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.
Best 5% Interest Savings Accounts of April 2024
Here are the top 5% interest savings accounts for April 2024 to help you reach your financial goals:
- CloudBank 24/7: 5.26% APY
- UFB Direct: 5.25% APY
- Newtek Bank: 5.25% APY
- Mission Valley Bank: 5.12% APY
- Bask Bank: 5.10% APY
- CIT Bank: 5.05% APY
- M1 High-Yield Savings Account: Up to 5.00% APY
- Milli Savings Account: 4.75% APY
- Valley Direct: 4.80% APY
1. CloudBank 24|7: 5.26% APY
- Interest Rate: 5.26%
- Minimum Opening Deposit: $1
- Fees: No monthly fees
- FDIC-Insured: Yes
CloudBank 24/7 is a digital bank working under Third Coast Bank. They partner with Raisin to provide high APYs and digital bank account management.
They pay high APYs and have only a $1 minimum deposit requirement. CloudBank 24/7 is FDIC-insured through Third Coast Bank and has no monthly maintenance fees.
To open an account at CloudBank, you need only $1, and you can start earning its high APY without worrying about monthly fees. It takes only a few seconds to start.
2. UFB Direct: 5.25% APY
- Interest Rate: 5.25%
- Minimum Opening Deposit: N/A
- Fees: No monthly fees
- FDIC-Insured: Yes
A division of Axos Bank, UFB Direct, offers high APYs on all balances.
They don’t force you to memorize tiers or determine how to avoid monthly maintenance fees. UFB Direct is strictly an online bank, so they have lower overhead. They can then pass these savings as higher interest rates to their customers.
The UFB Direct Savings account includes a free debit card, digital tools including mobile deposit, and FDIC insurance.
3. Newtek Bank: 5.25% APY
- Interest Rate: 5.25%
- 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 only rule they have to earn the 5.25% interest rate is you must have a balance of at least $0.01. 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.
4. Mission Valley Bank: 5.12% APY
- Interest Rate: 5.12%
- 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
5. Bask Bank: 5.10% APY
- Interest Rate: 5.10%
- Minimum Opening Deposit: No minimum account balance requirement
- Fees: No monthly fees
- FDIC-Insured: Yes
Bask Bank is a subsidiary of FDIC member Texas Capital Bank that exclusively focuses on savings accounts and CDs.You can open multiple CDs, a mileage rewards card, or a high-yield savings account with the online bank.
The Bask Interest Savings Account stands out for offering 5.10% APY on all account balances, with no minimum balance requirements or fees.
The account is easy to open online, and you can access your funds at any time through the website or highly rated mobile app.
6. CIT Bank: 5.05% APY
- Interest Rate: 5.05%
- 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. If your balance drops below this threshold, the APY drops to 0.25%.
If you can keep a $5,000 daily balance, you can earn 5.05% at CIT opening an account. It takes about five minutes to complete the application to get started growing your wealth.
7. M1 High-Yield Savings Account: Up to 5.00% APY
- Interest Rate: 5.00%
- Minimum Opening Deposit: No minimum account balance requirement
- Fees: Monthly subscription fee for M1 Plus ($10) or annually $95
- FDIC-Insured: Yes
You probably know M1 for its self-directed investing, but it also offers a competitive high-yield savings account.
To earn the higher APY on the M1 high-yield savings account, you must join M1 Plus. M1 Plus costs $10/month, or $95/year, and it comes with several perks, such as better loan rates and increased cashback credit card rewards.
Non-members can save with M1 but earn 1.5% APY versus 5.0% APY. M1 also offers 20x the average FDIC insurance, protecting savings balances up to $5,000,000 through B2 Bank’s Insured Deposit Network Program.
If you’re looking for a platform to spend, save, and invest, M1, the super finance app, can provide you with everything you need in one place.
8. Milli Savings Account: 4.75% APY
- Interest Rate: 4.75%
- Minimum Opening Deposit: No minimum account balance requirement
- Fees: No monthly fees
- FDIC-Insured: Yes
Milli Bank offers a high-yield savings account if you love the convenience of banking on your phone. Build a customized savings plan, and Milli will help you achieve your goals by providing automatic deposits and helpful tips to reach even the toughest goals.
The Milli savings account is 100% online and includes ‘savings jars’ to help you see your progress for individual goals. You can set up auto-save rules, automatically transferring funds from your external bank regularly.
If you’re ready to have a mobile app that provides helpful tips to save money and access your banking 24/7, download the Milli app for iPhone or Android and start saving today.
9. Valley Direct: 4.80% APY
- Interest Rate: 4.80%
- Minimum Opening Deposit: $1
- 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
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.
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