High‑yield cash at 5%

Those headline-level rates are usually limited: many banks and credit unions pay the highest advertised interest only on a small portion of your balance or only if you meet conditions like a monthly direct deposit. ( ) A practical example: a popular online bank advertises 5% interest on up to $5,000 when you qualify with direct deposits, while a credit union pays 5% only on the first $1,000 in an “accelerated” savings tier and much less above that. ( ) Annual percentage yield, or APY, is the effective annual return after compounding — in other words, it includes interest earned on previously posted interest — and different accounts compound on different schedules (daily compounding is common and increases the effective return slightly). ( ) Those top yields are concentrated at online banks, fintechs and some credit union tiers or marketplaces that partner with banks; that concentration is why published “best rates” can disappear quickly when banks change pricing or promotions. ( ) Deposit safety still works the usual way: bank deposits are federally insured up to $250,000 per depositor per ownership category by the FDIC, and credit union deposits are insured up to the same limit by the NCUA — that insurance covers principal and posted interest through the date an institution fails. ( ) To put numbers on it: if you qualified for 5% on $5,000, that would produce about $250 in interest in a year, while an $80,000 balance earning roughly 4% would return about $3,200 annually (shorter-term calculators used by outlets show roughly $1,935–$2,120 over eight months at rates between about 3.65% and 4.00%). ( )