Best 5% Interest Savings Accounts
Looking for a place to stash your personal or business cash savings? Here are the best 5% interest savings accounts. I spend a lot of time discussing the need to have your money in a high-interest or high-yield savings account. I thought it was about time I put together a list of the best 5% interest savings accounts with a focus on small business owners like me.
The Best 5% Interest Savings Accounts I’m Using
I currently use Ally as my primary personal savings account (mainly because I use them for checking; they are old and solid). I’ve got a small amount in Raisin testing their platform (see my full review of Raisin, the revolutionary platform offering several banks with an APY above 5%).
And I recently turned to Live Oak Bank for all my business savings (and checking) needs.
Until a few months ago, none of these banks, Ally included, were paying a decent interest rate. So, I sent a big portion of my cash emergency savings to a Vanguard taxable investing account. This is sitting in their S&P 500 index fund.
Other 5% Interest Savings Accounts to Stash Your Personal and Business Cash
Now for the safe money. Any of these accounts below would be great compared to the savings accounts held at traditional brick-and-mortar institutions. Don’t forget that these high-yield online savings accounts are FDIC insured.
There are many online high-yield savings accounts now available across the Internet. All contain different features, both positive and negative. But most, if not all, are FDIC insured, contain no fees, and pay an interest rate significantly better than traditional savings accounts.
You should find one that’s right for you and get started saving. And don’t just consider this list. These are just some of my favorites.
Okay, here are the rest of the top savings accounts:
What are the Best 5% Interest Savings Accounts?
Let’s dig into some of the details of these high-yield savings accounts. When possible, we’ve linked to their full review.
1. Raisin
Raisin is an innovative savings platform that provides access to high-yield savings rates from multiple banks and credit unions. With just one account, you can access multiple savings products like savings accounts, money market offerings, and CD’s from the top institutions in the industry.
With Raisin, you can get the top rates without ever having to switch banks! Full review of Raisin…
2. CIT Bank
You can turn your everyday savings into much more with a CIT Bank Savings Direct account. Get competitive rates with maximum growth and earn 13x the national savings average.
Easily access your funds with remote deposit checks and make transfers through the mobile app without any account opening or maintenance fees. Moreover, take advantage of daily compounding interest to maximize your earning potential, all while being FDIC insured.
3. Live Oak Bank
Live Oak offers competitive interest rates, no monthly maintenance fees, and FDIC insurance up to $250,000. Their Savings Account offers 11x the National Average APY with no minimum balance requirements and daily compounding interest.
Customers also enjoy North Carolina-based customer support and online banking with no maintenance fees and convenient access through their mobile app.
4. Ally Bank
Ally Bank offers some pretty lovely services aimed at treating their customers responsibly. I’ve been with them for several years and enjoyed their service.
They have both a savings and an interest checking account. They also offer some of the best CDs available today. Not just because of rates but because of their flexibility. They have a no-penalty CD and a one-time rate adjustment CD. They are FDIC insured and charge no ridiculous fees. Full review of Ally Bank…
See more banks? Click show >> show
Don’t Need a Full Savings Account? See the Best Automatic Savings Apps
Why We Need High-Yield Online Savings Accounts
I love the online savings account. It has so many uses. Mainly it will simply help you start saving more of your money. When I first started getting passionate about my finances and making changes in managing my money, one of the first things I did was open up an online savings account.
Here’s why I did and some of the benefits of having one. Hopefully, this list will convince you to open one.
Put Your Savings Behind a Wall
Since these high-yield online savings accounts are usually online-only, getting to your funds isn’t as easy as a regular savings account. With regular savings accounts, you can walk into the bank or move the money in a second to a checking account using an online feature.
Online banks typically don’t have physical locations. To get your savings in and out of these accounts, you’ll usually need to transfer your money to another bank and then withdraw or use the ATM.
I know this sounds like a negative, but it isn’t. You should only need your savings for emergencies or a short-term savings goal. It wouldn’t kill you to have a 1-2 day barrier to getting your money.
Learn more about why online bank transfers take so long here.
I’ve found that this barrier often dissuades me from spending money that I shouldn’t or keeps me from raiding the emergency fund for something frivolous. So you see, this faux wall to your savings helps you to save more in the long run.
No Fees or Minimums to Worry About
Let’s face it. The big guys on the banking block have run the show for far too long. A big bank checking and savings account can cost you hundreds of fees yearly.
There’s no reason you should put up with ridiculous fees and minimums from banks so that you can lend them your money. They should be paying you. But they can’t because they are fat and bloated and need your money and fees to cover their fat cat expenses.
