Best 5% High-Yield Savings Accounts for December 2024
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Climb the savings ladder fast with top 5% interest savings accounts.
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- Newtek Bank:
Personal High Yield Savings Account - 5.25% APY
Best High-Yield Savings Accounts with 5% Interest
Credit unions are run by their members so they're less focused on profit, and more focused on customer satisfaction.
How much do you earn with a 5% savings account?
A 5% APY savings account can quickly grow your money, especially with compounding interest. Use this calculator to see just how much you will earn.
Here's a table of how much you would have with 5% interest and different monthly contributions.
| Monthly contribution | 1 year | 3 years | 5 years |
|---|---|---|---|
| $1,000 Initial Deposit | |||
| $0 | $1,051 | $1,161 | $1,284 |
| $100 | $2,282 | $5,046 | $8,100 |
| $300 | $4,743 | $12,813 | $21,732 |
| $500 | $7,203 | $20,580 | $35,364 |
| $1,000 | $13,355 | $39,999 | $69,445 |
| $5,000 Initial Deposit | |||
| $0 | $5,256 | $5,809 | $6,420 |
| $100 | $6,487 | $9,693 | $13,236 |
| $300 | $8,948 | $17,460 | $26,868 |
| $500 | $11,408 | $25,228 | $40,500 |
| $1,000 | $17,561 | $44,646 | $74,581 |
| $10,000 Initial Deposit | |||
| $0 | $10,513 | $11,618 | $12,840 |
| $100 | $11,743 | $15,502 | $19,656 |
| $300 | $14,204 | $23,269 | $33,288 |
| $500 | $16,665 | $31,037 | $46,920 |
| $1,000 | $22,816 | $50,456 | $81,001 |
| $20,000 Initial Deposit | |||
| $0 | $21,025 | $23,236 | $25,680 |
| $100 | $22,256 | $27,120 | $32,496 |
| $300 | $24,717 | $34,888 | $46,128 |
| $500 | $27,177 | $42,655 | $59,760 |
| $1,000 | $33,330 | $62,074 | $93,841 |
Can you lose money in a 5% savings account?
You cannot lose money in a 5% savings account as long as the bank is insured by FDIC (or NCUA for credit unions). With FDIC insurance, your money is protected by the federal government up to $250,000 per depositor, even if the bank closes.
But if you have more than $250,000, anything over that amount is not guaranteed. So if you have a lot to save, it's best to split them into different savings accounts.
Another instance where you can lose money is by failing to meet any minimum balance requirements. In that case, you may have to pay a monthly fee.
Pros and Cons of a 5% APY savings account
Here are the pros and cons of a 5% interest rate savings account:
Pros:
- Earn more in the short-term
- Risk-free investment
- Funds are liquid - you can access them at any time
- Quick and easy to open
- Savings are FDIC or NCUA insured up to $250,000
Cons:
- APY is subject to change at any time
- Usually offered by online-only banks
- Usually limited to 6 withdrawals per month
- Some accounts may have requirements to earn the highest APY (or there's a cap)
How to Open A 5% Interest Rate Savings Account
Banks let you open an account in different ways. Here's how the online process typically goes:
- Visit your bank's website and select your preferred savings product.
- Fill out the application with your legal name, birth date, SSN, and contact details.
- Submit your application and fund your account.
- Be 18 years or older
- A US residential address
- A valid government ID
- A Social Security or Tax Identification number
- An initial deposit (if required)
How to Maximize 5% Interest Rate Savings Account
Here are things you can do to maximize your high-yield savings account:
- Look for the best rates.
Before you pick an account, check different offers to find the best rate. Look for one with an APY that applies to all balances. -
Find an account with no monthly fees.
Monthly charges can easily eat into your earnings. So, choose an account with no fees or one you can waive. - Satisfy APY requirements.
You may need to meet a specific balance or set up direct deposits to get the highest rate offered. Make sure to satisfy these requirements to maximize your account. - Make use of automated savings tools.
Many high-yield savings accounts are often from online banks with digital banking tools. You can use features like automatic transfers and savings goals to make your money work harder for you.
Alternatives to 5% savings accounts
There are other types of accounts offering 5% APY that may fit your needs more. Here are some alternatives:
Certificate of Deposit:
A CD gives you a fixed interest rate for a fixed term. Typically, longer terms will have higher APYs. CDs are a better option if you're saving for long-term goals and want to lock in a guaranteed high APY.
The catch is that you must deposit a fixed amount of money, and you can't add to it. You also can't withdraw early or else there will be penalties.
High-Yield CD Rates - Up to 4.50% APY
- No fees
- $1 minimum deposit
- FDIC insured
| Term | CD Rates |
|---|---|
| 3 Month | 4.50% APY |
| 5 Month | 4.40% APY |
| 6 Month | 4.40% APY |
| 9 Month | 4.35% APY |
| 12 Month | 4.25% APY |
12-Month No-Penalty CD - 4.25% APY
- $1 minimum deposit
- 24/7 online access
- Federally insured by NCUA
Certificate of Deposit
- 4.00% APY for 12-month term
- 3.80% APY for 18-month term
- 3.40% APY for 36-month term
- 3.40% APY for 5-year term
CIT Bank Term CDs - Up to 3.50% APY
- Up to 3.50% APY
- $1,000 minimum opening deposit
- No monthly maintenance fee
- Member FDIC
| Term | CD Rates |
|---|---|
| 6 Month | 3.00% APY |
| 1 Year | 0.30% APY |
| 13 Month | 3.50% APY |
| 18 Month | 3.00% APY |
| 2 Year | 0.40% APY |
| 3 Year | 0.40% APY |
| 4 Year | 0.50% APY |
| 5 Year | 0.50% APY |
12-Month High-Yield CD - 4.00% APY
- $1 minimum deposit
- No fees
- 24/7 online access to funds
- Federally insured by NCUA
Bonds:
This is a type of low-risk investment. It's basically a loan to the government or a company, and you get regular interest payments. When your bond matures, you get back the money you initially invested.
For an easy way to invest in bonds, check out Worthy Bonds. It offers 7% fixed interest with no fees, and you can withdraw at any time without penalty.
Worthy Bonds - Fixed 7.0% APY
- Bonds are only $10 each
- Earn a fixed 7% APY (until 01/01/26) and interest is compounded daily
- No minimum balances. No penalties. No fees.
- Sales and redemptions are made online or through app
- Bonds are not subject to Wall Street Volatility
Is a 5% Savings Account Right for Me?
A high-yield savings account is good for emergency funds and short-term goals (like vacation, wedding, or house down payment). Your money is not locked in, so you can access it when you need it. And there's no risk of losing money.
You'll want to look at the requirements of each account. Some accounts give you the APY on the entire balance, while others have requirements or a cap. So if you want to save big, look for an account that fits how much you plan to put in.
Also, weigh the opportunity cost. Consider what else you can do with the funds. If you don't need access and can afford some risk, there could be alternative investments that could provide a better return.
What the Experts Say
CreditDonkey asked a panel of industry experts to answer readers' most pressing questions. Here's what they said:
Bottom Line
A 5% savings account is a great option if you're looking for a place to park your money. It will boost your savings quickly with practically no risk.
Just be careful that some accounts may have requirements to earn the 5%. So make sure you can comply with them, and you should be growing your money in no time!
Write to Katarina Rodriguez at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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