Where to find savings accounts paying 4% to 5% APY

High-yield savings accounts exist at three types of institutions: online banks, traditional banks with online divisions, and credit unions. Online banks currently offer the highest rates—typically 4.5% to 5.35% APY—because they have lower overhead costs than brick-and-mortar branches. Traditional banks like Chase, Bank of America, and Wells Fargo offer savings accounts, but their rates are usually under 0.5% APY. Credit unions vary widely depending on membership and account type, but some offer competitive rates to members.

The banks and credit unions paying the highest rates change month to month as the Federal Reserve adjusts its benchmark rate. What matters more than a specific name is understanding which institutions update their rates frequently and which ones lag. Online banks tend to move faster because their entire business model depends on attracting deposits through rate competition.

You do not need to open an account to see current rates. Most banks publish their APY on their website's savings account page, and you can compare five to ten options in under an hour. The difference between 4.5% and 5.35% APY on $10,000 is roughly $85 per year, so the comparison is worth your time if you have money sitting in a low-rate account.

Key Takeaways

  • Online banks currently offer the highest savings rates, ranging from 4.5% to 5.35% APY, while traditional brick-and-mortar banks typically offer under 0.5% APY.
  • Rates change monthly as the Federal Reserve adjusts its benchmark rate, so the highest-paying bank today may not be the highest-paying bank in three months.
  • You can compare rates directly on each bank's website without opening an account, and the difference between top rates and low rates adds up to hundreds of dollars per year on larger balances.
  • Online banks move rates faster than traditional banks because they compete for deposits through rate changes rather than through branch locations.
  • All deposits at FDIC-insured banks and NCUA-insured credit unions are protected up to $250,000 per account holder, regardless of the rate offered.

Online banks with competitive rates

Online banks without physical branches include Marcus (owned by Goldman Sachs), Ally Bank, American Express Personal Savings, Discover Bank, and LendingClub. These institutions have historically been first to raise rates when the Federal Reserve increases its benchmark, and last to lower them when rates fall. Marcus, Ally, and American Express have consistently ranked in the top five for APY over the past two years.

Opening an account at an online bank takes 10 to 15 minutes and requires a Social Security number, proof of identity, and a way to fund the account (usually a transfer from another bank). You manage the account entirely through a website or mobile app—there is no branch to visit. Withdrawals typically take one to three business days to reach your linked bank account, which is slower than a debit card but standard for savings accounts.

The trade-off is convenience for rate. If you need cash when ready and do not want to wait for a transfer, an online bank is less practical. If you are parking money for three months or longer, the higher rate usually outweighs the slower withdrawal speed.

Traditional banks with online savings options

Chase, Bank of America, Wells Fargo, and Citibank all offer savings accounts through their websites, but their rates are typically 0.01% to 0.5% APY. These banks compete on branch access and customer service rather than rate, so their savings accounts are not designed to compete with online banks. If you already have a checking account at one of these banks, opening a savings account is straightforward—you can do it online in minutes—but you will earn significantly less interest than at an online bank.

Some traditional banks have created separate online divisions to compete with online-only banks. Bank of America has BankAmericard, and Chase has some higher-rate products, but these are not their main savings offerings and rates are still below what online banks offer. If rate is your priority, these accounts are not the right choice.

Credit unions and member-specific rates

Credit unions are member-owned institutions, and their savings rates depend on the union's size, location, and membership rules. Some credit unions offer rates competitive with online banks—occasionally 5% or higher on savings accounts—but membership is usually restricted. You might be able to join if you work for a specific employer, live in a specific county, or belong to a specific organization. A few credit unions allow anyone to join by making a small donation to a designated charity.

To find credit unions in your area or that match your employment, use the CO-OP Network search tool or the Credit Union Locator on the National Credit Union Administration website. If you already belong to a credit union, call and ask about their current savings rate—many members do not realize their union offers rates comparable to online banks.

Credit union deposits are insured by the National Credit Union Administration (NCUA) up to $250,000 per account holder, the same protection as FDIC insurance at banks. The main limitation is that credit unions are slower to change rates than online banks, so they may not always be the highest-paying option even if they are competitive today.

How rates change and what to watch for

The Federal Reserve sets a benchmark interest rate that influences what banks pay on savings. When the Fed raises its rate, online banks typically raise their savings rates within days or weeks. When the Fed lowers its rate, online banks lower their savings rates more slowly—sometimes taking months. This lag means the best time to lock in a high rate is right after the Fed announces an increase.

Rates also change based on how much money a bank needs to attract. If a bank has plenty of deposits, it may lower its rate. If it needs more deposits, it raises its rate to compete. This is why the highest-paying bank changes from month to month—not because of Fed action, but because of each bank's deposit needs.

You do not have to stay with one bank forever. If you open an account at a bank paying 5.35% and that bank drops to 4.5% three months later while another bank is paying 5.2%, you can move your money. Transfers between banks take three to five business days, and you do not lose any interest during the transfer—you earn interest up to the day you withdraw and start earning at the new bank the day the money arrives.

What to check before opening an account

Before opening a high-yield savings account, confirm three things: the APY is accurate (check the bank's website, not a comparison site that may be outdated), the account has no monthly fees, and the bank is FDIC-insured or NCUA-insured. Most online banks have no fees and no minimum balance, but some require a minimum deposit to open the account—usually $0 to $25.

Check whether the bank offers a debit card for the savings account. Some do, which makes withdrawals faster. Others require you to transfer money to a checking account first. This does not affect the interest you earn, but it affects how quickly you can access your money if you need it.

Read the bank's policy on how often they update their rate. Some banks update daily, others weekly, and a few update monthly. This matters less if you are planning to keep the money in the account for a year or longer, but it matters if you are comparing rates week to week.

Frequently Asked Questions

Can I move my money between banks without losing interest?

Yes. You earn interest up to the day you withdraw from your current bank and start earning at the new bank the day your deposit arrives. The transfer itself takes three to five business days, but you do not lose interest during that time. If you move money on the 15th and it arrives on the 18th, you earn interest from your old bank through the 15th and from your new bank starting the 18th.

What happens to my money if a bank fails?

If an FDIC-insured bank fails, the FDIC protects your deposits up to $250,000 per account holder. You will have access to your money within days, usually through a transfer to another bank or a check. Credit union deposits are protected the same way by the NCUA. This protection applies regardless of the interest rate the bank was paying.

Do I need a checking account to open a savings account?

No. Most online banks let you open a savings account without a checking account. You fund it by transferring money from a bank account you already have at another institution. Some online banks offer both checking and savings, but you can open just the savings account if that is all you need.

Why do online banks pay more than traditional banks?

Online banks have no physical branches, so their overhead costs are much lower. They pass those savings to customers through higher interest rates. Traditional banks maintain thousands of branches, which costs money, so they compete on convenience rather than rate. If you value branch access, you pay for it by earning less interest.

What is the difference between APY and interest rate?

APY (annual percentage yield) includes the effect of compounding—interest earned on interest. A bank might advertise an interest rate of 5.0%, but if interest compounds daily, the actual APY is slightly higher, around 5.13%. Always compare APY, not the base interest rate, because APY shows what you actually earn.