Savings account rates continue to decline after the Federal Reserve issued its second rate cut this year. Savers accustomed to annual percentage yields north of 5% will have to adjust to a new reality: A smaller number of banks and credit unions are offering these coveted rates.
CNET has compiled a list of banks that continue to offer APYs as high as 5.25%. Opening a savings account with one of these banks will accelerate your interest growth, making any money you have set aside for emergencies or special treats work up to 10 times harder than if you keep your cash in an account earning near the national average rate of 0.45%.
The Fed is expected to issue more rate cuts before the year’s end, which may lead to a continued drop in APYs. The sooner you open one of the high-yield savings accounts listed below, the more interest you stand to earn.
Savings accounts with 5% APY or higher
| Bank | APY | Min. deposit to open |
|---|---|---|
| Digital Federal Credit Union | 6.17% (on balances up to $1,000) | $5 |
| LendingClub | 4.00% to 5.00% | $0 |
| Newtek Bank | 5.25% | $0 |
| BrioDirect Bank | 5.00% | $5,000 |
| Varo Bank | 5.00% on first $5,000 (3.00% on the rest) | $0 |
Digital Federal Credit Union
Primary SavingsThe DCU Primary Savings account’s 6.17% APY tops our list of high-yield savings accounts. However, this APY only applies to balances up to $1,000. Any balance above that earns a 0.05% APY, which is less than the national average of 0.46%. We like that DCU offers mobile check deposits and has plenty of fee-free ATMs, but it doesn’t offer many perks beyond that.
The credit union has 24 branches in New Hampshire and Massachusetts, but it 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 or people who live in specific communities in Massachusetts. Visit its website for eligibility requirements.
Aside from the Primary Savings account, DCU also offers several other savings accounts that may have different APYs and features. These include an Advantage Savings account and a Member Described Savings account.
- No monthly fees or minimum balance requirements
- $5 deposit required
- Mobile check deposits via app
- 80,000 fee-free ATMs nationwide
The DCU Primary Savings account’s 6.17% APY tops our list of high-yield savings accounts. However, this APY only applies to balances up to $1,000. Any balance above that earns a 0.05% APY, which is less than the national average of 0.46%. We like that DCU offers mobile check deposits and has plenty of fee-free ATMs, but it doesn’t offer many perks beyond that.
The credit union has 24 branches in New Hampshire and Massachusetts, but it 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 or people who live in specific communities in Massachusetts. Visit its website for eligibility requirements.
Aside from the Primary Savings account, DCU also offers several other savings accounts that may have different APYs and features. These include an Advantage Savings account and a Member Described Savings account.
- No monthly fees or minimum balance requirements
- $5 deposit required
- Mobile check deposits via app
- 80,000 fee-free ATMs nationwide
LendingClub recently launched a LevelUp Savings account that rewards consistent savers with competitive rates. You’ll qualify for the highest rate if you deposit at least $250 per month. Deposits from any source — such as direct deposit or electronic transfers — count towards the minimum monthly requirement.
If your monthly deposit drops below $250 after the first two months, then the standard APY will apply. Both rates apply to the entire balance.
We also like that the LevelUp Savings account doesn’t charge a monthly fee or have a minimum balance requirement. Learn more about this account and its features in our CNET review.
- No monthly fees, minimum deposit or minimum balance requirements.
- Banking app supports mobile check deposits.
- Cash deposits accepted at select ATMs.
- Unlimited non-network ATM fee reimbursements.
LendingClub recently launched a LevelUp Savings account that rewards consistent savers with competitive rates. You’ll qualify for the highest rate if you deposit at least $250 per month. Deposits from any source — such as direct deposit or electronic transfers — count towards the minimum monthly requirement.
If your monthly deposit drops below $250 after the first two months, then the standard APY will apply. Both rates apply to the entire balance.
We also like that the LevelUp Savings account doesn’t charge a monthly fee or have a minimum balance requirement. Learn more about this account and its features in our CNET review.
- No monthly fees, minimum deposit or minimum balance requirements.
- Banking app supports mobile check deposits.
- Cash deposits accepted at select ATMs.
- Unlimited non-network ATM fee reimbursements.
Newtek Bank
Personal High-Yield SavingsNewtek Bank is an online-only subsidiary of Newtek One, a financial services company. Its savings account APY applies to all balance levels, but you’re 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 and manage them all through an online banking account or mobile app. But if you don’t want to manage your account online or will need to make more than six monthly withdrawals, it’s best to consider other options.
