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- Landmark Credit Union is currently paying 7.50% APY on its high yield current account.
- But the credit union only pays a high rate on balances up to $500, and you must meet certain criteria to qualify.
- Many high-yield savings accounts pay over 5% APY on your total balance without putting you through any hurdles.
- See the best savings account rates »
Banks have been raising savings rates for over a year now. The average interest rate on a savings account is 0.42% APY (annual percentage yield), but many institutions pay significantly higher rates – and one even pays over $7. % interest.
Is a 7% APY rate worth it? Learn more about how a 7% interest rate savings account works and whether you should bother opening an account with such a high rate.
Which bank gives 7% interest on a savings account?
Currently, only one financial institution pays at least 7% APY: Landmark Credit Union. Landmark pays 7.50% on its Premium Checking Account. However, there are some major caveats to consider.
First, keep in mind that this is a checking account, not a savings account. Second, you must sign up for eStatements and receive $250 in direct deposits each month to qualify for the 7.50% interest rate.
Finally, you’ll only earn 7.50% on balances up to $500. Since Landmark compounds the interest monthly, that means you’ll only earn just under $40 out of $500 over an entire year. Balances over $500 earn only 0.11% APY, well below the national average.
All in all, the 7.50% APY account with Landmark Credit Union is probably not worth opening. You’ll earn more with an account that pays a slightly lower rate, but on higher balances, maybe even on your entire account balance.
Note that from August there is also a CD paying over 7% APY: Michigan-based Alpena Alcona Area Credit Union is offering its members a special 7-month CD paying 7.19% APY .
What does a 7% interest rate on a savings account mean?
When an account pays 7% APY, you will earn 7% on your balance over one year. Most banks have compound interest, which means they pay interest on both the amount you deposited and the interest you earned on top of it.
Banks can compound interest daily, monthly, quarterly, or annually — and the more often the interest is compounded, the more money you’ll make in the long run. It is common for banks to compound the interest daily and pay it monthly to your account.
A 7% APY savings account can pay interest on all the money in your account. Or you could earn 7% on only part of your balance, or only earn interest if you meet certain conditions. Before opening a savings account because of its high interest rate, make sure you understand the bank’s rules.
Alternative High Yield Savings Account Options
Although no savings account currently pays 7%, many pay high rates on your entire balance. The following accounts are great alternatives to Landmark’s checking account, and they don’t require you to complete the requirements every month to qualify for their high rates.
What to Look for in a High Interest Savings Account
Choosing a high yield savings account is an important decision. Here are the factors to consider when making your choice:
- Interest rate: Look at the account’s interest rate and how often the bank compounds interest. Find out if you have to meet any criteria to qualify for the highest rate each month and if you earn interest on your total balance.
- Costs: Monthly service charges can easily wipe out the interest you earn on your savings account. The best online banks do not charge monthly fees.
- Minimum opening deposit: Some banks don’t need any money to open a savings account, while others require thousands. Whatever the amount, make sure you can afford the opening deposit.
APY 7% Savings Accounts: FAQs
No, there is currently no savings account that pays out 7% APY. The Landmark Credit Union Premium Checking Account pays 7.50% APY, but only on balances up to $500. If you keep more than $500 in your account, you’re better off opening a high-yield savings account that pays a slightly lower rate on your total balance.
Yes, some CDs pay 7% APY. The best CD rates change frequently and can sometimes pay 7% APY. We check rates daily to find the best CD rates for a variety of terms.
Betterment Cash Reserve currently pays the highest interest rate, which is 5.50% APY for new customers until the end of 2023.
Yes, you must report interest earned on any bank account when filing your taxes.
You will not earn 10% interest on any bank account. You may be able to earn 10% by investing in assets such as stocks or real estate, but the markets are unpredictable and there are no guarantees.
Products in this article: Landmark Credit Union Premium Checking Account, Alpena Alcona Area Credit Union 7 Month Certificate, Cash Enhancement Reserve Account, UFB High Yield MilliSavings Savings Account, UFB High Yield Savings Account Western Alliance Bank, Bask Bank Interest Savings Account, CIT Bank Platinum SavingsVio Bank Cornerstone Money Market Savings Account