After years of abysmally low yields, you can now earn a decent return on your cash, which has made it easier to meet your financial goals. But even in this high rate environment, which is likely to stay elevated as inflation remains well above the Federal Reserve’s desired level, you’ll be hard-pressed to find a widely-available savings account that gives you a 7% annual percentage yield (APY).
Account details and APYs are accurate as of October 31, 2023.
Can you get 7% interest on your savings?
Alas, you’re unlikely to garner a savings account that pays you 7% on your cash. In our review of the best high-yield savings accounts, for instance, the top rate is currently offered on the Digital Federal Credit Union Primary Savings account — which has a 6.17% APY on the first $1,000, after that, earn 0.15% APY. Among accounts with no bells and whistles, the top rate maxes out at slightly more than a 5.00% APY.
That’s because there’s only so much a financial institution can offer, and that limit is influenced by the actions of the Federal Reserve.
The current federal funds rate, which sets the costs for short-term borrowing, is 5.25% to 5.50% and members of the Federal Open Market Committee (which sets the federal funds rate) project that the need to continue raising rates at the same pace as we’ve seen over the last 18 months is gone.
Inflation has fallen from a four-decade peak of about 9% to 3.7% and the CME FedWatch tool shows that roughly 99% of professional traders think that rates will either stay the same or fall by the end of 2024.
But, if you’re willing to keep your cash in a different type of deposit account at a smaller institution, you can find 7% yields.
Where to find a 7% interest bank account
For example, Landmark Credit Union in Danville, Ill. currently offers a Premium Checking account with a 7.50% APY — but this yield only applies to balances of up to $500, membership requirements are tight and you’ll need to jump through a couple of hoops.
If you don’t qualify for one account, don’t lose heart. Look around for another at your local credit unions and at smaller digital banks.
“Online banks often offer competitive rates, so expand your search beyond traditional institutions,” said Ross Loehr, certified financial planner (CFP) and vice president of Market and Economic Research at Raisonné & Hammer Price in Jacksonville, Fla.
In your research, be sure that you read the small print on how the rate applies. To continue the example, the Landmark Credit Union Premium Checking account only offers the 7.50% APY on balances up to $500. If you have a large fund to deposit, putting it all in one account where only part of your savings would earn a high rate could be less profitable than keeping it in a smaller-yielding account that applies the interest rate to your whole deposit.
You can use our savings calculator to run your numbers.
Do you have to qualify?
Once you find a proposition account option, you may have to satisfy requirements such as maintaining a certain balance, receiving direct deposits or completing a number of debit card transactions. Plus, if the offering institution is a credit union, you’ll need to qualify for membership.
To use Landmark Credit Union as an example again, if you want to snag the 7.50% APY offered through the Premium Checking account, you’ll need to have direct deposits totaling at least $250 per month and enroll in eDocuments in addition to becoming a member of the credit union by virtue of living or working in a qualifying county of Wisconsin or Illinois.
Other high-yield savings alternatives
If you don’t find a high-yield savings account with the interest rate you had in mind, there are alternative savings and investment vehicles to consider:
- Another high-yield savings account: Although you might not find a high-yield savings account with a 7.00% APY that you can qualify for, several national banks offer savings account options with a rate of at least 5.00% APY.
- Certificates of deposit: Certificates of deposit (CDs) often offer higher interest rates than traditional savings accounts because you agree to part with your funds for the term length.
- Money market accounts: Money market accounts (MMA) also tend to offer higher interest rates than traditional savings accounts while allowing you to access its funds with a debit card or checkbook.
- High-yield checking account: Some financial institutions are offering high-yield checking accounts with attractive interest rates. It’s worth exploring your options to see if you find a good fit.
“Brokerage or investment accounts may also be an alternative in that they are liquid and allow an individual to freely move funds into and out of the account,” said Jeffery Wood, certified public accountant, CFP and partner at Elysium Financial. “However, even though they may offer the potential for higher returns, they also may have higher risk, depending on the underlying investment.”
If you decide to seek higher returns, consider holding some of your funds as a cushion for financial emergencies.
Frequently Asked Questions (FAQs)
As of writing, there aren’t any CDs with a 7.00% APY offered by a national bank. But you can be on the lookout for promotional rates, especially from smaller institutions.
As of writing, no U.S.-based banks are offering a 7.00% APY on a savings account. For high-yield savings accounts — top, competitive rates are more in the 5.00% APY range. However, Landmark Credit Union currently offers a Premium Checking account with a 7.50% APY on balances up to $500.
As of writing, no financial institutions are offering a 7.00% APY on savings accounts, but you can still shop around for the current best rates.
A high-yield savings account offers a higher interest rate than a standard savings account. For example, the national average rate on a savings account is 0.46% APY (as of February 20, 2024). But you can find high-yield savings accounts that offer rates above 5.00% APY.
For example, UFB Direct offers the UFB Secure Savings account with up to 5.25% APY and and there’s the Bask Bank Interest Savings Account that offers a 5.10% APY.
