In today’s rising rate environment, you can grow your savings a little more.
The Federal Reserve is still after its top priority -- inflation reduction. As the Fed raises rates, banks typically follow suit, adjusting consumer interest rates on everything from credit cards to savings accounts. Today, some of the best high-yield savings accounts have annual percentage yields, or APYs, hovering around 5.00% -- a savings rate we haven’t seen since the 1990s.
Whether you’re looking to grow your emergency savings, plan for a summer trip or work towards a down payment on a home, a high-yield savings account provides a secure place to grow your money. And if you want to earn more than 12 times the average savings account rate of 0.39% APY, we’ve compiled some of the best savings accounts currently offering a higher-than-average return.
Savings accounts with 5% APY or higher
A 5.00% or higher APY is enticing, but an obscure bank or promotional gimmick may give you pause. For instance, Digital Federal Credit Union only applies a 6.17% APY to balances up to $1,000. Beyond that, your balance only earns 0.16% APY.
| Bank | APY | Minimum deposit |
| DCU | 0.16% to 6.17%* | $5 |
| NewTek Bank | 5.00% | $0 |
| Varo Bank | 3.00% to 5.00%** | $0 |
**5.00% APY applies to balances up to $5,000
High-yield savings accounts near 5%
The below-average APY won’t suit those with more aggressive savings goals -- like buying a new car soon or paying for college. If that’s you, compare the savings accounts earning just under 5.00% APY below.
| Bank | APY | Minimum deposit |
| UFB Direct | 4.81% | $0 |
| Laurel Road | 4.80% | $0 |
| Panacea Financial | 4.80% | $25 |
| TAB Bank | 4.76% | $0 |
| Bask Bank | 4.75% | $0 |
Digital Federal Credit Union
- APY
- 0.16% to 6.17%
- Min. deposit to open
- $5
- No monthly fees or minimum balance requirements
- $25 deposit required Mobile check deposits via app
- 80,000 fee-free ATMs nationwide
- Highest APY is limited to balances up to $1,000
While DCU’s 6.17% APY tops our list of high-yield savings accounts, the APY only applies to savings account balances up to $1,000. Beyond that, balances earn a 0.16% APY, which is less than the national average of 0.24%. We like that DCU offers mobile check deposits and has plenty of fee-free ATMs, but it doesn’t offer many other perks or frills beyond that.
The credit union has 24 branches in New Hampshire and Massachusetts, but serves members nationwide through a network of more than 5,900 co-op shared branches. Membership is available to employees or members of partner organizations. Visit its website for eligibility requirements.
Newtek Bank
- APY
- 5.00%
- Min. deposit to open
- $0
- No monthly fees, minimum deposit or balance requirements
- Mobile check deposits via app
- No service or transaction fees
- Limit of six withdrawals per statement cycle
- Live customer support available 24/7
Newtek Bank is an online-only subsidiary of Newtek One. The 5.00% APY applies to all balance levels, but you’ll be limited to six withdrawals per statement cycle. Also, the account doesn’t come with an ATM card. You can open as many personal banking accounts as needed, all of which can be managed through an online banking account or mobile app. So if you don’t want to manage your account online or need to make more than six withdrawals, it’s best to consider other options.
Varo Bank
- APY
- 3.00% to 5.00%
- Min. deposit to open
- $0
- No monthly fees, minimum deposit or balance requirements
- Mobile check deposits via app
- Roundup tools to automate savings
- Highest APY available limited to balances up to $5,000
- Minimum of $1,000 in monthly direct deposits required to earn APY
Varo Bank is the second bank on our list with a tiered savings rate that benefits lower balances. Savings accounts that maintain a maximum daily balance of $5,000 for the entire monthly billing cycle earn 5.00% APY. Amounts above $5,000 will earn 3.00% APY.
To qualify for any interest at all, you’ll need to have $1,000 in direct deposits every month. You’ll also need to end each month with a positive balance in both your Varo Bank and Savings account. While Varo presents a tempting APY for those with lower balances, once your account balance exceeds $5,000, you’ll drop down to the lower APY.
However, we like that Varo offers more wiggle room to grow your stash with automatic round-ups to move your change from deposits and transactions to your savings.
UFB Direct
- APY
- 4.81%
- Min. deposit to open
- $0
- No monthly fees, minimum deposit or balance requirements
- Premier Money Market account also earns the same high-yield APY
- Mobile check deposits via mobile app
- Expanded insurance protection available up to $150 million
- ATM card available
UFB Premier Savings has a highly competitive APY that applies to all balances -- unlike some banks highlighted above that reserve top APYs for specific balance tiers.
In addition to great rates, we like that UFB Direct’s savings account comes with a free ATM card and unlimited free transfers between accounts. However, there’s a limit of six withdrawals a month and after that, there’s a $10 excessive transaction fee. That doesn’t apply to ATM cards, though. As an online-only bank, UFB Direct doesn’t offer physical branches, but you can handle deposits and transfers through its mobile banking app, online and SMS mobile banking -- which can come in handy if you don’t have access to Wi-Fi or mobile data, but need to handle your account.
Laurel Road
- APY
- 4.80%
- Min. deposit to open
- $0
- No monthly fees, minimum deposit or balance requirements
- Mobile check deposits via app
- Debit cards are not available with the High Yield Savings account
Laurel Road’s savings account doesn’t require a minimum deposit or balance to earn its competitive 4.80% APY. According to its website, your interest rate may vary based on your relationship with the bank, balances on other Laurel Road accounts and other factors. Laurel Road is the digital arm of KeyBank, but it doesn’t accept cash deposits. You’ll need to transfer funds and manage your account online.
