Can you earn a 7% CD interest rate? The truth behind high CD rates (2024)

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• The highest CD rate available right now is 6.50% APY.
• Plenty of CDs pay over 5% APY on your total balance and are available nationwide.
• Seetoday's best CD rates»

Banks have been increasing their CD interest rates for well over a year now. The average interest rate on a 6-month CD is 1.36% APY (Annual Percentage Yield), and the average rate for a 1-year term is 1.76% APY. Many institutions are paying significantly higher rates.

Is a 7% CD rate worth it? Learn more about how a 7% interest rate works on a CD, and whether you should bother opening an account with such a high rate.

Which bank gives 7% interest on a CD?

Right now, there aren't any financial institutions offering 7% interest on a CD. Alpena Alcona Area Credit Union, a local financial institution in Michigan, previously offered a 7.19% APY on a 7-month CD special, but that offer has ended.

There are a few financial institutions with CDs paying 6% APY or more, though. You may need to meet certain eligibility requirements to qualify for these CDs.

Alternative high-yield CD options

While there aren't any financial institutions paying 7% on a CD right now, there are other banks that pay high CD rates.

What does a 7% interest rate on a CD mean?

When a CD pays 7% APY, it means you would earn 7% on your balance over one year. Most banks compound interest, which means they pay interest both on the amount you've deposited and the interest you've earned on top of it.

Banks and credit unions can compound interest daily, monthly, quarterly, or annually — and the more often they compound interest, the more you'll earn in the long run. It's common for banks to compound interest daily and pay it into your account monthly, while credit unions typically compound interest monthly.

A 7% APY CD may come with certain rules about earning interest. Before opening a CD for its high interest rate, be sure you understand the bank's rules.

What to look for in a CD

Selecting a CD is an important decision. Here are factors to consider when making your choice:

• Interest rate: Look at the CD's interest rate and how often the bank compounds interest. Find out whether you have to meet criteria to earn the highest rate each month.
• Term length: How long are you comfortable parting with your money? For example, you don't want to open a 5-year CD if you think you'll need the money in one year. Choose a term that matches your financial goals.
• Minimum opening deposit: Some banks don't require any money to open a CD, while others require thousands. Regardless of the amount, make sure you can afford the opening deposit. And as with Alpena Alcona Area Credit Union, some institutions may limit how much you can deposit.
• Early withdrawal penalties: If you take out money before your CD term ends, you'll likely have to pay a penalty. Find out what the bank's penalties are and decide whether you're comfortable with that risk. If you're worried about early withdrawal penalties, you might prefer a no-penalty CD.

7% APY CDs: FAQs