Do banks actually offer 7% interest on savings accounts? If you’re lucky enough to find a 7% interest savings account, you might be surprised to learn that it’s not all it’s cracked up to be.
Bank APYs are up, but not by as much as you’d hope. So if you want to make your money in a savings account work for you, it’s best to use an online high-yield savings account that pays a higher interest rate.
What Does 7% Interest Mean?
When you earn 7% interest, the bank pays you 7% monthly on the amount you deposit and keep in your savings account. However, most banks don’t pay 7% on the full amount you deposit.
Before jumping at the chance to earn 7% interest, read the fine print. Determine the restrictions banks have, such as the limit on which they’ll pay the 7% interest while paying lower interest rates on the remaining balance.
Which Bank Offers 7% Interest Savings Accounts in the USA?
7% interest isn’t something many banks offer in the US, but one credit union, Landmark CU, pays 7% interest, there are major requirements and stipulations:
Landmark Credit Union: 7.50% up to $500
Landmark Credit Union offers various products, including checking, savings, money market accounts, and Health Savings accounts. Some of their most prominent features include:
- Online banking
- Mobile banking
- eStatements
- Home equity loans, auto loans, student loans, and personal loans
- Mobile deposits
- VISA debit card
Visit LandmarkCU.com to learn more
What’s the catch with Landmark CU’s 7% interest savings account?
As you probably guessed, there is a catch with the 7.5% interest rate they pay. It’s not on your entire balance. Landmark only pays the 7.5% rate on the first $500 and only if you have a direct deposit of at least $250 and get eStatements with a valid email.
Balances over $500 earn just 0.11%, and if you close your account early (within 90 days), there’s a $100 early termination fee.
Is the Landmark CU 7% interest savings account worth it?
A 7% APY sounds amazing and like something you should automatically accept, but it’s only $3 in interest per month on a $500 balance, which, as we mentioned, is the balance cap at Landmark CU.
Instead, you may be better off opening a bank account with a lower interest rate at a different bank.
Most will apply their highest rates to a much larger portion of your savings balance (in fact, some banks like UFB Direct don’t have any balance caps, and they’re currently offering 4.81%). So, you’ll earn more interest overall even though the percentage is lower.
Ultimately, promotional rates like the 7%+ interest from Landmark CU are marketing mind tricks, making you think you’re earning much more than you earn in reality. So, be sure to understand exactly what you’re getting.
Learn More:
Best Alternative High-Yield Savings Accounts
While 7% with Landmark Credit Union is the highest available interest rate, other high-yield savings accounts exist and may be more worth it based on each bank’s unique requirements.
These high-yield savings accounts pay higher interest rates than you’ll get at your local bank, but of course, they are always subject to change.
| Product | APY | Min Deposit |
|---|---|---|
| Western Alliance Bank High Yield Savings Account |
5.05% APY | $0 |
| Varo Bank Savings Account |
up to 5.00% APY | $0 |
| First Mid Bank & Trust High Yield Savings Account |
4.90% APY | $0 |
| Mission Valley Bank High Yield Savings Account |
4.86% APY | $0 |
| CIT Bank Platinum Savings |
up to 4.85% APY | $100 |
| UFB Direct UFB Premier Savings |
4.81% APY | $0 |
| Upgrade Premier Savings |
4.81% APY | $0 |
| Bask Bank Bask Interest Savings |
4.75% APY | $0 |
| Bread Financial High-Yield Savings |
4.65% APY | $100 |
| CIT Bank Savings Connect |
4.60% APY | $100 |
| Quontic Bank High-Yield Savings |
4.25% APY | $100 |
| LendingClub Bank High-Yield Savings |
4.25% APY | $100 |
| Synchrony Bank High-Yield Savings |
4.15% APY | $0 |
| Marcus by Goldman Sachs® Marcus Online Savings Account |
4.15% APY | $0 |
| Sallie Mae Bank High-Yield Savings |
4.05% APY | $0 |
Learn More:
Things to Consider When Choosing a High-Interest Savings Account
Before opening a high-interest savings account, consider the factors involved. These factors will help you determine if choosing high-interest-rate savings accounts makes sense.
Interest Rates
Interest rates are one of the most important factors because you probably won’t earn a high-interest rate on the entire balance, especially if you choose a bank paying an excessive interest rate. Most HYSAs pay a similar rate, but a few standout banks pay around 7%, but only on a small amount.
Minimum or Maximum Deposits
Before choosing a high-interest-rate savings account, consider the minimum or maximum deposits allowed.
First, consider the minimum opening deposit required or the minimum monthly balance. You won’t earn the high-interest rate if you can’t meet either.
But, also pay attention to the maximum amount allowed. It’s not that the banks don’t allow you to deposit more money, but they won’t pay the high-interest rate advertised on the full amount.
Notice Period
Find out if a bank has a predetermined period regarding when they will notify you if interest rates change. However, some banks state that interest rates can change without notice, which means there’s no guarantee you’ll earn the high-interest rate long-term.
Frequently Asked Questions
For more information, check out frequently asked questions from people like you.
How is interest in a 7% savings account affected when you withdraw money?
When you withdraw funds from your savings account, you decrease the interest you earn. You’ll earn interest on your average monthly balance if your bank compounds interest monthly.
Do I have to declare interest earned on a savings account?
Technically, you must report all interest earned on your savings account or any bank account. Banks aren’t required to send you a 1099-INT unless you earn $10 or more in interest, but you should keep track of the interest earned and report it on your tax returns.
Should I have more than one savings account?
If you have multiple financial goals, it’s a good idea to have multiple savings accounts. This makes it easier to track your progress. It might also be a good idea if you have money in a savings account that only pays a high-interest rate on a certain balance and then pays minimal interest.
For example, if you have money in a Landmark Credit Union account to earn the 7.5% interest rate, any amount above $500 should be kept in another account that pays an average of 3%.
Is monthly interest better than annual?
Monthly interest compounds more frequently than annual interest, so you’ll earn more money. Daily compounding is the best-case scenario, but unfortunately, only credit cards compound interest daily, which works against you since it increases the amount you’ll owe.
What is meant by a 7% interest savings rate for 1 Year?
If you earn a 7% interest rate annually, you will earn $70 for every $1,000 you have saved. If it compounds monthly, you will earn $70 in the first month and $74.90 in the second month.
How do I calculate interest earned on a 7% interest savings account?
To calculate interest earned on savings, multiply the principal amount deposited by the interest rate. For example, if you deposit $1,000 and earn 7%, you’d do the following: $1,000 x .07 = $70
Should You Opt for a 7% Interest Savings Account?
Should you opt for a 7% APY on a bank account? Typically, it’s not worth it. But, again, do the math, but you’ll usually make more money depositing funds in an account that pays 3% or so on any balance, and not just the first few hundred or even $1,000 you have deposited.
Read the fine print, know the fees, and ensure you’re earning the higher APY on all balances you have deposited before choosing an online high-yield savings account.
