You have $5,000 in cash — now what? While you may earn better returns from stocks, many savings accounts offer amazing rates without any of the risks associated with equities.

If you don’t already have an emergency fund, opening a savings account is the best move. It’s important to have easily accessible money set aside for unexpected expenses.

A savings account is one of the most ideal places to keep your money right now. Not only is it safe, but you can also earn around 5.00% APY with some of the best high-yield savings accounts.

What type of savings account is best for $5,000?

There are a few types of savings accounts. Here are some of the most popular options that can earn you a decent return on your money:

High-yield savings account (HYSA): A high-yield savings account functions like a regular savings account, except it pays a better interest rate. You can find many of the best high-yield savings accounts with online financial institutions, so a HYSA may only make sense if you’re comfortable with digital banking. HYSAs often have higher minimum balance requirements than regular savings accounts, so looking into any potential fees before opening one is essential.

Certificate of deposit (CD): A CD is a savings account where you deposit your money and leave it there for a specified timeframe. You often earn a higher interest rate than with a regular savings account, and the rate is fixed for the term, ensuring your return. However, there are usually early withdrawal penalties if you take your funds out before maturity, so it’s not a good fit for an emergency fund you expect to withdraw from.

Money market account (MMA): A money market account offers the benefits of both a checking and savings account. You can earn a rate similar to a savings account, sometimes even higher, but you can often write checks and make debit card purchases using your balance like a checking account. An MMA makes sense for people who want to earn a great rate without worrying about transferring funds to another account when they need it.

If you plan to use your $5,000 as an emergency fund, a high-yield savings account is likely the best place to put it because you’ll be able to withdraw your funds whenever you want, unlike a CD, and you’ll likely earn a higher rate than a money market account. Here are our 10 best high-yield savings accounts:

APY Estimated earnings Minimum deposit requirement

Varo Savings Account	5.00% on up to $5,000, then 3.00%	$400.24	$0
EverBank Performance Savings	5.05%	$505.32	$0
Bask Bank	4.65%	$465.00	$0
LendingClub Bank High-Yield Savings	5.00%	$500.00	$250
My Banking Direct High Yield Savings	5.00%	$500.07	$500
Laurel Road High Yield Savings	4.50%	$450.00	$0
BrioDirect High-Yield Savings	5.05%	$505.32	$5,000
First Foundation Online Savings Account	4.90%	$489.58	$1,000
UFB Direct High Yield Savings	4.31%	$431.00	$0
Popular Direct High-Yield Savings Account	4.80%	$480.14	$100

How much can you earn on $5,000 in a savings account?

The interest a savings account can accumulate over the years may surprise you. Here’s an example of how much you could earn on $5,000 in a savings account with a 5.00% APY and daily compounding interest over 5 years.

Is now a good time to put $5,000 in a savings account?

“Now is really the best time in the last 10 years to put money into a savings account,” said Robert Persichitte, CPA, CFP, CFE and adjunct professor of accounting at Metropolitan State University of Denver.

The future is uncertain, said Persichitte, and $5,000 in the bank can offer security if you lose your job. You’ll also receive interest payments from financial institutions in exchange for leaving your savings with them.

Although the Federal Reserve has suspended rate hikes for now, the federal funds rate still sits at its highest since 2007. This benchmark rate influences overnight lending between financial institutions and can significantly impact the APYs banks and credit unions offer. With a high federal funds rate, you can earn fantastic yields with the right savings account.

The emergence of online banks and fintech companies also makes it an ideal time to put $5,000 in a savings account. Many of fledgling banks offer high rates to attract customers. Without the expense of branch locations, online banks often provide better APYs and fewer fees than brick-and-mortar banks. As long as the financial institution is insured by the FDIC or NCUA, your money is safe up to $250,000 if it fails.

After heightened inflation, maintaining your purchasing power has become more challenging. If you aren’t, at minimum, receiving a rate that outpaces inflation, you’re losing value on your money. A high-interest savings account can help prevent inflationary loss and may put a little extra cash in your pocket.

