The Best 5% Interest Savings Accounts
After a thorough examination of the savings account options available on the market today we concluded on a list of several savings account options that offer interest rates of approximately 5% or more, which we consider to be market leading interest rates. If you’re short on time, we’d highlight the following 4 savings options which had the most attractive interest rates1:
- Current – 4.00%
- U.S. Treasury I Bonds – 9.62%
- Genisys Credit Union – 4.07%
- T-Mobile Money – 4.00%
Each of these options offers the potential to earn an attractive rate of interest – well above what conventional savings account rates – over time. We discuss these account options and several other accounts with competitive interest savings rates below.
Standard Savings Accounts Interest Rates Are Low
All high yield savings accounts (almost by definition) offer savings rates that are dramatically above the average rates standard savings accounts offer. Remember, the idea behind a savings account is to help you build savings. In return for you choosing to keep your hard-earned money in these accounts, your bank or credit union agrees to pay you interest at a certain rate, allowing your savings to compound over time. The rate of interest offered is obviously very important. But far too many consumers settle for very low interest rates. A quick examination of the interest rates currently being offered on the savings accounts from the 5 largest national banks clearly demonstrates this point.
As shown, while these banks have a disproportionate percentage of bank accounts in the country (and are all fantastic institutions) you’re not going to compound your savings by much if you use one of their savings account options. In fact, this isn’t an issue that’s isolated to the large banks: data from the Federal Deposit Insurance Corporation (FDIC) shows that the national average interest rate on savings accounts in the United States is currently just 0.10%.
Between these two examples, it should be very clear how valuable (and rare) 5% interest savings accounts are. In times like these where inflation is particularly high (9% as of the latest reading in July), taking advantage of high interest savings accounts is not just a good idea but critical to ensuring your hard earned money does not lose value. This article summarizes our research into the best high yield savings accounts, which we believe are truly the unicorns when it comes to savings account options, with a description of the offerings, a overview of the pros and cons and our verdict.
These are the Best 5% Interest Savings Accounts
U.S. Treasury I Bonds – 9.62%
U.S. Treasury I Bonds are savings bonds issued by the United States governments that earn interest based on a fixed rate and an inflation rate. Indeed, this is not a typical savings account and more of a savings vehicle. That said, we included it in this list because of its uniquely attractive interest rate and the fact that at the end of the day it achieves the same result for those looking to earn interest.
With the U.S. Treasury I Bonds, interest accrues on the first day of the month of the issue date and compounds monthly. The advertised annual interest rate, which as of this writing is 9.62%, is applicable for the 6 month period following the purchase of the I Bond. Therefore consumers that purchase I Bonds between now and October 2022, will earn a 9.62% annualized return on their money over the six month period from when they make the purchase.
- Pros of U.S. Treasury I Bonds
- Very attractive interest rate that factors in the rate of inflation
- Low risk given it is issued by the U.S. government
- Interest earned is only taxable on a federal basis (no state tax)
- Cons of U.S. Treasury I Bonds
- The maximum amount each individual can purchase in a given year is $10,000
- Interest only compounds semi-annually
- You can only cash the bonds after 12 months, and face a penalty if you cash then sooner than 5 years
Verdict on U.S. Treasury I Bonds – while this isn’t your conventional high yield savings account, it does currently offer a compelling rate of interest and is one of the best high yield savings options available today. Because of the way the interest rate is determined (a fixed component and an inflation component), I Bonds provide somewhat of a hedge against higher inflation. Our estimate is that consumers can earn an average interest rate over a 5 year period of 4.2% by purchasing I Bonds today2.
Answers to Frequently Asked Questions About U.S. Treasury I Bonds
- You are eligible to purchase an I Bond if you have a Social Security Number and are either a U.S. citizen, U.S. resident or Civilian employee of the United States.
- You have to open a TreasuryDirect account to purchase the bonds (available here).
