Tiered-Rate Account

AAA

DEFINITION of 'Tiered-Rate Account'

A checking or savings account that pays interest in increasingly higher amounts as the account balance increases. Each tier corresponds to a range of account balances and interest rates earned by the customer if his or her balance falls within that range.

For example, the first tier may include balances of $2,500 to $10,000 and pay 1% interest; the second tier may include balances of $10,001 to $17,500 and pay 1.15% interest, and the third tier may include balances of $17,501 and up and pay 1.3% interest.

INVESTOPEDIA EXPLAINS 'Tiered-Rate Account'

A tiered-rate account may have a minimum required balance to open an account and a minimum average daily balance required to earn interest. Banks are free to choose the number of tiers they offer and what interest rate they will pay for each tier. A checking or savings account is often not the best way to earn interest, however, especially on large balances.

RELATED TERMS
  1. Minimum Balance

    The minimum dollar amount that a customer must have in an account ...
  2. Checking Account

    A transactional deposit account held at a financial institution ...
  3. Average Daily Balance Method

    A credit card accounting method where interest charges are based ...
  4. Interest

    1. The charge for the privilege of borrowing money, typically ...
  5. Savings Account

    A deposit account held at a bank or other financial institution ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. Online Banks: Lower Costs And Little ...
    Savings

    Online Banks: Lower Costs And Little ...

  2. Your First Checking Account
    Insurance

    Your First Checking Account

  3. Choose To Beat The Bank
    Options & Futures

    Choose To Beat The Bank

  4. How To Break Up With Your Bank
    Options & Futures

    How To Break Up With Your Bank

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center