minimum Balance Requirements

Luckily, most of the 5% interest savings accounts we mentioned here don’t have a minimum balance requirement. But some require you to either have a minimum opening deposit or balance to earn a high APY. Carefully review this information to make sure you have enough to fund the account.

Find Out if There Are Any Monthly Service Fees

Monthly service fees can cancel out the interest you earn. Since you have so many good options that don’t charge this fee, you can likely find one that meets your needs.

Always Choose a Bank That Prioritizes Customer Service

Ideally, you want a bank that offers customer phone support hours at least every day; 24/7 support via live chat is an added bonus, as is online messaging and a resource center. Many banks aren’t open on the weekends, so if you like to do your banking on Sunday mornings, you might want to find an institution with support during that time. When comparing options, you can also check out customer reviews online through trusted sites like the Better Business Bureau (BBB) or Trustpilot.

Take Note of the Number of Permitted Withdrawals

The Federal Reserve used to have Regulation D, which limited you to six monthly withdrawals or transfers from your banking account. But that regulation is no longer in place, so some banks allow you to make unlimited withdrawals. This factor can come in handy if you plan on using your savings account to pay bills. Be sure to check if there are restrictions on withdrawals before opening a savings account.

Read the Fine Print and Be Aware of Other Service Fees

When selecting a 5% interest savings account, make sure to consider other fees, including overdraft fees, wire transfer fees and even statement fees. Check for the bank’s Truth in Savings disclosure—it’s a required document that lists all the interest rates and fees associated with an account.

How to Open a 5% APY Savings Account

Opening a 5% APY savings account will require verifying your identity and providing a fair bit of personal information. Here are the basic steps you can expect when opening a new bank account.

Check the bank’s application methods. Many banks let you apply online, but some also offer phone or in-person applications.
Get an identifying document handy. The bank will likely ask to see a government-issued ID like your driver’s license and Social Security number.
Enter your contact information. The application will ask for your name, address, email address, phone number, and age. These are used to verify your identity and make sure the bank can contact you.
Select the specific account you want. Some banks offer multiple savings accounts, so make sure you’re choosing the 5% APY savings account.
Read and agree to any terms and disclosures. These documents typically include important stipulations about your account that you’ll want to be aware of.
Wait for the bank to approve your application. For many banks, this happens immediately. Other banks may need a few days to review your information.
Complete your initial deposit. Some accounts require you to make a minimum deposit within a certain number of days, so make sure you link up an external account to get the transfer going.
Manage your account. Once your account is open, you can put your savings account to use. You can set up automatic withdrawals or manually transfer over a flat amount or percentage of your income. For example, 10% to 20% each month.

How To Get the Most out of Your 5% Interest Savings Account

If you’re looking into 5% interest savings accounts, here’s how to get the most out of one:

Compare APYs.Look at banks, credit unions and online lenders to find the most competitive APY. The higher the APY, the more you earn.
Go fee-free.You can earn a lot if you consistently save with a 5% APY. But you won’t earn as much if fees are taking a bite out of that. Check for potential fees and choose a savings account where you won’t get hit with fees.
Read the fine print.Some banks can lure you in with a 5% interest savings account, but may not offer the rate on the total balance. See if there are any limits or restrictions you should know about, so you’re not surprised and disappointed.
Set up automatic withdrawals.Connect your checking account with your savings account to set up automatic withdrawals. You can choose an amount and frequency, so you continue to save without any extra effort. Be mindful of your checking account balance to avoid overdraft fees.
Add windfalls.Whether it’s for your birthday, a tax refund or cash back, consider putting all your windfalls into your 5% interest savings account to earn even more.
Set a goal.The best way to save money is when you’re motivated. Set a goal that inspires you to put money away. For example, having $10,000 in an emergency fund, setting up a travel fund to go to Spain, or to buy your next car in all cash, or have a 20% down payment ready.
Track your progress.After setting a goal or multiple goals, track your progress so you can see where you stand. Check your accounts monthly or quarterly, so you can adjust as needed.
Cut expenses.To get the most out of your 5% interest savings account, you want to save as much as you can. Review your expenses and see which ones you can eliminate. You can track your subscriptions and cancel any you don’t use. Reduce in other areas, without cutting back too much. Taking this approach means it may not feel like you’re cutting back that much, but it’s making a difference in your savings.

Frequently Asked Questions

Who Has the Highest Interest Savings Account?

Currently, the Newtek Bank Personal High Yield Savings account has the highest APY at 5.25%. But there are plenty of other savings accounts with over 5% interest rates.

How Much Is 5% APY on $1,000?

You’d earn $50 after one year with a $1,000 deposit in a 5% APY account. If you left that money alone for five years, you’d earn a total of $276.28. And if you let it sit for 10 years, your total earnings would be $628.89. Of course, this all relies on the 5% APY staying the same for that long, which is unlikely.

Can the Rate Change on a 5% APY Savings Account?

Banks reserve the right to change savings account rates at their discretion. They’re variable rate accounts, which means you can expect your rate to go up and down for however long you hold the account.

Where Can I Get 5% Interest on My Savings Account?

If you’re wondering where you can get 5% interest on your savings account, you can look into various financial products. Currently, high-yield savings accounts, certificates of deposit and money market accounts are offering 5% APY or higher. accounts.

Newsweek writer Melanie Lockert contributed to this post.

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