On September 16, the Federal Reserve raised its benchmark rate by a quarter point to a range of 3.75% to 4.00%, its first increase since 2023, according to CNBC. Savings rates tend to follow, and the best high-yield accounts are already paying a little over 4% APY. So a lot of people are about to open their bank’s rate sheet, look for the new number, and find not one rate but a small table of them.
That table is a tiered rate structure. It’s common on savings accounts, money market accounts, and interest checking, and it quietly decides how much of a rate increase actually reaches you. Two accounts can advertise the exact same top rate and pay you noticeably different amounts, depending on how the tiers work.
What a tiered rate account is
A tiered account pays different interest rates depending on how much money is in it. A typical sheet might say something like 0.50% on balances under $10,000, 3.00% from $10,000 to $49,999.99, and 4.00% at $50,000 and up. Bigger balances earn higher rates. Banks do this because large deposits are more valuable to them, and because it lets them advertise an eye-catching top rate that most customers will never reach.
The federal rule that governs how banks disclose all of this is the Truth in Savings Act, implemented through Regulation DD. Under Appendix A of that regulation, a bank offering tiered rates has to calculate and disclose an annual percentage yield for every balance tier. The minimum balance for each tier also has to appear close to its APY and with equal prominence, so a bank can’t print the top rate in giant type and bury the $50,000 requirement in a footnote.
What the rate sheet often doesn’t make obvious is that there are two very different ways to apply tiers, and the regulation recognizes both.
Method A: the whole balance gets one rate
Under what Regulation DD calls Tiering Method A, the bank looks at your total balance, figures out which tier it falls into, and pays that tier’s rate on every dollar.
The CFPB’s official text of Appendix A walks through an example with three tiers: 5.25% up to $2,500, 5.50% from $2,500 to $15,000, and 5.75% above $15,000. (The rates are old illustration numbers, but the mechanics haven’t changed.) If you deposit $8,000 under Method A, the bank pays 5.50% on the full $8,000. With daily compounding, that works out to $452.29 for the year, an APY of 5.65%.
Method A is easy to reason about. Cross a tier threshold and your entire balance jumps to the higher rate. Each tier has exactly one APY.
Method B: each slice of your balance earns its own rate
Tiering Method B works like tax brackets. The bank pays each tier’s rate only on the portion of your balance that falls inside that tier.
Using the same example, that $8,000 deposit would earn 5.25% on the first $2,500 and 5.50% on the remaining $5,500. By our math (same daily compounding), that comes to about $445.70 for the year instead of $452.29. That gap is small at this size, but the difference grows as balances and rate spreads grow.
Because the effective yield under Method B keeps rising as you add money within a tier, Regulation DD requires the bank to disclose a range of APYs for each tier above the first. In the CFPB’s example, the middle tier’s APY runs from 5.39% to 5.61%. At a $15,000 balance, Method B pays $841.45. We ran the same $15,000 through Method A’s 5.50% rate and got about $848.04. Same advertised rates, same balance, different result.
If you see a range like “3.25% to 3.87% APY” printed next to a tier, that’s your clue the bank is using Method B. A single APY per tier usually signals Method A.
Why this matters more after a rate hike
When the Fed moves, nothing requires a bank to raise every tier by the same amount. A bank can lift its top tier, advertise the new number, and leave the bottom tier where it was. If that happens, a customer with $4,000 in savings could see their rate go from almost nothing to almost nothing.
That’s probably part of why the national average savings rate sits so far below the best advertised rates. A lot of money sits in the bottom tiers of accounts at large banks, earning a fraction of a percent, while the top-tier rate grabs attention.
So after a rate change, skip the headline and ask what the new rate is on your balance.
How to read a tiered rate sheet
Start by finding the tier your balance actually falls into today, not the one you hope to reach. That’s the rate you’ll earn next month.
Then check whether the APY for your tier is a single number or a range. A range means Method B, so your effective yield will be somewhere inside it, closer to the low end if you’re just over the threshold.
Next, look at the distance to the next tier. If you’re sitting at $9,600 and the next tier starts at $10,000, it may be worth consolidating money from another account to cross the line, especially under Method A, where crossing lifts the rate on the whole balance.
Finally, compare against a flat-rate account. Many online banks pay one rate on every dollar with no minimum at all. NerdWallet’s September 2026 list shows top high-yield savings rates up to 4.21%, and plenty of those accounts have no tiers. If your bank only pays its best rate above $50,000 and you have $12,000, a flat-rate account will almost certainly beat it.
Your statement tells you what you actually earned
Advertised APY is a forecast. Regulation DD also requires banks to show an “annual percentage yield earned” on periodic statements, calculated from the interest you were actually paid and your average daily balance for the period. This is the most honest number the bank gives you, because it accounts for your real balance, your real tier, and any mid-cycle rate changes.
If you want to know whether the Fed’s September increase reached you, wait for your October statement and compare the APY earned figure to the one from August. If it didn’t budge, your balance may be stuck in a tier the bank chose not to raise.
The bottom line on tiers
Tiered rates are a legitimate pricing choice, and the rules require banks to spell them out. They do reward people who read past the biggest number on the page. Know which tier you’re in, figure out whether the bank uses Method A or Method B, and check the APY earned on your statement. If your money is sitting in a low tier with no realistic path to the next one, moving it to a flat-rate high-yield savings account is usually the simplest raise you’ll get this year.