7% Interest Savings Account: Too Good To Be True? (2024)

What is a 7% interest savings account?

A 7% interest savings account is considered high yield because the interest you’d earn is far above what you’d typically get from a standard savings account. The Federal Deposit Insurance Corporation (FDIC) lists thenational average interest ratefor savings accounts at just 0.47%.

Finding a 7% interest rate is sort of like hitting the personal finance jackpot. While most high-yield savings accounts offer a highAPY that far exceeds the 0.47% national average, they still usually cap out at around 5% interest. It’s not unusual to sign up for an online-only savings account that offers a 4.25% to 4.50% APY and feel like you really scored.

If you do manage to find a financial institution that offers 7% interest rates, those extra couple of percentage points can make a huge difference.

Here’s what your earnings might look like if you made an initial deposit of $5,000 at an APY of 7% compounded monthly versus the same account subject to basic interest.

Basic vs. Compound Interest: 7% Interest Savings Account With $5K Initial Deposit

The above chart assumes you’re not making any additional deposits. But if you signed up for 7% compounded interest and added just $100 each month to your account, after five years, you’d have a whopping $14, 247.42.

To understand more about how much you could earn, try using our savings calculator.

Which bank gives 7% interest on a savings account?

There aren’t any banks offering a savings account with 7% interest right now. However, two financial institutions are paying out at least 7% APY on checking accounts.

While it’s an unusual move, stockpiling your “extra” money in a checking account with sky-high interest could be beneficial. Unlike with how a savings account works, there likely won’t be any withdrawal limits and you should be able to access your money more readily than if you opted for a savings account or CD.

Banks with high-yield savings accounts’ interest rates

Landmark Credit Union Premium Checking

Landmark Credit Union offers a Premium Checking account with an interest rate of 7.50%. That sounds exciting, but there are major caveats.

That rate only applies to balances of up to $500, and you’ll need to jump through some hoops to qualify:

• Become a member of the credit union (only open to residents of certain counties in Wisconsin and Illinois)
• Have direct deposits to the account totaling at least $250 per month
• Enroll in eDocuments (the digital version of monthly bank statements)

Key Features of Landmark Credit Union Premium Checking

Remember, this isn’t a savings account. You’ll be able to make deposits and withdrawals as often as you like, but you may be subject to fees if you don’t meet balance requirements or if your bank account is overdrawn.

OnPath Credit Union High Yield Checking

OnPath Credit Union’s High Yield Checking is also a transactional account, not a savings account. But it comes with an impressive 7.00% APY that surpasses what you’d normally see from checking accounts at brick-and-mortar banks or savings accounts at online-only banks.

Like Landmark’s Premium Checking, OnPath’s High Yield Checking has a cap on balances eligible for the maximumAPY, but the ceiling is a very generous $10,000. Balances over $10,000 earn just 0.50% APY.

Other eligibility requirements that must be met before you nab that 7% APY include:

• Log into your OnPath online account or mobile banking at least once per monthly statement cycle
• Make at least 15 debit card purchases each statement cycle (must post and settle during the given cycle)
• Enroll in e-statements

Membership eligibility for OnPath Credit Union is extremely restrictive. You must live, work, attend school or worship in an eligible part of Greater New Orleans or in the nearby areas of Avondale, Bridge City,Gretna, Harvey, Lafourche Parish, Marrero, Orleans Parish, South Kenner, St. Tammany, Waggaman orWestwego. The financial institution also has a Select Employee Group (SEG) program that extends membership to employees of 600 local businesses and organizations.

Key Features of OnPath Credit Union High Yield Checking

How to choose a 7% interest savings account

Before you sign up for a 7% interest account, it’s important to consider what features are offered and how those perks (and any associated drawbacks) stack up against your own list of needs and wants.

You’ll want to review these savings account features:

• Type of account:As of April 2024, no banks are offering a 7% interest savings account. However, two credit unions are offering that rate for one of their top-tier checking accounts. Get to know the differences between checking and savings accounts to see if the APY is worth the switch.
• Eligibility:Credit unions often have strict eligibility requirements to open an account, and that’s the case with the two institutions offering 7% APY checking accounts. You’ll need to live, work, attend school or worship in a certain area to even apply.
• Deposit requirements:Some banks require a certain minimum deposit to open an account. Both high-yield accounts listed in this guide have low minimum deposit requirements (just $25 and $35) and no minimum monthly balances to meet.
• Fees:The interest you earn can quickly be canceled out by sky-high fees. Look for an account that either has zero monthly maintenance fees or one that eliminates fees if you meet certain requirements (e.g., enabling direct deposit or switching to digital statements).
• Ease of access:Accessibility is important, especially with a checking account you plan to use frequently. Banks with large fee-free ATM networks make it easier to manage your money while traveling, and having conveniently located brick-and-mortar branches can be helpful, too.
• Type of interest accrued:A bank account offering compound interest is usually more favorable than one with simple interest. That’s because simple interest generates earnings based solely on the account’s principal, but compound interest is based on the principal amount and interest earned to date combined. Compound interest just adds up faster.

How to apply for a 7% interest savings account

As of April 2024, there are no savings accounts offering a 7% interest rate, but you can open a 7% interest checking account at two U.S.-based credit unions.

To qualify for these accounts, you’ll need to meet some very strict requirements. That’s because credit unions are membership-based, and they’re allowed to qualify members based on factors such as geographic location and business affiliation. Depending on the institution, you may need to worship at a certain church or belong to a certain labor union.

OnPath Federal Credit Union is a great example of these requirements in action. To join OnPath’s 63,000-strong membership pool, you need to live, work, attend school or worship in certain areas of New Orleans or one of the nearby cities or parishes approved by the bank. You may also be eligible if you or a direct relative (parent, grandparent, child or sibling) meets OnPath FCU’s eligibility requirements.

If you do qualify, you can likely apply by following these steps:

• Gather personal documentation that proves your identity and current address, such as a government-issued ID or a passport.
• If applicable, bring proof that you live or work in the required area or, if you need to be a member of a certain union, provide your membership card for that organization.
• Bring your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) for tax recording purposes.
• Fill out the credit union’s application.
• Once you’ve approved, fund your account.
• Take actions necessary to secure the premium interest rate, such as setting up direct deposits or opting in to eDocuments.

Is a 7% interest savings account right for me?

Since you can’t currently get a 7% interest rate savings account, the real question is whether a 7% checking account is right for you. Understanding the pros and cons of high-yield savings accounts can help you decide if it is worth it.

Consider these pros and cons when deciding whether or not to get a checking account with a 7% interest rate.

Alternatives to 7% interest savings accounts

If you’re still not sure if a 7% interest rate checking account is right for you, there are other high-yield options worth exploring.

FAQ: 7% interest savings accounts

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