One of the first big posts I wrote when I started this blog was about Netspend and their 5% interest savings accounts. At the time, getting 5% interest on cash in a bank account was amazing. At best, savings accounts were paying 1% interest, so taking the time to maximize my cash holdings made a lot of sense. These 5% interest accounts were also perfect spots to put my emergency fund. Indeed, for years, I’ve based the amount of my emergency fund on how much I was allowed to put into these 5% interest savings accounts.
Things have changed a lot over the past year or two though. Inflation went wild and the Fed dramatically raised interest rates in 2022. These higher interest rates have also meant higher savings account rates, as banks have raised rates to match the higher Fed Funds Rate.
My 5% interest accounts are still around these days, but their value today is far more muted. Most mainstream high-yield savings accounts pay 3.7% interest or more and there are many savings accounts out there paying 4% or more without jumping through any hoops. I think there’s still value in the 5% interest accounts that I have, but admittedly, if I didn’t already have them set up, I probably wouldn’t bother with them.
So what is the current landscape of high-yield savings accounts look like? Are the 5% interest savings accounts I once wrote about even worth the hassle anymore? In this post, I wanted to look at what’s currently out there and consider how I’d approach these high-yield savings accounts today.
My Original High-Yield Savings Strategy
When I first wrote about my high-yield savings account strategy, the main 5% accounts I used included the following:
- Netspend 5% Savings Accounts (Netspend, Ace Elite, Western Union, H-E-B, Brinks)
- Digital Federal Credit Union (DCU)
- Service Credit Union
- H-E-B Debit
In addition to the above accounts, I also used a 3% interest account from Service Credit Union, a 3.5% interest account from Workers Credit Union, and a couple of 4% interest accounts from Current.
These accounts did have some significant limitations, namely that you were limited in how much you could put into each one. They also took some work to set up, but I found the initial legwork was worth it since the difference in interest rates was so much (5% for most of them compared to 1% for a typical high-yield savings account). And once the accounts were set up, they ran themselves.
At my peak, my wife and I had $37,000 set aside in these accounts earning between 3% and 6.17%. That made for a good emergency fund. And it was useful to have these accounts since the alternative was to have my emergency fund in a regular bank account earning basically nothing.
These days, however, I have much less in these accounts given where interest rates are now. The 3% savings account from Service Credit Union and 3.5% savings account from Workers Credit Union aren’t worth using since normal high-yield savings accounts offer a higher interest rate. Current still has their 4% savings account, but it comes with requirements that make it essentially worthless now.
I still use all of the accounts that pay 5% interest or more but I no longer bother with any of the sub-5 % interest accounts. So, between me and my wife, we have $17,000 in these 5% interest savings accounts. That money is divided as follows:
- $10,000 earning 5% interest within 10 total Netspend accounts.
- $2,000 earning 6.17% interest in 2 DCU accounts.
- $1,000 earning 5% interest in 2 Service Credit Union accounts.
- $4,000 earning 6% interest in 2 H-E-B Debit accounts.
The benefit of these accounts isn’t that big since rates are so high, but since we already have these accounts open and they’re fully automated, there’s no point switching out of them unless they were to stop offering these high rates.
The Current Landscape Of High-Yield Savings Accounts
So what’s the current landscape of high-yield savings accounts? Right now, we’re at a point where money in a savings account can actually earn some significant interest. In terms of the mainstream banks, you’re looking at rates around 3.7% or more from banks like:
- Ally
- Discover
- Marcus by Goldman Sachs
For simplicity purposes, I’m not listing the exact interest rates in this post since the rates do vary, but the important takeaway is that these big traditional banks are paying good rates.
If you’re willing to go the Fintech route, Fintech banking apps like Wealthfront, Betterment, and SoFi are offering really high rates (higher than 4%). As I write this, Wealthfront is leading the pack, offering one of the highest interest rates available in an FDIC-insured savings account.