How long will savings account rates stay this high?

There’s been much speculation about how long savers will be able to take advantage of high savings rates. Many people look to the Fed to determine whether we’ll see lower interest rates in the future.

In 2022, the Federal Reserve started to increase rates to curb inflation. While inflation is a normal economic phenomenon, the target rate is 2%. According to the Bureau of Labor Statistics (BLS), the Consumer Price Index saw a 3.3% year-over-year change in May 2024. Although that’s a vast improvement from the peak inflation rate of 9.1% in June 2022, it’s still higher than the Fed’s target rate. We’ll have to wait and see if inflation continues to decrease and if the Fed decides to lower interest rates in the future.

Persichitte thinks savings account rates could stay high even if the Fed lowers the federal funds rate.

“People are no longer saying, ‘Yeah, this bank account is okay to park a bunch of money in for nothing in return,’” said Persichitte. “They’re shopping around; they’re looking for other options. So, banks have to be competitive.” He says it’s unlikely we go back to where we were before, even if the Federal Reserve cuts interest rates.

Is $5,000 enough for an emergency fund?

The FDIC recommends keeping at least six months’ expenses in an emergency fund. While $5,000 in savings is nothing to scoff at, it probably isn’t enough for most people to meet that criteria.

Imagine you lost your job tomorrow. How long would it take before that $5,000 is gone? Do you think you would have enough time to find a new job before running out of money?

If the answer is “no,” try not to feel too discouraged. According to the Fed, over 40% of Americans said they wouldn’t be able to cover a $1,000 emergency using only their current savings. With $5,000 in the bank, you’ve already made substantial progress compared to many others.

Persichitte said $5,000 is a good start, but not the finish line on a savings account. “It’s kind of like you’re trying to run a marathon, and you ran your first 5k,” he said. “That’s good. That’s a great step on the way there, but you have to keep going.”

It usually takes time to build up your savings, but here are some tips that may help you get there faster:

Create a budget
Set savings goals
Earn interest with one of the best high-yield savings accounts
Automate your savings
Reduce unnecessary spending
Start a side hustle

How much does the average American have in savings?

Let’s take a look at the average American savings by age according to Federal Reserve data:

Age 34 — $20,540: Younger people tend to have less savings than higher age groups. One reason is that they haven’t had as much time to build wealth. People are also typically hit with a lot of expenses in early adulthood, such as paying for college tuition, a car or a home.

Age 44 — $41,540: Individuals in this age group typically begin to settle down; they may have a house or family. Many have advanced (or are in the process of advancing) in their career and bring home a higher income. This age is typically a good time to start focusing on saving for retirement and, if applicable, your children’s education.

Age 54 — $71,130: With retirement right around the corner, this is the most critical time to save money. Not only will you need to supplement your income in retirement, but you’ll also likely have additional health care expenses as you age. Fidelity recommends that you have at least six times your salary saved by age 50 and seven times your salary by 55.

Age 64 — $72,520: People in this age group may plan to retire around 66 or 67. Although you can claim Social Security benefits at 62, waiting for your full retirement age can increase your benefit amount. Fidelity says people at 60 should have eight times their salary saved. However, the median household income of full-time workers ages 55 through 64 is $64,688, according to the BLS data. This may indicate that many Americans in this age group are not adequately prepared for retirement.

The risk of chronic health issues is higher in older adults, so it may be difficult to work extra hours later in life to catch up on retirement savings. You should start saving as early as possible. Not only will it put you on track for a smooth retirement, but you can also take advantage of compound growth, increasing your savings exponentially over time.

Editorial Disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airlines, hotel chain, or other commercial entity and have not been reviewed, approved or otherwise endorsed by any of such entities.

This content is for educational purposes only and is not intended and should not be understood to constitute financial, investment, insurance or legal advice. All individuals are encouraged to seek advice from a qualified financial professional before making any financial, insurance or investment decisions.

Note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed or may no longer be available.

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10 savings accounts to open with $5,000 in November