- You can purchase $10,000 of I Bonds per year for yourself electronically and up to $5,000 in paper I Bonds using your federal income tax refund.
- The bonds earn interest for 30 years unless you cash them first. There is a penalty of 3 months worth of interest if you cash the bonds before 5 years.
Landmark Credit Union – 7.50%
Landmark Credit Union is a Wisconsin-based credit union that currently has more than 360,000 members. It serves customers that live or work in Southern and Northeastern Wisconsin in addition to customers that live in Lake and McHenry Counties in Illinois. The company offers a Premium Checking account that pays a 7.50% APY on balances up to $500. You have to open a Premium Checking account, enroll in e-statements and a direct deposit of $250 or more per month in order to be eligible.
- Pros of Premium Checking
- 7.50% APY is a best in class compared to other high yield savings accounts
- No monthly service fee
- No minimum balance requirement
- Cons of Premium Checking
- Interest Rate caps off at $500 and falls to 0.10% on amounts above $500
- Only available to consumers that live within areas of Wisconsin and Illinois
Verdict on Landmark Credit Union – this is a great savings options for consumers that are eligible to open an account with the company. However, because the 7.50% interest rate only applies for the first $500, there isn’t much of an incentive to maintain a balance much higher than $500 in the account. This is simply because the interest rate you earn falls very significantly above the $500 threshold. You can visit the credit union’s website to learn more.
Current – 4.00%
Current is one of the most interesting companies on the list and also has a compelling savings account option. Current falls under the category of a banking disruptor but it is actually not a bank but a technology provider (incidentally it was valued at over $2 billion a few years ago). All of Current’s banking services are provided by Choice Financial Group which is an FDIC-insured bank. The company currently offers a savings account with a 4.00% APY up to $6,000. For amounts beyond this, customers will not accrue any additional interest.
- Pros of Current Savings Account
- Earn interest up to $6,000, which is higher than most savings account options
- No account fees
- Interest is compounded daily
- Cons of Current Savings Account
- Have to open 3 savings pods to maximize the value
- Interest Rate falls to 0% above $6,000
Verdict on Current – what we like most about Current is that its interest savings account earns the 4% rate of interest up to $6,000. This means that if you maintain a balance of $6,000 with Current, over the course of a year you’ll earn at least $240 in interest, or $20 a month! Aside from having to set up 3 distinct savings pods to take advantage of the $6,000 (each pod can accommodate $2,000) there aren’t many disadvantages with this savings option. You can visit the company’s website to learn more.
Aspiration – 5.00%
Aspiration’s self-described mission is to build a better world and the company achieves this in part by donating 10% of every dollar their customers pay them to charities and also by avoiding certain types of companies such as oil companies when it comes to its commercial activities. The company plans to plant 125 million trees by 2030.
Aspiration has two excellent savings account options which allow you to earn a 3.00% and 5.00% APY respectively on the first $10,000 in your account. However, in order to qualify for these interest rates you need to spend $1,000 or more each month using your Aspiration debit card. If you fail to spend $1,000 in a given month, then the 5.00% APY falls to 0.25%. This is still 2.5 times the national average, but a lot less compelling than 5.00%. In addition, to qualify for the 5.00% interest rate you have to be a subscriber paying either $7.99 a month if you elect for the monthly plan or $5.99 a month if you commit to the annual plan.
- Pros of Aspiration Savings Account
- Potential to earn 5% APY up to $10,000 which is higher than a average upper limit
- Product is designed to help the environment
- Cons of Aspiration Savings Account
- Need to spend $1,000 a month with your debit card to qualify for 5% interest rate
- Need to maintain a membership that costs $72-96 a year to qualify for 5% rate
Verdict on Aspiration – if you can satisfy the $1,000 monthly spend threshold on your debit card and have at least $3,000 which you can keep in the account, this is a great savings account option. The more money you have available to keep in the account the better. For example, if you have $3,000 and opt for the annual Aspiration Plus subscription, after a year you will earn $150 in interest but would have paid $72 in subscription fees. This works out to a 2.6% annual rate of interest on your money. However, if you instead have $7,000, the same calculation results in a 3.97% rate of interest. You can learn more about the company here.
