Do banks really give savings accounts interest rates of 7%? If you’re lucky enough to find a savings account that gives you 7% interest, you might be surprised to find out that it’s not as good as it sounds.
APYs are going up, but not as much as you might want. So, if you want your money in a savings account to work for you, it’s best to use an online high-yield savings account that pays a higher interest rate.
- Update 9/19/2023: The offer is still available.
READ MORE: SEE THE NATION’S BEST SAVINGS AND MONEY MARKET RATES
What Does an Interest Rate of 7% Mean?
When you get 7% interest, the bank gives you 7% of the money you put into your savings account every month. But most banks don’t give you 7% on the whole amount you put in.
Read the fine print before you jump at the chance to earn 7% interest. Find out what limits banks have, like how much they’ll lend at 7% interest and how much they’ll lend at lower interest rates on the rest.
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Which Bank in the U.S. Earns 7% Interest?
In the US, not many banks offer 7% interest, but one credit union, Landmark CU, does. However, there are a lot of rules and requirements:
Landmark Credit Union: 7.50% up to $500
Landmark Credit Union offers various products, including checking, savings, money market accounts, and Health Savings accounts. Some of their most prominent features include:
- Online banking
- Mobile banking
- eStatements
- Home equity loans, auto loans, student loans, and personal loans
- Mobile deposits
- VISA debit card
What’s the Catch with a Landmark CU Savings Account that Pays 7% Interest?
As you might have guessed, the 7.5% interest rate they pay has a catch. It’s not on your entire balance. Landmark only pays the 7.5% rate on the first $500 and only if you have a direct deposit of at least $250 and get eStatements with a valid email.
Balances over $500 earn between 0.11% and 7.5% interest, and there is a $100 early determination fee if you close your account before 90 days are up.
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Is the Landmark CU Savings Account with 7% Interest Worth it?
A 7% APY sounds great and like something you should take right away, but on a $500 balance, that’s only $3 a month in interest.
You might do better to open a bank account at a different bank that pays less interest. Even though the percentage you earn is lower, you will earn more interest. It’s like a trick that makes you think you make a lot more than you really do.
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Best High-Yield Savings Account Alternatives
The highest interest rate you can get on a savings account is 7% at Landmark Credit Union. However, there are other high-yield savings accounts that may be better depending on the rules of each bank.
The interest rates on these high-yield savings accounts are higher than what you’ll get at your local bank, but they can change at any time.
American Express® High Yield Savings Account Earns 4.25% APY (Nationwide) - The American Express® High Yield Savings Account, Member FDIC, account offers a 4.25% APY (Annual Percentage Yield) rate - as of 8/18/2023. Update 8/18/2023: Rate for Amex HYSA increases to 4.25% APY. Update 8/1/2023: Rate for Amex HYSA increases to 4.15%… GET OFFER
UFB High Yield Savings & High Yield Money Market Accounts Earn Up To 5.25% APY - Both the UFB High Yield Savings and UFB High Yield Money Market accounts earn a very competitive rate. Details below. Update 8/14/2023: Rates for their savings and money market accounts are now up to 5.25% APY. Update 7/27/2023: Rates for… GET OFFER
Quontic Bank High Yield Savings Account Earns 4.50% APY (Nationwide) - Get a great rate for the Quontic Bank High Yield Savings Account. Quontic bank is a digital bank and is often ranked in the top 10 in this space. Details below. Update 7/31/2023: The High Yield Savings account gets a… GET OFFER
CIT Bank Savings Connect Earns 4.65% APY (Available Nationwide) - The CIT Bank Savings Connect account is a very competitive online savings account option. See the current rate details below. CIT Bank is a popular option for online banking, especially if you're seeking interest-bearing online checking and savings accounts. Not… GET OFFER
Barclays Bank Online Savings Account Earns 4.35% APY (Available Nationwide) - Barclays has a great rate on their savings account with no minimum required - available online-only in the U.S. Update 7/26/2023: APY has increased to 4.35% APY. Update 6/16/2023: The APY rate has increased to 4.15% APY. Update 4/27/2023: The… GET OFFERThings to Consider When Choosing a High-Interest Savings Account
Before opening a high-interest savings account, consider the factors involved. These factors will help you determine if choosing high-interest-rate savings accounts makes sense.
The Interest Rates
Interest rates are one of the most important factors because you probably won’t earn a high interest rate on the whole balance, especially if you choose a bank with a high interest rate. Most HYSAs pay about the same rate, but a few banks pay around 7% on a small amount, which makes them stand out.
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Minimum or Maximum Deposits
Before choosing a high-interest savings account, think about how much you can put in or how much you can put in total.
First, think about the minimum deposit needed to open the account or the minimum monthly balance. If you can’t do either, you won’t get the high-interest rate.
But you should also pay attention to how much you can spend. The banks won’t stop you from putting in more money, but they won’t give you the high interest rate they advertise on the whole amount.
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Frequently Asked Questions (FAQs)
You must report all interest earned on your savings account. Banks aren’t required to send you a 1099-INT unless you earn $10 or more in interest, but you should keep track of the interest earned and report it on your tax returns.
Depending on your goals, it’s often a good idea to have multiple savings accounts. It also may be necessary to get the best rates with different accounts depending on the minimum and maximum limits.
To calculate interest earned on savings, multiply the principal amount deposited by the interest rate. For example, if you deposit $1,000 and earn 7%, you’d do the following: $1,000 x .07 = $70
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Bottom Line
Should you choose a bank account with an APY of 7%? Most of the time, it’s not worth it. You’ll usually make more money if you put money in an account that pays 3% or so on any balance, not just the first few hundred or even $1,000.
Before you choose an online high-yield savings account, read the fine print, learn about the fees, and make sure that all of your balances are getting the higher APY.
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