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Business banking tiered

For this reason, it is very unlikely that the interest rates offered by a bank will come close to matching the interest rates charged on their loans�unless the fee schedule associated with that account is particularly expensive. A tiered-rate account is usually either a savings account or money market account. Under the terms of this tiered-rate account, depositors are entitled to escalate interest rates on their deposits depending on the amount of money held in their account. In this situation, the bank is betting that it will generate enough fee revenue�if your daily balance falls below the minimum, or you exceed the number of allowable transactions�to offset the higher interest paid on the account. What Is a Tiered-Rate Account?

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You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Business Debit Cards. If default rates are low and the bank can earn a higher rate of interest on their loans than they pay to their account holders, then the bank will be profitable. Generally, tiered-rate bank accounts will offer higher rates of interest for larger balances, in order to encourage customers to save and remain loyal to the bank in question. How Tiered-Rate Accounts Work.