La Capitol Federal Credit Union – 4.25%
La Capitol Federal Credit Union is a Louisiana-based credit union that currently has more than 50,000 members. The company serves customers that live or work in certain areas of the state or attend certain schools (see our overview of the credit union for complete eligibility information). However, anyone can become a member by joining the Louisiana Association for Personal Financial Achievement. The Choice checking account pays a 4.25% APY on balances up to $3,000 and importantly, the rates still remain attractive if you have a balance above $3,000. The account also comes with added benefits such as $25 of ATM refunds each month.
- Pros of Choice Checking
- Attractive interest rates all the way up to $10,000 (falls to 2.00% APY above $3,000)
- Up to $25 in ATM refunds each month
- Cons of Choice Checking
- Have to maintain $1,000 balance or pay $8 monthly maintenance fee
- Have to complete 15 non-ATM debit transactions each month to be eligible for the advertised interest rates
Verdict on La Capitol Federal Credit Union – by joining the Louisiana Association for Personal Financial Achievement, anyone can join La Capitol Federal Credit Union and get access to its Choice checking account. This is a great savings account option for consumers that are heavy users of their debit cards for day to day purchases and can maintain $1,000 or more in their account. Both of these are crucial as if you cannot maintain the balance or surpass the debit transaction threshold, you not only lose out on earning the 4.25% interest rate, but you also will have to pay the monthly maintenance fee of $8.00. You can learn more about the credit union by visiting their website.
Mango Savings – 6.00%
This is one of the most exciting high yield interest savings accounts currently available. Mango Money is a digital bank that offers a Prepaid Mastercard (known as the Mango Card) and a savings account (Mango Savings). Once you have activated and loaded your Mango Card you will then be eligible to open a Savings Account where you can earn a 6.00% APY on the first $2,500 balance. This is one of the highest yields being offered on savings accounts.
- Pros of Mango Savings Account
- 6% annual percentage yield is best in class
- 2% fall-back annual percentage yield is still multiples of the national average
- Cons of Mango Savings Account
- Have to open a prepaid Mastercard to gain access
- Have to spend $1,500 or more each month using the prepaid Mastercard to qualify for the 6% annual percentage yield
- No interest is earned on balances above $5,000
Verdict on Mango Savings – it is tough to beat a 6% annual percentage yield. That said, you do have to jump through hoops to get access to this attractive rate including opening a prepaid Mastercard and using it a lot each month. This is a great option for consumers that are OK making the Mango Prepaid Mastercard their primary debit card and who are also able to consistently spend $1,500 or more each month. You can learn more about Mango Savings accounts by visiting this page.
Consumers Credit Union Rewards Checking – 4.09%
Consumers Credit Union is a Michigan-based credit union that currently has more than 120,000 members. The company serves customers that live, work or attend post-secondary school in the Lower Peninsula of Michigan. The credit union offers a Rewards Checking account that pays a 4.09% annual percentage yield on balances up to $10,000. Importantly, for balances above $10,000 the credit union pays a 0.20% APY which is still double the national average and significantly higher than what the big 5 banks offer on their savings accounts.
- Pros of Consumers Credit Union Rewards Checking
- Attractive interest rates all the way up to $10,000
- Unlimited reimbursement for any and all ATM fees
- No monthly maintenance fees for the checking account
- Cons of Consumers Credit Union Rewards Checking
- Have to apply, get approved and open a CCU Visa Credit Card and spend $1,000 a month in purchases to qualify for the 4.09% rate
- Only available to consumers that live, work or attend school in parts of Michigan
Verdict on Consumers Credit Union Rewards Checking – if you are eligible to join this credit union this is definitely a savings account option worth strongly considering. On the one hand, it isn’t ideal that you will need to open a new credit card (which in the short term will impact your credit scores) and have to maintain a decent level of monthly spending to qualify for the 4.09% interest rate. But on the other hand, the CCU Visa Credit Card does not have an annual fee and the credit union will pay the interest rate up to $10,000 – if you can fully max this out, you can earn more than $400 a year from your savings account! Visit here to learn more.
