Best 5% Interest Savings Accounts of December 2024

Saving for a big goal can feel like it takes forever. Especially when saving your money at a traditional bank with a low APY.

However, you can find many 5% interest savings accounts online that pay much higher APYs and don’t charge fees, helping you reach your goals faster.

Featured High Yield Savings Account - 5.05% APY

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Earn up to 5.05% APY on an HYSA from Valley Direct. This offer is for new customers only and requires a minimum $5,000 deposit, otherwise, you'll earn 4.25% APY

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Best 5% Interest Savings Accounts of December 2024

Here are our top 5% interest savings accounts for December 2024 to help you reach your financial goals:

1. Valley Direct
2. Varo Money
3. Newtek Bank
4. OpenBank
5. Mission Valley Bank
6. CIT Bank

1. Valley Direct

• Minimum Opening Deposit: $1
• Max Balance For High Yield:  Unlimited
• Fees: No monthly fees
• FDIC-Insured: Yes

Valley Direct pays 10x the national average for savings accounts, allowing your funds to grow faster. They provide 24/7 online access to your account and only a $1 minimum required opening deposit; it’s easy to start earning on any balance.

Valley Direct doesn’t charge monthly maintenance fees, and their deposits are FDIC-insured up to $250,000. Valley Direct offers the option for mobile deposits to make it easier and faster to start earning interest on your funds.

New and existing customers of Valley Bank, Valley Direct’s partner, can open a high-yield savings account in a few minutes on their phone to start earning interest immediately.

Start Saving with Valley Direct

2. Varo Money

• Minimum Opening Deposit: $1
• Max Balance For High Yield:  $5,000
• Fees: No monthly fees
• FDIC-Insured: Yes

Varo Bank is a true online-only bank with no hidden fees and pays high interest rates. Unlike other online-only bank accounts, in 2020, they acquired their own national banking charter, so they don’t have to rely on outside resources for their banking services.

Varo Bank is one of the largest neobanks in the country, with over 7 million customers and a user-friendly mobile app.

Varo Bank offers a fee-free checking account, savings account, and many savings tools. They have 40,000+ fee-free ATMs and offer a credit-building credit card for people looking to build credit.

The Varo Bank mobile app lets you track your bank balances and transactions, make mobile deposits, Zelle friends and family, and access live support in just a few seconds, all for free.

Varo offers a tiered APY structure. The base rate is 2.50%; however, if you maintain a $1,000 direct deposit and keep a positive balance, you can earn 5.00% APY on your first $5,000.

Learn More:

• Visit Varo Money

3. Newtek Bank

• Minimum Opening Deposit: No minimum account balance requirement
• Fees: No monthly fees
• FDIC-Insured: Yes

Newtek Bank, a subsidiary of NewtekOne, Inc., is known for its superior business bank accounts. Still, they offer a high-yield personal savings account with no minimum balance to help you save for personal goals.

The digital platform allows easy access to your banking information, and your deposits are insured up to $250,000.

To open a high-yield savings account at Newtek Bank, you only need your personal identifying information and access to an external account for funding. You can set up your account quickly and securely online to earn interest immediately.

Start Saving with Newtek Bank

4. OpenBank

• Minimum Opening Deposit: $500
• Fees: No monthly fees
• FDIC-Insured: Yes

OpenBank is the new digital arm of Santander Bank.

You are eligible to open an OpenBank savings account if you do not reside in a state with a Santader Branch, which is every state in the U.S. except for Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island.

Opening an account is done completely online, and you’ll need at least a $500 minimum opening deposit.

Start Saving with OpenBank

5. Mission Valley Bank

• Minimum Opening Deposit: $1
• Fees: No monthly fees
• FDIC-Insured: Yes

Mission Valley Bank is a newer bank located in Sun Valley, California. Their mission focuses on supporting small businesses and communities to help them thrive, and they provide excellent customer service.

Their partnership with Raisin allows them to offer high APYs and no monthly fees, allowing them to remain committed to their desire to provide superior customer service.

If you want to take advantage of Mission Valley’s incredible customer service, high APYs, and no monthly fees, open an account through Raisin and start earning today!

Start Saving with Mission Valley Bank

6. CIT Bank

• Minimum Opening Deposit: $100
• Fees: No monthly fees
• FDIC-Insured: Yes

The CIT Platinum Savings account offers 11x the national savings average on balances over $5,000. There are no fees to open or maintain an account, and they have a robust mobile app to make banking from anywhere a breeze.

The only downside with CIT is you must carry a $5,000 average daily balance to earn the highest APY. If your balance drops below this threshold, the APY drops to 0.25%.

It takes about five minutes to complete the application to get started growing your wealth.

Start Saving with CIT Bank

What Is a 5% Interest Savings Account?

A 5% interest savings account pays you much more than traditional banks.

