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Do 7% interest savings accounts exist anymore?
At present, there aren't any banks offering 7% APY on savings accounts. If you're looking for maximum returns from a bank, the best you can hope to earn is in the range of 4% to 5% on a high-yield savings account (HYSA), certificate of deposit (CD), or money market account (MMA).
Why aren't 7% APY bank accounts available anymore? Mainly because of the Federal Reserve's interest rate adjustments.
Starting in 2022, the Fed began a series of unusually aggressive rate hikes, with the aim of taming post-pandemic inflation and preventing a recession. For people with money in savings accounts, a positive side effect of the hikes was that banking rates rose in tandem.
Now, with inflation approaching the Fed's target rate of 2%, the Fed is expected to continue its recent series of conservative rate cuts. And with each cut, banks will reduce their deposit rates.
For financial accounts that have variable interest rates, including checking accounts, savings accounts, and credit cards, interest rates have dropped alongside the rate cuts, and are likely to fall further. For new accounts with fixed rates, including CDs and most loans, rates have shifted downwards too.
Read more: Savings accounts with interest rates of 5% and up (updated weekly)
How to earn more interest on a savings account
To find the highest rate on a savings account, you'll have to shop around. Interest rates vary drastically from one account to another, with the national average at just 0.45%, 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:
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Enroll in eStatements
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Complete a minimum number of debit transactions per month
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Receive a minimum dollar amount in direct deposits per month
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Log into your account at least once a month
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Open both a checking and savings account with the financial institution
Read more: 10 best high-yield savings accounts available today
Banks that offer 7% interest on accounts
For the foreseeable future, you won't find any banks that offer 7% APY on savings accounts. However, you can find some credit unions that pay 7% or more on checking accounts.
Before opening an account, take a close look at the terms and conditions to determine whether you can earn the advertised rate. For example, with BCU, you need $3,000 in qualifying deposits each month to earn the 8% rate, and the APY significantly drops after three months.
Alternatives to 7% interest savings accounts
Earning 7% APY on a bank savings account is a thing of the past, but that doesn't mean you should empty your bank account. Keeping some money in FDIC- or NCUA-insured accounts is still essential for good financial management, even when rates are falling.
Here's where you can deposit your money to maximize your interest:
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Day-to-day spending cash: Look for a high-yield checking account with low or no fees, where you can make unlimited withdrawals without any penalty. (Here’s a look at our top 10 picks for the best high-yield online checking accounts.)
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Emergency savings: Try a high-yield savings account or money market account where you qualify for high APY based on the balance amount you can consistently keep on deposit.
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Short-and-mid-term savings: Open a CD or Treasury bill that allows you to lock in an above-market APY before the Fed makes more interest rate cuts.
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Long-term savings: Invest in a retirement account (ideally with an employer match) where you'll earn compound interest over the long term. Stock purchases and other investments can bring high returns, too, but they should be part of a balanced portfolio, especially given the current uncertainty in the stock market.
Read more: How to maximize your interest earnings following a Fed rate cut