Genisys Credit Union High Yield Checking – 4.07%
Genisys Credit Union is a Michigan-based credit union that is one of the largest credit union’s in the state and that has more than 250,000 members. Anyone that lives, works, worships or attends school in the state of Michigan is eligible to join the credit union, and in fact it falls into the catgeory of a credit union that anyone can join, as by becoming a member of the Arthritis Foundation or the Pain Creek Center For The Arts anyone can gain eligibility. The credit union offers a High Yield Checking account that pays a 4.07% annual percentage yield on balances up to $7,500. For balances above $7,500 the credit union pays a 0.05% APY, which is below the national average and does not provide much of an incentive to maintain significant balances above $7,500.
- Pros of Genisys High Yield Checking Account
- Attractive interest rates all the way up to $7,500
- Widely accessible as anyone can become a member of the credit union
- No monthly maintenance fees for the checking account
- Earn 1 point for every $2 you spend with your Debit MasterCard
- Cons of Genisys High Yield Checking Account
- Have to make ten or more debit card purchases of $5.00 or more each month to qualify for the advertised interest rate
- Interest rate falls below the national average on balances above $7,500
Verdict on Genisys Credit Union High Yield Checking – this is fantastic savings account option for consumers that are able to fully take advantage of the high limit. While the company does require you to make ten or more debit purchases of $5.00 or more each month, that is easily achievable (just 3 transactions a week gets you there) and you also earn reward points as you spend. As far as conditions go, we think the High Yield Checking account conditions are mild, and when compared with the potential to earn more than $350 in interest per year, its pretty close to a no brainer. Learn more about the credit union by visiting its website.
T-Mobile MONEY – 4.00%
T-Mobile MONEY is definitely one of the more unique savings account options on this list and one that every T-Mobile customer should consider. You don’t need to be a T-Mobile customer to open a bank account with them, you just have to satisfy certain requirements including being of legal age, having U.S. federal or state government issued ID and a social security number.
All customers that open a T-Mobile MONEY checking account automatically earn a 1.50% annual percentage yield on their balances and there is no upper cap on this. However, to get access to the 4.00% annual percentage yield you have to be enrolled in a qualifying T-Mobile postpaid wireless plan, have to be registered for perks with your T-Mobile ID and have to make at least 10 qualifying purchases using your T-Mobile MONEY card each month.
- Pros of the T-Mobile MONEY Checking Account
- Earn 4.00% up to $3,000 and 1.50% on balances above $3,000
- No monthly maintenance fees for the checking account
- No ATM fees charged by T-Mobile
- No overdraft fees
- Cons of the T-Mobile MONEY Checking Account
- Have to be an active T-Mobile postpaid customer
- Have to make 10 qualifying purchases a month with your T-Mobile MONEY card
Verdict on T-Mobile MONEY – this is a no brainer high yield savings account option for T-Mobile customers. It is also a very attractive bank account option given the lack of maintenance fees, overdraft fees and ATM fees. We especially like the fact that while the 4.00% interest rate caps off at $3,000, the subsequent rate is 1.50% which is 15x the national average and importantly, has no upper limit. For T-Mobile postpaid customers that can maintain $3,000 or more in their T-Mobile MONEY checking accounts, with the 4.00% APY, your interest earned is $120 a year. You can think of this as effectively a $10 monthly discount off your wireless bill. Visit this page to learn more.