Don’t play that game any longer. Move to an online bank where you can enjoy a fee-free environment.
High Interest / High Yield
If you do like I did for so long and keep your savings in a regular savings account, you will earn a very small interest on your savings. Typically this is something like 0.10%. That stinks.
With a high-interest online savings account, you can earn much more. Look at the rate chart above to see these accounts’ current annual percentage yield.
These rates also fluctuate with the LIBOR rate. So as interest rates rise, you’ll see these rates shoot back up. I remember when the rates were something like 5.00%. Wow!
Calculate Your Annual Interest Earned
This calculator allows you to see the amount of interest you will earn over a year.
Steps:
- Enter the principal (the amount of money in the savings account) and
- enter the APY (the annual percentage yield) in the appropriate input fields, and
- Click the “Calculate” button
The result is displayed in the “Interest” field below the button. Try it!
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How much will you earn?
Will They Always Be High-Yield Savings Accounts?
I had a reader comment asking whether these savings accounts would still be classified as “high-yield” if the rates dropped back down again. It’s a fair question that I thought I would tackle here.
Interest rates are currently hovering around 5%, give or take a bit. I remember when these high-yield savings accounts were at their highest a decade ago. They were touting rates in the 5% range. It certainly appears that rates are going to fluctuate for a bit.
But you can’t stop your comparison there. These accounts are so special because they don’t have the internal expenses that most brick-and-mortar banks have. As a result, they are consistently able to offer a better rate on savings accounts than banks like Chase and Bank of America, neither of which come close to even 1%.
All that to say, across the industry, banking rates are up and down. So the question then becomes, where do you turn to get a better rate without sacrificing the security of FDIC-insured banking products?
You can’t turn to the stock market or peer lending. Both are too risky. Some have turned to reward checking, which is probably a good move for those who can work within the requirements of such an account.
My money is staying put in my high-yield savings account. I’m there first and foremost for the FDIC insurance I get. I also like that these accounts provide clear separation from my checking account, and they provide the liquidity to use the money if needed.
If my account gets too full, then I’ll take the excess and put it in equities.
Rates will come and go. Once the major banking rates mentioned above return to normal levels, the high-yield rates will be back. I’m fine sticking around till they do.
![The Best CD Rates [Up to 5.51%]](https://ptmoney.wpenginepowered.com/wp-content/uploads/2023/01/Best-CD-Rates-768x512.jpeg)
JRobMac You can thank for federal officials for it. On the bright side, your mortgage rate is less than 4%.
I’m just still blown away….how on earth is 0.9 considered high yield?
I was reading Dave Ramsey and all excited about saving a bunch of money and then come to find Highest interest rates less than even 1%.
Disgusted.
Wow, is this some kind of a joke?!? What happened to interest rates of 12%? Does that not exist anymore?
Investing with an interest rate of 0.9% is not much better than sticking money in a piggy bank.
Very discouraging.
Thanks man. Trying to find a good savings account is hard these days.
Thanks – one other thing that I would be interested to know but most people don’t talk about is what their ACH transfer limits are. I’m not just referring to the number of withdrawals (I’m aware that it’s six per month), but the actual amount they allow you to transfer per month/transaction. I read that some banks have a fairly low transfer limit, which could be a problem if I ever need to transfer a substantial amount of money back to my linked checking account within a short period of time. For example I’ve been saving money for a house in one of these accounts, and I would hate it if I come across a house I like and they don’t let me transfer the required amount for the down payment.
I spoke to TIAA. Their 5k a day limits are for ACH pushes; no limits for ACH pulls from another bank.
Good info!
Only one suggestion – could you also identify which banks also have IRAs?
Thanks,
Matt Poskonka
Have any opinion on the features/functionality of the banks that have the higher rates? meaning, things like transfer times, fund hold times, quality of web or mobile interface, or customer service? I am having a hard time choosing between Amex, Barclays, CIT, and Ally because all their rates are relatively similar but I get conflicting reviews online with regard to the other aspects. Speed of bank transfers (in and out) and quality of web site (meaning able to complete most activities yourself) are my top requirements.
frank
With the inflation at 3.5% is there any local or foreign Online bank that gives an yield higher than the inflation rate?
Frank, IL, USA
With the inflation at 3.5% is there any local or foreign Online bank that gives an yield higher than the inflation rate?
Frank, IL, USA
@Martin Harrs I was fortunate to open an account a week before they suspended new account openings for the high yield savings.