- 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, a financial services company. Its savings account APY applies to all balance levels, but you’re 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 and manage them all through an online banking account or mobile app. But if you don’t want to manage your account online or will need to make more than six monthly withdrawals, it’s best to consider other options.
- 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
BrioDirect Bank
High-Yield SavingsBrioDirect is the online-only arm of Webster Bank, a full-service bank with over 200 branches located throughout Connecticut, Massachusetts, Rhode Island and New York City. This bank works best as a secondary savings option as it only offers a high-yield savings account and CD with terms ranging from 30 days to five years.
While the competitive rate is attractive, the highest APY only applies when you open the account with an initial deposit of $5,000 or more. However, once you’ve opened the account, you’ll continue to qualify for the best APY available as long as you maintain a minimum balance of $25. We also like that there are no monthly fees associated with this account.
- No monthly fees
- Online and mobile banking app
BrioDirect is the online-only arm of Webster Bank, a full-service bank with over 200 branches located throughout Connecticut, Massachusetts, Rhode Island and New York City. This bank works best as a secondary savings option as it only offers a high-yield savings account and CD with terms ranging from 30 days to five years.
While the competitive rate is attractive, the highest APY only applies when you open the account with an initial deposit of $5,000 or more. However, once you’ve opened the account, you’ll continue to qualify for the best APY available as long as you maintain a minimum balance of $25. We also like that there are no monthly fees associated with this account.
- No monthly fees
- Online and mobile banking app
Varo Bank
Online Savings AccountVaro Bank has a tiered savings rate that benefits lower balances. You’ll earn 5.00% APY on balances up to $5,000 and 3.00% APY on balances above that. But there are a few catches.
You’ll start off earning 3.00% APY. To qualify for 5.00% APY on balances of $5,000 or less, you must have $1,000 in direct deposits into your account every month, and you must end each month with a positive balance in both your Varo Bank (checking) and savings account. Qualifying direct deposits include paychecks, pensions or other government benefits such as Social Security.
While Varo presents an appealing APY for those with lower balances, any balance amount over $5,000 will earn the lower APY. However, we like that Varo offers more wiggle room to grow your stash with automatic round-ups that move your change from deposits and other transactions to your savings.
- 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 has a tiered savings rate that benefits lower balances. You’ll earn 5.00% APY on balances up to $5,000 and 3.00% APY on balances above that. But there are a few catches.
You’ll start off earning 3.00% APY. To qualify for 5.00% APY on balances of $5,000 or less, you must have $1,000 in direct deposits into your account every month, and you must end each month with a positive balance in both your Varo Bank (checking) and savings account. Qualifying direct deposits include paychecks, pensions or other government benefits such as Social Security.
While Varo presents an appealing APY for those with lower balances, any balance amount over $5,000 will earn the lower APY. However, we like that Varo offers more wiggle room to grow your stash with automatic round-ups that move your change from deposits and other transactions to your savings.
- 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
How to find the best savings rates
When searching for a savings account that promises competitive rates, read the fine print. Some accounts advertising exceptional rates have a tiered balance structure and apply the highest rate available only to a limited balance.
Digital Federal Credit Union, for example, applies a 6.17% APY only to accounts with balances of up to $1,000. Beyond that, your balance earns a mere 0.05% APY. Other banks may offer a competitive rate for a limited time, such as a teaser rate.
How does a 5% interest savings account work?
A high-yield savings account with a 5% APY 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 CNET Bankrate.
McBride explained 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 period. Compound interest adds the interest earned from the previous period to the principal balance -- thus supercharging your savings growth. The annual percentage yield represents the actual rate of return and accounts for the effects of compounding interest.
For example, $1,000 deposited in an account that earns a 5% APY with interest compounded monthly will earn $50 in interest in one year, assuming the APY doesn’t change.
Interest rates advertised for savings accounts are variable and can change at any time. Your actual annual yield will fluctuate if your APY changes throughout the year.
How to open a high-yield savings account
Most online banks offer high-yield savings accounts. Opening an account is a simple process. Here’s what you should expect:
- Choose an account. Before opening an account, remember to read the fine print to understand account details and any requirements to earn interest.
- Apply. Complete the application process at your chosen bank or credit union. You may also be able to do so online.
- Provide the necessary information. Provide a government-issued form of ID to verify your identity. Most banks will require your Social Security number or Individual Taxpayer Identification Number, phone number, physical address and other personal information.
- Make an initial deposit. Transfer or deposit the amount needed to fund the account.
- Activate online banking. Follow the steps provided to set up your online banking account if one is available. From there, you should be able to manage your account online and possibly via a mobile app or text messages.