You can earn 5% on your deposits annually or $50 for every $1,000 saved. Always pay attention to the terms for 5% savings accounts to ensure you meet the requirements.

For example, some banks require a minimum daily balance, and others require a specific number of direct deposits or other requirements to earn the interest. In addition, some banks have tiered interest rates, only paying the higher APYs on certain balances.

How Does a 5% Interest Savings Account Work?

Most 5% interest savings accounts are online, so you must sign up online and manage your bank account on your computer or phone.

Typically, you link an external bank account to fund your account, and you can often set up automatic transfers or direct deposits to grow your balance.

Many banks limit your withdrawals, although Regulation D no longer limits the number of withdrawals a consumer can make from their savings accounts.

Factors To Consider When Choosing the Best 5% Savings Accounts

Before opening a 5% savings account, consider these factors.

• Opening Requirements: Some banks have minimum opening balance requirements. Most on our list don’t; they are $100 or less if they do. However, always read the fine print as banks change their requirements often. Ensure you meet the requirements to earn the highest APY your chosen bank offers.
• Interest rate requirements: If a bank offers tiered interest rates, you only earn the high APY advertised when you meet the minimum daily or monthly balance requirements. If your balance falls below the threshold, you will earn the lower interest rate that isn’t advertised.
• Fees: Most online savings accounts don’t charge monthly maintenance fees but never assume. Read the fine print and learn what the account will cost. Besides monthly maintenance fees, you may also pay fees for other services, such as teller transactions, paper statements, or wire transfers.
• Online/Mobile Banking: Most 5% interest savings accounts are online banks, so you must understand how to access the account. Is it online only, or do they have a mobile banking app? Determine if they offer mobile deposit or an ATM card to access your funds. If not, look closely at the transfer timeline to understand how and when to access your funds.
• Features: Consider what you need from an online bank, including how you’ll access your funds, if an ATM card is included, or if they offer unique services like savings buckets to help you reach your financial goals.
• Accessibility: Consider how easy it is to access your funds. For example, if the account doesn’t include an ATM card, you must transfer funds electronically to an external bank account, which can delay how long it takes to receive the funds.
• Ratings: Banking online can be efficient and beneficial, but there are risks. Doing your due diligence, researching the bank’s legitimacy, and reading others’ reviews can help you determine if it’s the right fit for you.

How To Open a 5% Interest Savings Account

Most online banks have a simple onboarding process. You choose the bank account you want to open and click ‘Open account.’ If you are already a customer of their parent bank, you can log in with your existing credentials and add the account.

If you’re a new customer, you must provide some basic information proving your identity and the details of an external bank to fund the account.

Typically, it takes only a few minutes to open a 5% interest savings account.

Pros and Cons of 5% Interest Savings Accounts

It seems like earning 5% interest on a savings account would have only positives, but there are some downsides to consider.

Pros

• Earn more interest than the average savings account
• Low risk, especially if FDIC-insured
• Funds are readily accessible

Cons

• Lower returns than higher-risk investments
• Some banks limit accessibility to the funds
• There may be a minimum balance requirement

Tips To Get the Most From Your 5% Interest Savings Account

To make the most of high-interest savings accounts, consider the following tips:

• Watch for fees: Many online banks offer high-interest savings accounts that don’t charge fees but always read the fine print. Avoid accounts that require a monthly fee, as many accounts pay high-interest rates without the fees
• Look for balance requirements: Some accounts require a specific balance requirement to earn the higher APY. Read the disclosures to ensure you’ll earn as much as you think, even on small balances
• Set up automatic transfers: Regularly contributing to your savings account allows your balance to grow faster. The higher your savings balance is, the more interest you’ll earn
• Leave your money to grow: Avoid withdrawing from your savings account as much as possible to take advantage of compound interest, letting your earnings earn money

Example of 5% Savings Account Impact on Your Money

Seeing how your money can grow by earning 5% interest on a savings account can help you understand the importance of having higher balances.

Here’s how your money would grow in one year with a 5% interest rate compounded daily:

• Save $1,000: Earn $51 interest
• Save $5,000: Earn $256 interest
• Save $10,000: Earn $513 interest

Alternatives to 5% Interest Savings Accounts

If a 5% interest savings account doesn’t feel like the right choice, consider these alternatives:

Money Market Accounts

MMAs are a cross between a high-yield savings and a checking account. They usually include a checkbook and ATM card but often have higher minimum balance requirements to earn the high APY.

CDs

Certificates of deposit are timed deposits that pay high APYs for some terms. You must keep the funds locked up for the entire term, or you’ll pay a penalty for early withdrawal. Many CDs also automatically renew, so know the rules before investing.

401k

Investing for retirement is the key to having enough money during your golden years. Money invested in your retirement account is tax-advantaged and can be invested in high or low-risk investments to help your retirement savings grow.