Banks and accounts offering 7% interest rates
A few banks and credit unions have offered rates around 7% on savings accounts in recent years, but these offers come and go quickly and often come with conditions. The most common source of 7% rates has been high-yield savings accounts at online banks and credit unions, particularly during periods when the Federal Reserve kept interest rates high. However, the exact rate available to you depends on the bank, the account type, and when you open it.
As of late 2024, finding a true 7% rate is less common than it was in 2023, when several online banks offered rates in that range. Rates have shifted downward as the Federal Reserve adjusted its policy. That said, some credit unions and smaller online banks still advertise rates at or near 7%, though you will want to verify the current rate before opening an account, because banks change their rates frequently.
The banks most likely to offer competitive high rates include online-only institutions like Marcus, Ally, and Capital One 360, as well as credit unions that participate in shared branching networks. Credit unions sometimes offer higher rates to members who meet specific conditions, such as maintaining a minimum balance or setting up direct deposit.
Key Takeaways
- Online banks and credit unions are more likely to offer rates near 7% than traditional brick-and-mortar banks, because they have lower overhead costs.
- The exact rate you receive depends on the bank's current offer and may come with conditions like a minimum deposit or direct deposit requirement.
- Rates change frequently and can drop without notice, so the 7% you see advertised today may be lower when you open the account.
- Credit unions sometimes offer higher rates to members who meet specific requirements, so it is worth asking about membership conditions before opening an account.
- Money market accounts and certificates of deposit (CDs) at some banks may also offer rates near 7%, though they have different rules about when you can withdraw your money.
How online banks offer higher rates than traditional banks
Online banks can afford to pay higher interest rates because they do not operate physical branches. A traditional bank pays for building leases, tellers, security, and branch managers. An online bank has only a website and customer service phone lines. That savings gets passed to customers in the form of higher rates on savings accounts.
When the Federal Reserve raises its benchmark interest rate, banks have more room to offer higher rates to savers. When the Fed lowers rates, banks lower their savings rates too. The 7% rates that appeared in 2023 were possible because the Fed had raised its rate to 5.25% to 5.50%. As the Fed adjusted course, many banks lowered their savings rates to the 4% to 5% range.
This means a 7% rate is not permanent. If you find one, it is worth opening an account, but you should not expect that rate to stay at 7% forever. Banks will lower the rate over time as market conditions change.
Credit unions versus online banks for high-rate savings
Credit unions are member-owned financial institutions, not corporations. Some credit unions offer higher rates than online banks, but they often require you to be a member first. Membership usually means living or working in a specific area, belonging to a certain employer, or being part of an organization the credit union serves.
If you are already a member of a credit union, ask them directly what rate they currently offer on savings accounts. Some credit unions advertise rates on their websites; others only show rates to members who log in. A few credit unions use shared branching networks, which means you can visit branches of other credit unions to deposit or withdraw money, even if you do not live near your own credit union's branch.
Online banks do not require membership and are open to anyone with a Social Security number and a U.S. address. You can open an account in minutes from your phone or computer. The trade-off is that you cannot walk into a branch if you need help in person.
What conditions might come with a 7% rate
Banks that offer very high rates sometimes attach conditions to keep the rate. Common conditions include a minimum deposit (often $500 to $2,500), a requirement to set up direct deposit from your paycheck, or a limit on how many times you can withdraw money per month. Some accounts require you to maintain the minimum balance at all times or the rate drops.
Read the account terms carefully before opening. The fine print will tell you whether the 7% rate applies to your entire balance or only to balances up to a certain amount. Some banks offer 7% on the first $5,000 and a lower rate on anything above that. Others offer 7% on your full balance but only if you meet the conditions.
If you cannot meet the conditions, the account may not be worth opening. A 7% rate with a $10,000 minimum deposit is only useful if you have $10,000 to set aside. If you have $2,000, look for an account with a lower minimum or accept a slightly lower rate.
Money market accounts and CDs as alternatives to savings accounts
If you cannot find a 7% savings account, a money market account or certificate of deposit (CD) might offer a similar rate. A money market account works like a savings account but usually requires a higher minimum deposit and offers check-writing privileges. A CD is an account where you agree to leave your money untouched for a set period (three months, six months, one year, or longer) in exchange for a may provide rate.
CDs have been a reliable source of 7% rates because the rate is locked in when you open the account. If a bank advertises 7% for a one-year CD, you will earn 7% for the full year, even if the bank lowers its rates next month. The catch is that you cannot withdraw the money without paying a penalty, usually equal to a few months of interest.
Money market accounts offer more flexibility than CDs but usually require a higher minimum balance. Rates on money market accounts can change at any time, just like savings accounts, so a 7% rate today might be 5% next month.
How to find the current highest rates
Interest rates change constantly, so the best way to find a 7% rate is to check rate-comparison websites that update daily. Websites like Bankrate, DepositAccounts, and DepositAccounts track rates across hundreds of banks and credit unions. You can filter by account type (savings, money market, CD) and sort by rate to see which institutions are currently offering the highest rates.
When you find a rate you like, visit the bank's website directly to confirm the rate is still available and to read the full account terms. Do not rely on a third-party website alone, because rates can change between the time the website updates and the time you open the account.
If you are interested in a credit union, search for credit unions in your area or check whether you are already a member of one through your employer or a professional organization. The Credit Union Locator tool on the CO-OP Network website can help you find credit unions you may be able to join.
What happens to your rate over time
Even if you open an account at 7%, the rate will not stay at 7% forever. Banks lower rates when the Federal Reserve lowers its benchmark rate or when they want to reduce the cost of paying interest. Some banks lower rates gradually; others drop them suddenly. You will usually receive a notice in the mail or by email before the rate changes, but the notice may come only a few days before the change takes effect.
Once your rate drops, you have the option to move your money to a different bank that offers a higher rate. This is called rate shopping, and it is a normal part of managing a savings account. There is no penalty for closing a savings account and moving your money elsewhere, as long as you do not close the account within a few days of opening it (some banks charge a fee for accounts closed very quickly).
If you want a rate that will not change, a CD is a better choice than a savings account. When you open a CD, the rate is locked in for the full term, no matter what happens to the market.
Frequently Asked Questions
Can I really get 7% on a savings account right now?
Some banks and credit unions still offer rates at or near 7%, but they are less common than they were in 2023. Check rate-comparison websites like Bankrate or DepositAccounts to see current offers. Rates vary by bank and change frequently, so verify the rate on the bank's website before opening an account.
What is the difference between a savings account and a CD?
A savings account lets you withdraw money anytime without penalty. A CD requires you to leave the money untouched for a set period (three months to five years). CDs usually offer higher rates because the bank knows your money will stay there. If you withdraw early from a CD, you pay a penalty.
Do I need to have a lot of money to get 7%?
Not necessarily. Some accounts with 7% rates have minimum deposits as low as $500. Others require $2,500 or more. Check the account terms to see what minimum applies. If you do not have enough to meet the minimum, look for an account with a lower minimum or accept a slightly lower rate.
What happens if the bank lowers my rate?
Banks can lower savings account rates anytime, usually with a few days' notice. If your rate drops and you want a higher rate, you can move your money to a different bank. There is no penalty for closing a savings account. With a CD, the rate is locked in for the full term, so it cannot be lowered.
Are online banks safe?
Online banks are insured by the Federal Deposit Insurance Corporation (FDIC) just like traditional banks. Your deposits are protected up to $250,000 per account. Check that the bank displays the FDIC logo on its website to confirm it is insured.