Can You Get 7% on a CD in 2025? Rates, Promos, and Safer Alternatives
Short answer: yes, you can find a 7% rate attached to a CD in 2025-but it’s usually a promotional unicorn with strings attached: tiny deposit caps, short terms, membership hoops, or blended yields that make the headline number look better than your actual return.
Certificate of Deposit (CD) is a time deposit at a bank or credit union that pays a fixed rate in exchange for locking your money until maturity, typically insured up to $250,000 per depositor, per institution.
When you see a huge headline rate, slow down and read the footnotes. Banks and credit unions know 7% turns heads, so they sometimes set tight limits. Typical constraints:
Here’s the catch in numbers. If a promo pays 7% on the first $5,000 and 4% on the rest, and you deposit $50,000, your blended yield is:
(0.07 × $5,000 + 0.04 × $45,000) ÷ $50,000 = 4.3%.
Looks like 7%, feels like 4.3%. That’s why these offers exist-they’re attention-grabbing, but the average customer earns much less than the banner promise.
Annual Percentage Yield (APY) is a standardized way to show the annualized return including compounding; it lets you compare deposit accounts on an apples-to-apples basis.
APY isn’t the same as APR. APY includes compounding; APR doesn’t. CDs are quoted in APY so you can compare across banks without doing math gymnastics.
Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency that insures bank deposits up to $250,000 per depositor, per institution, per ownership category. Credit unions have a twin:
National Credit Union Administration (NCUA) is a U.S. regulator that backs credit union deposits via the National Credit Union Share Insurance Fund, with coverage mirroring FDIC limits.
In Australia, CDs are called “term deposits.” The Financial Claims Scheme guarantees up to A$250,000 per account holder per ADI (authorised deposit-taking institution). 7% term deposits here in 2025 are rare to nonexistent; focus on the best competitive rates you can actually get.
Seven percent usually appears under one of these umbrellas:
The broader rate environment matters. When central banks cut or hold rates, banks don’t need to bid as hard for deposits. In the U.S., if policy rates drift down from peak levels, mainstream CD yields follow. That’s why you’ll see most top listings in the 4.5%-5.5% APY band rather than 7%.
Brokered Certificate of Deposit is a CD sold through a brokerage account; it’s issued by a bank but purchased on a brokerage platform, often tradable on a secondary market.
Brokered CDs can offer sharp rates and easy shopping across many banks. But there are differences:
Traditional CDs usually have an early-withdrawal penalty (EWP) like “3-6 months of interest.” That’s predictable. Brokered CDs use market pricing for exits, which can be better or worse depending on rate moves.
U.S. Treasury Bill is a short-term U.S. government security (4-52 weeks) sold at a discount and redeemed at par, exempt from state and local taxes. T‑bills often compete with top CDs, especially after state-tax savings.
Series I Savings Bond (I Bond) is a U.S. government bond with a fixed rate plus an inflation-adjusted rate, tax-deferred until redemption, annual purchase limits apply. Good hedge when inflation pops; less exciting when inflation cools.
Multi‑Year Guaranteed Annuity (MYGA) is a fixed annuity from an insurer that locks a guaranteed multi-year rate, offers tax‑deferred growth, and typically charges a surrender fee for early withdrawals. MYGAs can post chunky rates for 3-7 years. They’re not bank deposits and have insurer credit risk; vet the insurer’s ratings and understand state guaranty association limits.
Other options: high‑yield savings (instant liquidity, variable rate), no‑penalty CDs (lower rate, easy exit), and short-term bond ETFs (market risk, daily liquidity).
Penalty math example: $10,000 in a 12‑month CD at 5% APY. Monthly interest ≈ 0.4167%. A 6‑month EWP equals about 2.5% of principal ($250). If you break after 3 months you’ve earned ≈1.25% ($125) but owe 2.5% ($250), net −1.25% (−$125). Breaking early can sting.
Blended APY example: A “7% for new members” CD pays 7% on $5,000 and 4% beyond that. If you invest $20,000, the blended APY is (0.07 × $5k + 0.04 × $15k) ÷ $20k = 4.75%. If your alternative is a straight 5.25% CD for the full $20k, the plain CD wins on dollars earned.