Digital Federal Credit Union – 6.17%
Digital Federal Credit Union is a Massachusetts-based credit union that had over 1 million members as of March 2022. It is also the largest credit union operating in the state. Anyone can join the credit union by becoming a member in one of several participating organizations including SHOLAN FARMS and the Free Software Foundation. The credit union offers a 6.17% APY on its Primary Savings account for the first $1,000 balance in the account. For balances above $1,000 the credit union pays a 0.16% APY, which is still above the national average.
- Pros of Digital Federal Credit Union Primary Savings Account
- Very attractive interest rates on the first $1,000
- Anyone can become a member of the credit union
- No monthly maintenance fees for the savings account
- Cons of Digital Federal Credit Union Primary Savings Account
- The high interest rate is limited to the first $1,000
Verdict on Digital Federal Credit Union – if you are already a member of this credit union or were considering joining, this is a great savings account option. As should be clear so far from the options we’ve discussed an interest rate above 6.17% is very rare indeed. Importantly, there are essentially no requirements or conditions to be able to earn the 6.17% APY, you just have to be a member of the credit union and open the account. Learn more here.
Blue Federal Credit Union – 5.00%
Blue Federal Credit Union is a Wyoming-based credit union that had 112,400 members as of March 2022. It is also the largest credit union operating in the state. Anyone can join the credit union by becoming a member of the Blue Foundation which costs just $5. The credit union offers an Accelerated Savings account that offers a 5.00% APY on the first $1,000 in the account. For balances above $1,000 the credit union has a tiered interest rate structure with balances between $1,000 and $5,000 earning a 1.80% APY and between $5,000 and $10,000 earning a 1.15% APY.
- Pros of Blue Federal Credit Union Accelerated Savings Account
- Very attractive interest rates on the first $1,000 and above national rates beyond
- Anyone can become a member of the credit union
- No monthly maintenance fees for the savings account
- Earn rewards with your savings account
- Cons of Blue Federal Credit Union Accelerated Savings Account
- The high interest rate is limited to the first $1,000
Verdict on Blue Federal Credit Union – if you are already a member of this credit union or were considering joining, this is a great savings account option. As high yield savings accounts go, this is a fairly standard offering. Although the 5% interest rate is limited to the first $1,000, based on the credit union’s tiered structure you can continue to earn rates of interest well above the national average all the way through balances above $50,000.
BlockFi Interest Account USDC – 6.00-7.50%
For those of you that are crypto investors or enthusiasts, there are quite a few options for earning interest on your cryptocurrency balances. BlockFi is one of the biggest names in the crypto world and offers a range of financial services products to the crypto community. One of the company’s offerings is a BlockFi Interest Account which allows consumers to deposit different cryptocurrencies and receive an attractive APY in return. For simplicity we’ve focused on the U.S. Dollar Coin, which is a cryptocurrency that tracks the US Dollar. In effect its purpose is to be the crypto equivalent of the U.S. Dollar and after some periods of volatility it has served this purpose quite effectively over the last two years.
With a BlockFi Interest Account, you can earn a 7.50% APY on USDC balances up to $20,000 and 6.00% APY on balances above $20,000. This clearly is one of the most attractive savings rates available on U.S. Dollar savings accounts. That said you do need to be comfortable with cryptocurrency volatility and all the associated risks.
- Pros of BlockFi Interest Account
- Best in class interest rates
- No limits on the total balance you can earn high interest rates
- Cons of BlockFi Interest Account
- Not insured by the FDIC
- Cryptocurrencies are volatile and risky
Verdict on BlockFi Interest Account – if you are comfortable with the risks associated with cryptocurrencies this is a savings account worth considering. There are not a lot of accounts that offer 6.00% APY all the way up to balances as high as $2 million and beyond. To learn more visit the company’s page.
What Interest Rates Do Major Banks and Credit Unions Offer?
