Do 7% interest savings accounts exist anymore?
Do 7% interest savings accounts exist anymore?.
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In recent years, deposit rates as high as 7% APY made a savings account look like a better investment than the stock market. But those rates have largely become a thing of the past.
Today, the best high-yield savings accounts offer as much as 4% APY. Alternatively, some credit unions offer 7% on checking accounts, but these accounts are rare and the terms and conditions can be complex.
So, why don't 7% savings accounts exist anymore — and how can you earn as much interest as possible on your savings? Read on to learn more.
Currently, no banks are offering 7% APY on savings accounts. If you're looking for the highest returns on federally insured deposit accounts, the best available rates are generally in the 3% to 4% APY range for high-yield savings accounts (HYSAs), certificates of deposit (CDs), and money market accounts (MMAs).
So why aren't 7% APY savings accounts available anymore? The answer largely comes down to the Federal Reserve's interest rate policy.
Beginning in 2022, the Fed launched one of its most aggressive rate-hiking cycles in decades to combat elevated post-pandemic inflation . It continued raising rates into 2023 before shifting course in 2024 and beginning a series of rate cuts as inflation cooled and economic conditions evolved.
When the Fed raised rates, banks increased yields on their accounts to attract deposits, leading to some of the most competitive savings rates seen in years. However, as the Fed lowered rates again, those yields gradually declined, and today's top accounts no longer offer the same high rates as before.
Today, inflation remains above the Fed's long-term 2% target, so policymakers have kept interest rates unchanged this year while they continue to evaluate inflation, employment, and broader economic conditions. There's a chance the Fed may increase its target rate at some point this year, but not enough to bring savings account rates back up to 7%.
To find the highest rate on a savings account, you'll have to shop around. Interest rates vary drastically from one account to another; the national average savings account rate is just 0.38%, so earning more starts with some comparison shopping.
When you find a bank or credit union that advertises a high interest rate, be sure to read the fine print. In some cases, the highest rate on an account only applies to a limited portion of your deposit, and you have to meet certain requirements to earn that rate. Any or all of these actions may be required:
Receive a minimum dollar amount in direct deposits per month
Open both a checking and savings account with the financial institution
Bank accounts that offer 7% APY are extremely rare. That said, you can find a handful of credit unions that pay 7% or more on checking or savings accounts. The catch: These rates only apply to a portion of your balance. Plus, you must meet the credit union's eligibility requirements for membership, which are often limited to those who live, work, go to school, or attend church in a specific region.
Before opening an account, take a close look at the terms and conditions to determine whether you can earn the advertised rate.
APY drops to 4% after 3 months; balances over $15,000 earn 0.01% APY
Monthly activities must be completed to earn the highest rate
30 debits per month required to earn the highest APY; 15 debits per month required to waive $9 fee