Rule of thumb: unless the cap is a big share of your planned deposit, 7% promos won’t move your overall needle. Use them as a nice bonus, not your core plan.
| Vehicle | Typical 2025 Yield Range | Liquidity | Insurance/Guarantee | Common Terms | Early Exit Cost | Tax Treatment |
|---|---|---|---|---|---|---|
| Bank/Credit Union CD | 4.0%-5.5% APY (7% promos rare, capped) | Locked until maturity | FDIC/NCUA up to $250k | 3-60 months | 3-12 months’ interest penalty | Federal + state income tax |
| Brokered CD | Similar to top CDs; callable variants vary | Sell in market; price risk | FDIC via issuing bank | 6-60 months | Market loss if rates rise | Federal + state income tax |
| U.S. Treasury Bill | Often competitive with top CDs | Highly liquid (auction/secondary) | Backed by U.S. government | 4-52 weeks | No penalty; market price varies | Federal tax only (state‑tax exempt) |
| Series I Savings Bond | Varies with CPI; purchase caps apply | 12‑month lock; penalties before 5 years | U.S. government | Redeemable after 12 months | Lose 3 months’ interest if redeemed before 5 years | Tax‑deferred; federal only; education exclusions possible |
| MYGA (Fixed Annuity) | Often 4%-6%+ depending on term | Locked; limited free withdrawals | Insurer’s claims‑paying ability; state guaranty association backstops vary | 3-7 years | Surrender charges | Tax‑deferred; ordinary income on withdrawal |
| High‑Yield Savings (HYSA) | Variable; often just below top CDs | Instant | FDIC/NCUA up to $250k | N/A | None | Federal + state income tax |
Bank interest is taxed at ordinary income rates. In high-tax states, that bites. T‑bills skip state and local taxes, which can tilt the math their way. I Bonds are tax‑deferred and may get federal tax breaks if used for qualified education expenses. MYGAs defer tax until you take money out. In Australia, term deposit interest is taxable at your marginal rate; no special breaks, so compare post‑tax returns, not just the headline APY.
A CD ladder spreads your cash across multiple maturities (e.g., 3, 6, 9, 12 months). You get regular maturities to reinvest if rates rise, and you avoid locking everything at today’s rate if you think rate cuts are coming. A simple approach in 2025: front‑load the short end (3-6 months) with some 12‑month pieces so you can roll frequently without giving up all yield.
It depends on how much will actually earn 7% and for how long. If you’re capped at $5k for three months, the dollar impact is small. If the alternative is a clean 5.25% on your full deposit with easy terms, the plain CD may pay you more in real dollars. Use 7% promos as sweeteners. Build your core around the best all-in options you can actually fill.
Yes, but it’s not common. When you find 7%, it’s usually a promo: small deposit caps (like $1,000-$5,000), short terms, tight eligibility, or blended APYs that only apply to part of your balance. Mainstream, nationally available CDs generally sit near 4.5%-5.5% APY in 2025. Treat 7% offers as niche opportunities, not your core plan.
Check the bank’s FDIC status or the credit union’s NCUA status and the certificate number. Confirm the titling matches your name and ownership category, and make sure your total across that institution stays under the $250,000 insurance cap per depositor, per ownership category. For brokered CDs, confirm the issuing bank and coverage through your brokerage statements.
They can be. Brokered CDs make it easy to shop many banks at once and sometimes show top yields. But exits use market pricing instead of a fixed early‑withdrawal penalty, so you can lose principal if you sell after rates rise. Some brokered CDs are callable, which caps your upside if rates fall. If you value predictability, a plain bank CD with a known penalty can be simpler.
In high‑tax states, Treasury bills often win because they’re exempt from state and local taxes. I Bonds defer federal tax and can get special treatment for education. MYGAs defer tax until withdrawal and can offer multi‑year guarantees, though they’re insurance products, not deposits. Always compare after‑tax yields, not just the headline APY.
Common EWPs are 3 months’ interest for short terms, 6 months for 12-24 months, and up to 12 months for longer terms. A 6‑month penalty on a 12‑month 5% CD equals about 2.5% of principal. If you think you’ll need the money early, consider a no‑penalty CD, a shorter term, or T‑bills for easier exits.
Very unlikely in 2025. Australian “term deposits” have been running well below 7% as the rate cycle cools. Focus on competitive offers from ADIs (authorised deposit‑taking institutions), and remember the Financial Claims Scheme covers up to A$250,000 per account holder per ADI. Compare post‑tax returns and keep liquidity needs in mind.
No one times rates perfectly. A ladder splits the difference: lock some yield now and keep maturities rolling so you can reinvest if rates climb. If you expect cuts, consider slightly longer terms today; if you expect hikes, keep the ladder short so you can reset sooner.
APY includes the effects of compounding and is the standard for deposit accounts like CDs and savings. APR is a simple annual rate without compounding and is more common for loans. When comparing CDs or savings, always use APY to see your true annualized return.
Many CDs roll into a default term at the bank’s current “standard” rate, which might be far below market. Set a calendar reminder 2-3 weeks before maturity, decide whether to withdraw or transfer to a better CD, and give the bank written instructions. Don’t let a great promo turn into a mediocre renewal.
Final thought: if you can snag a genuine, insured 7% on a meaningful balance with clean terms, do it. If not, build a mix-your best CD, some T‑bills, maybe a short ladder-and let the math, not the marketing, drive your yield.
FDIC is a U.S. government corporation backing bank deposits.
NCUA is a U.S. independent agency that insures credit union deposits.
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