Panacea Financial
- APY
- 4.80%
- Min. deposit to open
- $25
- No monthly fees, minimum deposit or balance requirements
- Minimum $25 deposit required
- Mobile check deposits via app
- Live customer support available 24/7
- Expanded insurance protection available up to $125 million
Panacea Financial, created by doctors for doctors, has a high-yield savings account that is open to everyone nationwide. The competitive APY applies to all balance levels. Plus, you’ll have 24/7 live customer support by calling 833-472-6223.
There’s an added benefit sure to come in handy for those with larger balances: The PLUS Insured Cash Sweep offers expanded insurance for balances over $250,000 up to $125 million per tax ID.
TAB Bank
- APY
- 4.76%
- Min. deposit to open
- $0
- No monthly fees, minimum deposit or balance requirements
- $5 monthly fee for paper statements
- Full suite of deposit accounts available
- Mobile check deposits via app, plus text alerts
- Extended customer service hours
TAB Bank recently increased its already competitive high-yield savings account APY to 4.76%. There’s no minimum balance or deposit required and you’ll only need 1 cent in your account to start earning interest.
Because TAB Bank is an online-only bank, we also like that you can receive mobile alerts and text messages. For example, you can receive alerts about withdrawals when your account falls below a certain limit. Another benefit is that TAB has extended customer service hours -- Monday through Friday from 6 a.m. to 7 p.m. MST and Saturdays from 9 a.m. to 3 p.m. MST, excluding federal holidays.
Bask Bank
- APY
- 4.75%
- Min. deposit to open
- $0
- No monthly fees, minimum deposit or balance requirements
- Two savings account options available: one earns American Airlines miles, the other earns interest
- Doesn’t offer ATM or debit cards with savings account
- Mobile check deposits via app
Bask Bank is an online-only subsidiary of Texas Capital Bank that offers two savings accounts. The Interest Savings Account allows you to earn one of the most competitive APYs available.
There aren’t any deposit or balance requirements. However, Bask Bank reserves the right to close your account if it sits unfunded for 60 days. It allows six withdrawals per month from your account, but it doesn’t offer debit or ATM cards. One major drawback is that the savings accounts don’t permit joint ownership, which could represent a significant limitation for some. And this may not be the best option if you prefer to keep your checking and savings accounts together. Bask does not offer checking or money market accounts.
How to find the best savings rates
When searching for a savings account promising ultracompetitive rates, make sure to read the fine print. Some accounts advertising great rates have a tiered-balance structure and only apply the highest rate available to a limited balance. Others may offer a competitive rate for a limited time -- as a teaser rate.
You’ll want to ensure that selecting a savings account with a slightly lower rate that will be applied to the entire balance won’t be better for your savings goals than a higher rate that’s only applied to specific portions of the overall balance.
How does a 5% interest savings account work?
A high-yield savings account that offers a 5.00% APY usually works like most other savings accounts. You can regularly deposit and withdraw money while earning interest on your balance.
Interest represents the amount of money a financial institution will pay you in exchange for using your money to fund its lending operations. “Banks that need more deposits to feed their lending operations will be a little more aggressive in paying out to bring in deposits,” said Greg McBride, CFA and chief financial analyst for Bankrate. He explains that smaller banks and credit unions without the marketing budget to rival more established banks compete for your dollars by offering better rates on deposit accounts. “How do you compete with the behemoth? You pay a better rate,” he said.
Interest is expressed as a percentage and calculated by multiplying the principal balance by the interest rate by a time period. Compound interest adds the interest earned from the previous period to the principal balance -- thus supercharging your savings growth.
For example, $1,000 deposited in an account that earns a 5.00% APY with interest compounded monthly will earn $51 in interest in one year -- assuming the APY stays the same. Interest rates advertised for savings accounts are variable and can change at any time. Your actual annual yield will fluctuate depending on the changes applied to interest rates.
How to open a high-yield savings account?
Most online banks offer high-yield savings accounts. Opening an account is a pretty simple process. Here’s what you should expect:
- Complete the application process at your chosen bank or credit union. You may also be able to do so online. Most banks will require your Social Security number, phone number, physical address and other personal information.
- Provide a government-issued form of ID to verify your identity.
- Transfer or deposit the requisite amount needed to initially fund the account.
Before agreeing, remember to read the fine print to understand account details and any requirements to earn interest. From there, you should be able to manage your account via a mobile app, online or text messages.
The bottom line
A high-yield savings account earning near or above 5.00% APY is a great vehicle to stash an emergency savings fund or money that you’ll need access to quickly with limited restrictions. While savings rates remain high, now’s a good time to maximize how much you can earn on your savings by simply switching to a high-yield savings account with a high interest rate.
Keep in mind that some banks advertising the highest rates may have terms that limit the balance amounts that can earn the highest APY available. It’s important to understand the fine print and choose the account that best compliments your overall savings goals.
A high-yield savings account earns a variable APY that can change at any time. Experts believe the latest Fed rate hike might be the last for some time. Now is the time to capitalize on the great rates available if you haven’t already.
CNET maintains a regularly updated list of the best savings accounts and best high-yield savings accounts. Use these resources as a starting point to compare the most competitive APYs available from banks, credit unions and financial service firms that are FDIC- or NCUA-insured for up to $250,000 per person, per institution.
Methodology
CNET reviews savings accounts by comparing them across set criteria, including annual percentage yield, monthly fees, minimum deposits or balances and access to physical branches.
We reviewed more than two dozen leading traditional banks and online financial offerings to determine our best savings accounts. Along with the aforementioned criteria, we also considered sign-up bonuses and other rewards. All savings accounts must also be insured by the FDIC.