None of the institutions we’ve discussed in this post fall into the category of the largest banks or credit unions in the country. At the same time, these institutions are so dominant that the odds are that you are an existing customer of at least one of them. Below we’ve summarized the interest rates currently being offered by the top 5 banks and top 5 credit unions in the country.
- Chase Bank – 0.01% APY
- Citibank – 0.05% APY
- Wells Fargo – 0.01% APY
- U.S. Bank – 0.01% APY
- Bank of America – 0.01% APY
- Navy Federal Credit Union – 0.25% APY
- Pentagon Federal Credit Union – 1.00% APY
- State Employees’ Credit Union – 0.10%-0.35% APY
- Boeing Employees Credit Union – 0.25-2.02% APY
- America First Credit Union – 0.05% APY
Clearly these rates are barely a fraction of the rates offered by many of the accounts we detailed in this post. To be fair we’re not including offerings such as Marcus by Goldman Sachs which offers a high yield savings account with a 1.20% APY. But this is still a fraction of the rates discussed in this post.
Put simply, despite the fact that inflation in the U.S. is currently high and that interest rates have increased significantly this year, most of the major banks and credit unions continue to offer paltry interest rates that are magnitudes lower than the rates offered by all of the 5% interest savings accounts we detailed above.
Everyone Should Consider 5% Interest Savings Accounts
The difference between a high yield savings account and the average national savings account (including accounts offered by the largest banks and credit unions) is significant. The chart below helps depict this very clearly:
What this shows is the total interest that a consumer would earn if they had a $1,000 or $3,000 average balance held in accounts at various interest rates. Comparing the 0.01% APY with the 5.00% APY is the point we’re trying to make. The contrast is stark. With a high interest savings account you actually can accumulate a healthy amount of savings over time. With conventional savings accounts and even accounts that offer APYs that match the national average, you basically earn no interest over time. For this reason we think everyone should consider 5% interest savings accounts.
Frequently Asked Questions About Savings Accounts
- Are the advertised 5% interest rates guaranteed? No – not only can banks, credit unions or the entity offering the rates change the interest rates at any time, but often your ability to earn the advertised rate comes with several conditions.
- What is the highest interest rate offered? Based on our research, the highest interest rate currently offered on any balance is 7.50% on traditional savings account (offered by Landmark Credit Union) and 9.62% on the U.S. Treasury I Bonds.
- What matters when choosing a savings account? Consumers should prioritize 3 areas when shopping for savings accounts
- Security – by far the most important factor when selecting a savings account (or any account) is ensuring that your money will be safeguarded. For banks customers funds are insured up to $250,000 per account by the FDIC, while for credit unions the insurance is provided by the National Credit Union Administration (NCUA). It can get a little confusing when dealing with digital financial providers as a lot of the time these entities aren’t actually banks or credit unions and instead are partnering with banks behind the scenes. For example, T-Mobile Money is provided by Customers Bank, which is an FDIC-insured institution.
- Interest Rate Offered – this should be self explanatory. You should prioritize savings account options that offer the highest interest rates. As shown in the prior section, the difference between a savings account that earns a 0.10% APY (the national average) and a 5% interest savings account is very significant over time.
- Fees Charged – finally, we’ve previously shared our viewpoint about bank fees and fees on checking accounts. Monthly maintenance fees can quickly add up and offset the interest you earn on your savings, so its important to prioritize accounts that have no maintenance fees or where you can have these fees waived by maintaining a certain balance. In addition, some savings accounts have restrictions on the amount of withdrawals you can make each month, so ensure that you are comfortable operating within those constraints.
1While many of the account options on our list have APYs below 5%, keep in mind that they often have higher thresholds for which the rate is applicable. We are normalizing for the fact that a 4.00% APY account that allows you to earn this rate up to $5,000 is more attractive than a 6.00% APY account that has a $1,000 cap and beyond this level pays only 0.10%.
2This is a Bankdash estimate that assumes the rate declines to 4% for the following 6 month period and then averages 1.50% for the subsequent 4 year period.