Finally, if you really want to maximize your cash savings, you could opt to go with smaller credit unions that are offering insanely high rates. For example, the Western Alliance High Yield Savings Account is offering over 5% interest as I write this with no special requirements and no limits on how much you can put into the account. Theoretically, if you had a million dollars in cash, you could put all of it in there and generate $50,000 per year of interest!
I haven’t personally moved money to Western Alliance yet, but I likely will do so, as it is an FDIC-insured bank account and is one of the largest banks in the US.
Would I Bother With The 5% Interest Savings Accounts Today?
Given what’s out there now, a good question to ask is whether I would bother with the original 5% interest savings accounts I recommended before. As I mentioned, I still have these accounts open and still maximize all of them. But the reason I do so is because I already had them open.
If I was starting fresh today, I probably wouldn’t bother with any of the 5% interest savings accounts that come with restrictions. Looking at the accounts, here’s my thoughts on them:
- Netspend takes too much work to set up and given how little you can set aside in those accounts, it’s probably not worth it. The only reason I’d recommend it is if you want to earn a signup bonus from Netspend.
- Service Credit Union probably isn’t worth opening at all given you can only get 5% on up to $500.
- DCU is an account I’d still probably open since it offers 6.17% interest and has a small signup bonus that’s easy to earn.
- H-E-B Debit is a mixed bag. It offers 6% interest on up to $2,000 but does take a little bit of work to manage. Most likely, I wouldn’t bother with it if I didn’t already have an account with them.
So, in short, what would I do? I’d probably only open these original 5% interest accounts if I wanted to earn the signup bonuses. But in terms of their interest rates, it’s just not worth the hassle considering the other options available.
Final Thoughts
I don’t know whether this is the new normal and we can expect savings accounts to actually pay decent interest. For now, though, there are a lot of good options out there, ranging from the traditional, high-yield savings accounts from large banks to fintech bank accounts to bank accounts from smaller banks.
My advice, if you’re sitting on cash, is to find any bank that offers a good rate that you are comfortable with. Don’t get too hung up on slight differences in interest rates unless the rate is several percent higher.
Outside of my original 5% interest accounts, the rest of my cash sits in savings accounts from Ally, Discover, and Marcus by Goldman Sachs. All of those are paying good enough interest that I don’t really have to go through the trouble of switching savings accounts.
Whatever you do though, if you have money in a savings account that’s still paying nothing, you absolutely need to move it. With rates where they are now, it’s an insult that some big banks are still paying nothing for their savings accounts.
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More Recommended Ebike/Scooters
Check out these other ebikes and scooters I've reviewed:
- Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
- Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
- Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
- Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
- Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
- KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
- Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
- Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
- Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
- Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
- Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
- Hiboy S2 Scooter – The Hiboy S2 is an excellent entry-level commuter scooter that's perfect for someone looking to save some money in transportation costs and improve their commute. Check out my Hiboy S2 Review.
- Hiboy S2R Scooter – The Hiboy S2R is one of the more interesting electric scooters I’ve been able to test out. It’s not a high-powered scooter, but for an everyday transport option, it’s very useful, especially given some of the unique features that it has. Indeed, for the price, the Hiboy S2R might be the best value scooter I’ve used. Check out my Hiboy S2R Review.
- Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.
More Recommended Investing App Bonuses
For additional investing app bonuses, be sure to check out the ones below:
- M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
- SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with just $10 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
- Webull (20 free stock shares) – Webull's current promotion gives you 20 free shares valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free shares using Webull.
- Moomoo (15 free stocks) – Moomoo is a free investing app currently offering 2 different referral bonuses if you open an account using a referral link. Read my Moomoo referral bonus guide for more information.
- Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
- Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.
More Recommended Bank Account Bonuses
If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.
- SoFi Money ($325) – SoFi Money is a free checking account from SoFi. They’re currently offering a $25 referral bonus if you open a SoFi account with a referral link and deposit $10. You can also make an additional $300 as well if you complete a direct deposit. This is a good bank that is also 100% free, so you won’t have to worry about managing this account. Here’s a post I wrote with instructions on how to earn your SoFi Money bonus: SoFi Money Referral Bonus: Step By Step Guide.
