Earn 5.00% APY on your Entire Balance | High-Yield Savings (2025)

FAQs

What does 5.00% APY mean on a savings account? ›

To find what the APY is on investments, multiply the annual interest rate by the number of times interest is made in a year and then divide that number by one. For example, $1,000 put into an account with an annual interest rate of 5% would, in theory, earn $50 at the end of the year.

If you deposit $1,000 into a high-yield savings account with a 4.5% APY, you'll earn just over $45 in interest after one year. If you deposit $1,000 into a high-yield savings account with a 4.5% APY at age 20, you'll earn almost $6,100 in interest by age 65.

As of September 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions have high-interest checking account: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.

Imagine you put $10,000 in an account that earns 5% APY, compounded annually. In the first year, you'd earn $500 (5% of $10,000). Now, your total is $10,500. In the second year, you earn 5% of $10,500, which is $525.

A high-yield savings account that pays 5% interest is highly competitive. Not only does it significantly outpace the average savings account interest rate, but it's on the high end of the scale even for high-yield savings products.

As long as you're banking with an FDIC-protected bank, you're not risking losing your money when you deposit it into a high-yield savings account. However, the rate of inflation can be higher than your APY, resulting in a negative real return, or the return after taxes and inflation are taken into account.

Millionaires Like High-Yield Savings, but Not as Much as Other Accounts. Usually offering significantly more interest than a traditional savings account, high-yield savings accounts have blown up in popularity among everyone, including millionaires.

While you can grow your money with a high-yield savings account, it's not the best way to generate long-term wealth for retirement because the yield often doesn't keep up with inflation. As a result, working with a broker or robo-advisor to develop an investment portfolio is better for long-range plans.

If you deposit $50,000 into a traditional savings account with a 0.46%, you'll earn just $230 in total interest after one year. But if you deposit that amount into a high-yield savings account with a 5.32% APY,* your one-year interest soars to over $2,660.

The interest you earn on a high-yield savings account—or any other savings account, money market account or certificate of deposit, for that matter—is subject to state and federal income taxes. This means there's no hard-and-fast answer for what you'll pay on your earnings.

Should I keep all my savings in a high-yield savings account? ›

Not the best choice for long-term savings – High-yield savings accounts offer much better interest rates than traditional savings accounts, but often, you won't earn enough over the long-term to account for inflation. Investments may be a better option for a longer-term, greater yield.

Yes, 5% interest savings accounts are a legitimate offering that you can find at many banks and credit unions. One way to make sure your money is secure is to check that the account is protected by FDIC or NCUA insurance.

APY is the percentage rate of return on your money over one year, and it includes compound interest. The interest may be compounded daily, monthly, or yearly, depending on the deposit account.

For example, if you have a balance of $1,000 earning 4.00% APY for five years, you would multiply 1,000 by 0.04 by 5 to reach a simple interest total of $200. Simple interest determines earnings on only money you've deposited. However, most savings accounts earn compound interest.