Common savings account fees to avoid
Your savings account should help you save money, whether for emergency savings, a future expense like a family vacation or to meet your holiday shopping needs. Fees work against your ability to maximize your savings. Here are some common charges associated with savings accounts that you should avoid whenever possible.
Monthly maintenance fee: This is a monthly fee some financial institutions charge for maintaining an account. Sometimes, you can have this fee waived by meeting certain criteria, such as signing up for e-Statements or direct deposit. It’s best to avoid accounts with monthly maintenance fees or those without simple options to waive the fee.
Minimum balance fee: Some savings accounts require you to maintain a minimum balance to avoid incurring a fee. You want to avoid savings accounts that charge this type of fee, especially if you struggle to maintain a certain balance in your savings account.
Excessive withdrawal fee: A Federal Reserve Board rule, Regulation D, historically limited the number of withdrawals or transfers you can make from your savings account to six per month. That rule was removed in 2020, but many banks maintain the withdrawal limit and charge a fee if you exceed it. Always track your withdrawals and note any limits in place to avoid this fee.
ATM fees: If you use an out-of-network ATM, your bank may charge you an ATM fee. If you frequently use ATMs, look for an account that offers a significant number of ATMs in your area or reimburses ATM fees.
Paper statement fee: Many financial institutions charge a fee for receiving paper statements by mail. Sign up for electronic statements to eliminate this fee.
Account closure fee: Closing your savings account within a certain window may also trigger a fee. This window is generally 90 days after opening the account or less and is in place to discourage account churning (opening and closing accounts in rapid succession to receive new account bonuses). Note any policies regarding account closure fees before closing an account to avoid surprises.
Monthly maintenance fee: This is a monthly fee some financial institutions charge for maintaining an account. Sometimes, you can have this fee waived by meeting certain criteria, such as signing up for e-Statements or direct deposit. It’s best to avoid accounts with monthly maintenance fees or those without simple options to waive the fee.
Minimum balance fee: Some savings accounts require you to maintain a minimum balance to avoid incurring a fee. You want to avoid savings accounts that charge this type of fee, especially if you struggle to maintain a certain balance in your savings account.
Excessive withdrawal fee: A Federal Reserve Board rule, Regulation D, historically limited the number of withdrawals or transfers you can make from your savings account to six per month. That rule was removed in 2020, but many banks maintain the withdrawal limit and charge a fee if you exceed it. Always track your withdrawals and note any limits in place to avoid this fee.
ATM fees: If you use an out-of-network ATM, your bank may charge you an ATM fee. If you frequently use ATMs, look for an account that offers a significant number of ATMs in your area or reimburses ATM fees.
Paper statement fee: Many financial institutions charge a fee for receiving paper statements by mail. Sign up for electronic statements to eliminate this fee.
Account closure fee: Closing your savings account within a certain window may also trigger a fee. This window is generally 90 days after opening the account or less and is in place to discourage account churning (opening and closing accounts in rapid succession to receive new account bonuses). Note any policies regarding account closure fees before closing an account to avoid surprises.
The bottom line
A high-yield savings account that earns a 5% APY or more is an ideal option to store and grow your savings, whether to build an emergency savings fund or save for a specific goal. Since savings rates remain high, now’s a good time to maximize your interest-earning potential by switching to a high-yield savings account.
Be aware that some banks advertising the highest rates may have terms or restrictions. Pay attention to the fine print and choose the account that best serves your overall savings goals.
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 neobanks (newer banks that operate exclusively online or through mobile apps) that are insured by the Federal Deposit Insurance Corporation or National Credit Union Administration for up to $250,000 per person, per institution if the bank fails.
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.
The banks, credit unions and neobanks we reviewed include Affirm Savings, Alliant Credit Union, Ally, America First Credit Union, American Express High Yield Savings Account, Axos High Yield Savings, Bank of America Advantage Savings, Bank of the West, Bank5 Connect, Barclays, Bask Bank, Bread Savings, BrioDirect High-Yield Savings, Capital One 360 Checking, Charles Schwab, Chase Premier Savings, Chime, Citibank, Citizens Online Savings Account, Colorado Federal Savings Bank, Consumers Credit Union, Discover, First Internet Bank of Indiana, LendingClub, Live Oak Bank, M&T Bank, Marcus, My Banking Direct, Nationwide My Savings, Navy Federal Credit Union, NBKC, OneUnited Bank, PenFed CU, PNC, Popular Direct Select Savings, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sally Mae Smarty Pig, Santander Bank, Synchrony, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Varo, Vio and Wells Fargo.