- Upgrade ($300) – Upgrade is a free checking account that’s currently offering a $300 referral bonus if you open an account and complete a direct deposit. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Here’s a post I wrote with more details: Upgrade $300 Referral Bonus – Step By Step Directions.
- Fairwinds Credit Union ($175) – Fairwinds Credit Union is offering a referral bonus for users that sign up using a referral link. Fairwinds has no fees or minimum balance, so this is a particularly easy bonus to earn. Since this is a smaller credit union, my gut instinct tells me this offer won’t be around long, so if you’re in a position to meet the bonus requirements, grab this bonus before it’s gone. Here is my step-by-step guide on how to earn your Fairwinds Credit Union bonus.
- Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
- US Bank Business ($800) – This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
- Fifth Third Bank ($200) – This offer is limited to customers in the following states: Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, West Virginia, and South Carolina. If you don’t live in one of those states, you won’t be able to open an account online but you can still open an account in-branch if you happen to be visiting a city that has a branch. This is a fairly easy bank bonus to earn, especially since there are plenty of data points showing what will trigger the direct deposit requirement. In addition, you can open the Fifth Third Momentum Checking bank account, which comes with no monthly fees or minimum balance requirements. Read my guide on this bonus here.
- GO2Bank ($50) - GO2Bank is an easy bank bonus that I recommend people take advantage of if they have an easy way of meeting the direct deposit requirement. I like that it’s easy to open the account and that the bonus pays out quickly. Check out my step-by-step guide on how to earn your GO2Bank $50 referral bonus.
- Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link. Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
- Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
- Varo ($25) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $25 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
- 5% Savings Accounts. I'm currently getting 5.24% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
- US Bank Business. US Bank is currently offering new business customers a $800 signup bonus after opening a new account and meeting certain requirements.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
- Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
Netspend savings now 6%
I’ve had 1 Netspend account for a year at least. Does anybody have a guess as to if Netspend will raise the rate? You know, to stay competitive. Maybe you could give them a call and ask, if you have an inside contact from your referrals.
I’m guessing they’ll just leave rates the same. I’m still keeping mine open just in case rates fall in the future, but until then, I’d just leave it open and keep the bi-monthly transfer in and out to avoid inactivity fees.
If you’re willing to tie your money up for a bit*, it’s really worth looking into Treasuries right now. I just put most of our possible-down-payment cash into a 6-month T-bill. Closed at 5.43%, which (with my high-tax jurisdiction and the state/local-tax savings), comes out to a just under 6% tax equivalent rate (!) vs. if we were going for a CD.
*And they’re actually more liquid and less punitive than typical CDs via secondary market – unless interest rates jump wildly.
There used to be banks like TIAA that had a yield promise or something like that, where they would always be in the top % of APY among national banks, so you wouldn’t have to shop around. But Ally, Discover, and others pay decent now and increase often in this environment. Now I just wish more bank bonuses would come back!
…do you know how to close those Netspend accounts? Or will you just keep yours open and just keep transferring the small amounts every quarter or so?
I’m still using my Netspend accounts just because it’s all automated anyway. It’s not hard to close them – just send a message. Whether to close them or not really depends on whether you think the rates we have now are the new normal or whether we’ll go back to a low yield environment at some point. I have no idea. I remember when I was in high school (mid-2000s), all the high-yield savings accounts were paying 5%. But then since I’ve been an adult, rates have always been really low, so who knows.
I did your Netspend stuff about a year ago – so I have those accounts. But I have a HYS account with UFT (Axos) and it’s making 5.01% and I don’t have to watch it – any amount I have in there makes the 5.01%, which is nice.
Hi Kevin,
I love reading your column and thank you for your advice.
The DCU account to get 6.1 interest said you have to become a member and in order to do that you have to be a family member of someone who works there. Was that true when you signed up?
Check out this post: DCU $20 Referral Bonus – Step By Step Guide (Plus A 6% Interest Savings Account) It walks you through how to open your account. You have to make a $10 donation to some school non-profit to be eligible for a DCU account. You can make that back just by the interest, plus it’s money going to a non-profit anyway.