By Lisa Bernardi, Adam McFadden, Ashley Barnett – CNN Underscored Money – March 8, 2024

Everything you need to know

It may be hard to believe, but some banks are currently advertising rates that come close to or even exceed the 7% benchmark. However, these sky-high rates don’t come without caveats.

Here, we explain the fine print of these offers to help determine whether a 7% interest savings account is too good to be true.

Understanding 7% interest savings accounts

A vital feature of any savings account is its interest rate. This rate, typically advertised as annual percentage yield (APY), determines how much the bank will pay you in interest as a percentage of your account balance.

For example, a savings account with a $1,000 balance that earns interest at a rate of 7.00% APY would receive $70 in interest per year.

While the potential earnings of a 7% interest rate may sound enticing, it’s far from common. Most savings accounts, even high-yield options, pay interest at a much lower rate. However, recent economic changes have led to higher rates than we’ve seen in decades, and some banks may advertise rates near the 7% range.

If you have your sights set on a savings account earning 7% interest, the most important thing to understand is that savings rates fluctuate. Even if a bank advertises a savings account with a rate at or near 7%, this rate will likely change as the market changes.