First Internet Bank (FirstIB.com) also offers check deposits by scanner (not only EverBank).
TIAA Direct has an FDIC online insured savings account for 1.25%! TIAA-CREF is the largest non-profit money manager for the academic community in the US known for great service.
I have ING Direct and SallieMae accounts (don’t forget about SallieMae!). SallieMae has offered rates equal to or better than ING Direct for a while, but now they’re basically the same. However, I closed my ING Direct account once Capital One took over — Capital One is a relentless marketer that fills up my mailbox with unending offers, and I don’t want to deal with that or them. I would keep an eye on ING Direct with Capital One in charge!!
Given what must be huge profit margin for banks between these savings rates and their lending rates, can anyone tell me why there is not more competition between these savings rates ? Ie why not more competitive upward pressure in these rates ?
Given what must be huge profit margin for banks between these savings rates and their lending rates, can anyone tell me why there is not more competition between these savings rates ? Ie why not more competitive upward pressure in these rates ?
SmartyPig is going down to .70 by December 9 🙁
Can you really still call them high-yield when they are so low?
Excellent point, Jared. Compared to 2004 levels, these rates aren’t high. But when you compare them to BOA and Chase checking, they are at least 3 times higher, which is still significant in my book. If you also consider that these banks are virtually fee free compared to those brick and mortar types, the differences really show up. Still, you make a good point about interest rates. It’s hard to get anything for your money these days. I know many people have turned to reward checking, and riskier products like peer lending, and even the stock market to find better returns for their savings.
I have checking accounts at 2 small banks that each pay just over 3%. Both the EZ Rewards Checking at Crow River Bank in Delano, MN and the Power Checking at BankWest in Rockford, MN are completely free checking accounts. There is no minimum balance and the 3+% rate is paid on any balance less than $25,000. The only requirements are: to access online banking and receive electronic statements, have one automatic (electronic) deposit or one ACH automatic debit (ie, automatic payment of a utility bill) and make 10 purchases with the free debit card you receive. There is no minimum purchase, so you can charge little things like lunch at McDonald’s or any small purchase. The requirements must be met each statement cycle to receive the higher interest rate. If you don’t meet the requirements, you receive a lower rate for that cycle. ATM fees are reimbursed as long as you meet the above requirements for each statement cycle. There is unlimited check writing too. It’s a great deal.
Emigrant Direct is currently at 1.1% It was 1.4% 6 months ago and has decreased since then.
Looks like the best online savings account out there today is SFGI Direct at 2.25%. Beats my Onbank account which dropped below 1%
I agree, thom. We use ING DIRECT pretty exclusively now. I have a BOA account just for making check deposits.
ING is the best, although their rates have gone down, they provide good services
GMAC bank has 2.23%. Etrade is now down to .95% as of today, 5/8/09. When I joined Etrade less than a year ago, it was at 5%.
I’ve added Schwab, EmigrantDirect, and Dollar Savings Direct.
dollarsavingsdirect.com. 2.05%, $1500 minimum. VERY easy to use. I beleive it is a part of Emigrant Bank, which as far as I know is different than Emigrant Direct.
I have used Emigrant Direct for years and their current rate is 1.65%. Their site is very easy to use and you can have multiple accounts with one log-in to help separate your different savings categories.
@RBJ – Good points. I will consider MMAs if I ever add another section to this list.
@Sarah – I use Schwab for my 401K. Thanks for the tip.
Charles Schwab has a 2% savings account right now- my friend told me about it and I recently filled out the pw to open one myself.
@Sarah – You got me really excited! However, I just called Schwab and that would be 0.2% (not 2.0%) – how big a difference it makes where the decimal is… 🙂 I recently opened a FDIC Money Market savings account at Sallie Mae’s banking division. The rate started at 1.05%, but has since dropped to 0.95% (still not bad). There are no minimum balance requirements. And you can open as many savings accounts as you like, so we use them for all of our different savings goals. @ptmoney thanks for the CITBank tip – I like anything over 1% these days!!
Should this list also include High-yield Money Market accounts? Over recent months, the Capital One MM account (with no minimums) has had a higher rate than the Capital One Savings account. Once you get over $10k, it makes sense to move that to a Capital One Savings acct (minimum to achiever higher rate).
RBJ
MrsRefney – Yeah, I hate to see these rates now. Just another way us responsible folks are getting the short end in this economy.
Oh, and high-interest savings is always on my mind. 😉
When I first joined ING, it was around 4%. How I miss those days…
I was actually going to email you today about high interest savings accts. When did you start reading minds??? 🙂