Tiered Rate Calculator: What Each Balance Tier Really Pays

Enter your balance plus each tier's minimum and APY, and you get the yearly interest and the effective APY under both of the methods banks use to apply a tier table.

A tier table looks like it settles what an account pays. It usually doesn't. The table lists balance thresholds with an APY beside each one, but never says whether reaching a threshold lifts your entire balance to that rate or only the dollars above it. Those two readings can be hundreds of dollars a year apart. The calculator runs both, so you can match the result to the sentence in your disclosure that decides which is yours.

Pulling the numbers off the disclosure, not the landing page

Balance. Use what the account realistically holds through a full statement period, not the peak on payday. Tier assignment normally works off a balance measured across the period, so a level you only briefly reach overstates what you earn.

How the bank applies it. This is the one input you cannot infer from the rate table. In the disclosure, "the annual percentage yield applies to the entire balance" means the whole-balance option; "each portion of the balance earns the rate for that tier" means the split option. Both appear in the output whichever you choose.

Tier minimums and APYs. These belong to the truth-in-savings disclosure or rate sheet. Regulation DD (12 CFR Part 1030) requires a tiered-rate account's disclosure to give the annual percentage yield for each tier with the balance requirements attached to it, so the pairs exist in a document the bank has to hand you. A promotional page is not that document and usually shows only the top tier.

Enter each tier's minimum, not its ceiling — the next tier's minimum becomes the current tier's upper bound, and the top tier runs uncapped. A row counts only when both fields are filled, so a threshold with a blank rate is dropped without warning. Leave rows four and five empty on a three-tier table. Order doesn't matter; tiers are sorted by minimum first, and two complete tiers are needed for any result.

Advertised headline APY. Optional — the figure from the banner or listing that got your attention. It adds a line showing how far your balance falls short of that rate, measured against whichever method you selected.

Tiering Method A versus Tiering Method B

The two options are not an invention of this site. Appendix A to Regulation DD names both: under Tiering Method A the institution pays the stated rate on the entire balance in the account; under Tiering Method B it pays that rate only on the portion of the balance falling within the tier.

For the whole-balance method the calculator finds the highest tier minimum your balance reaches and multiplies the full balance by that tier's APY. Every dollar earns one rate. For the split method each tier takes a slice — the part of your balance between that tier's minimum and the next one's — multiplied by its own APY, and the slices are added. The effective APY underneath is total interest divided by balance, which is why it lands between the lowest and highest rate and matches neither.

Interest is a plain annual figure, balance times APY, not a compounding projection. APY already carries the institution's own compounding, so multiplying by it once gives twelve months without counting compounding twice; the nominal interest rate through the same arithmetic would understate every tier. Our piece on how money market accounts are structured covers where tiering tends to appear.

Walking a three-tier table through both methods

Suppose an account posts three tiers: 0.50% APY starting at $0, 3.00% APY starting at $10,000, and 3.25% APY starting at $50,000. Suppose your balance is $26,000 and the offer was advertised at a 3.25% headline APY.

The whole-balance method reaches the $10,000 tier but not the $50,000 tier, so 3.00% applies to all $26,000: $780.00 a year, an effective APY of 3.00%. The split method pays 0.50% on the first $10,000 ($50.00) and 3.00% on the $16,000 between $10,000 and $50,000 ($480.00), with nothing in the top tier — $530.00 a year, an effective APY of 2.04%.

Same money, same table, $250.00 apart. Against the advertised 3.25%, the whole-balance reading falls $65.00 short over a year and the split reading falls $315.00 short, even though the bank quoted a rate it genuinely pays — just at a balance level this deposit never reaches.

What the arithmetic cannot see

The calculator will not tell you which method your bank uses. That comes from the disclosure, and guessing is the expensive part.

It also assumes one steady balance. Many institutions drop the whole period to a lower tier if the balance dips below a threshold even once, and the balance computation method the disclosure states — daily balance, average daily balance — changes what "your balance" means.

Qualification conditions sit outside the model. Reward checking accounts often condition the high tier on direct deposits, a count of debit card transactions, or electronic statements. Miss them and the tier table is irrelevant for that cycle, whatever the balance.

One structure deserves care: accounts paying a high rate up to a cap and a low rate above it, where tiers descend rather than climb. The calculator accepts that table because it only sorts by minimum, but the whole-balance reading would apply the low rate to everything — almost never how those products are written. Capped-bonus accounts are split-method products.

Finally, the output is one year of gross interest on today's terms: no deposits or withdrawals, no multi-year compounding, no tax, no monthly maintenance fee. Variable tier rates can also be repriced, and what happens to these accounts when rates move is worth reading before treating any tier as settled.

Questions about tiered accounts

If the disclosure is ambiguous, which method should I assume?

Assume the split method for planning, then ask the bank in writing. Where tier rates climb with balance it is the more conservative reading, so planning on it avoids a shortfall. The bank can point to the governing term in its disclosure.

Why does my effective APY match no rate on the table?

Under the split method it never will, except at an exact tier boundary. The effective figure is a balance-weighted blend of every tier your money passes through, so it sits between the lowest and highest rate that applies. That blend, not the headline tier rate, is what the account pays.

Can adding money to reach the next tier ever reduce my interest?

Not with a table whose rates rise as balances rise. It can happen with a capped-bonus structure under the whole-balance method, where crossing the cap moves every dollar to the lower rate. Enter your balance just below and just above the threshold and compare.