Earn 5.00% APY with a High-Yield Account | Wealthfront Cash (2024)

FAQs

Is 5% good APY? ›

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.

Wealthfront isn't a bank, so it partners with several FDIC-insured banks in order to offer the Wealthfront Cash Account. While FDIC insurance generally caps out at $250,000 per person, Wealthfront keeps your money in many different banks at once, letting you be insured for up to $8 million per person.

As easy as it is to withdraw money from a high-yield savings account, there may be limits to the number of withdrawals allowed per month or year. Going over that limit can incur extra fees. Some banks may even close the account if the withdrawals become excessive and don't meet the terms set by the bank.

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. However, if the rate is 5% with interest earned monthly, the APY would actually be 5.116%, earning you $1051.16 by the end of the first year.

By contrast, if you put $5,000 in an account with an interest rate of 5% that compounds monthly, the earnings would be $255.81. This works out to an APY of 5.12%. In our example, compounding accounts for $5.81 more interest per year than if you just use the simple interest rate calculation, which ignores compounding.

7% Interest Savings Accounts: What You Need To Know. Why Trust Us? As of August 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions have high-interest checking accounts: 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.

You can earn 5% or more with several savings accounts, including Betterment Cash Reserve, Newtek Bank High Yield Savings Account, and more. You can also earn above 5% with several accounts through Raisin, an online savings marketplace that sets you up with high rates from partner banks.

The main con of Wealthfront is that its required $500 minimum deposit is higher than other free robo-advisors like SoFi Invest® and Betterment Investing.

Can I trust Wealthfront? ›

Is Wealthfront Safe? Wealthfront carries the same safety protocols that you'll find in most major financial institutions. Your cash is insured by the FDIC, while investments are insured by the SIPC. 24 No insurance protects your investments from the price fluctuations of the stock and bond markets.

Once your funds are deposited at a partner bank, they're covered by FDIC insurance as we described above. Because of this, you can feel confident that your funds are well protected no matter what kind of Wealthfront account they're in, even if they take a day to land at one of our FDIC-insured partner banks.

Losing money in a high-yield savings account is rare, but it can happen. If you're looking for safe ways to grow your money and protect your savings, a high-yield savings account (HYSA) can be a great option.

Some disadvantages of a high-yield savings account include few withdrawal options, limitations on how many monthly withdrawals you can make, and no access to a branch network if you need it. But for most people, these aren't major issues.

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.

The top high-yield savings accounts are currently earning APYs of 5 percent and greater. By comparison, the national average savings account APY is just 0.59 percent. You'll often find the most competitive APYs at online-only banks, which tend to pay higher rates than brick-and-mortar banks.

The best 5% interest savings accounts can help you reach your financial goals faster. Whether you're saving for a down payment on a house, paying off student loans or building an emergency fund, the higher your interest rate, the sooner you'll get there.

General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.

Personal loans

A 5% APR is very good for a personal loan. APRs on personal loans tend to range from around 4% to 36%.