A banked curve is a way your bank structures interest rates so they change at different account balances

A banked curve is a tiered interest rate system. Instead of paying one flat rate on your entire balance, your bank pays different rates depending on how much money you have in the account. The more you deposit, the higher the rate climbs — but only on the money that falls into each tier.

For example, a bank might pay 0.01% on the first $10,000, then 0.05% on money between $10,001 and $50,000, then 0.10% on anything above $50,000. If you have $60,000, you earn the lowest rate on the first $10,000, the middle rate on the next $40,000, and the highest rate on the final $10,000. The curve "bends" upward as your balance grows.

Banks use banked curves to reward larger deposits and encourage customers to keep more money with them. The structure also helps banks manage their own costs — they pay more interest only when they have more of your money to lend out or invest.

Key Takeaways

  • Banked curves pay different interest rates at different balance levels, so your money earns more as your account grows.
  • Only the portion of your balance that falls into each tier earns that tier's rate — you do not lose the lower rate on earlier deposits.
  • Banks use curves to encourage larger deposits and to align their interest costs with the money they actually hold.
  • The difference between a flat rate and a banked curve can add up significantly over time if you maintain a high balance.

How the tiers work in practice

The mechanics are straightforward once you see an example. Say your bank offers these rates: 0.01% on $0–$25,000, 0.05% on $25,001–$100,000, and 0.15% on anything above $100,000.

If your balance is $75,000, you earn 0.01% on the first $25,000 and 0.05% on the remaining $50,000. You do not earn 0.05% on the whole balance — only on the portion above $25,000. If you add $30,000 and reach $105,000, the new $30,000 is split: $25,000 of it earns 0.05%, and $5,000 earns 0.15%.

This structure means your total interest earned increases in two ways: your balance grows, and the rate on new deposits may be higher. The curve rewards you for keeping money in the account, but the benefit is gradual, not sudden.

Why banks structure rates this way

Banked curves solve a problem for banks. If they offered a single high rate to everyone, they would pay too much interest on small accounts that cost them money to maintain. If they offered a single low rate, they would not attract large deposits from customers who have options.

The curve lets banks pay less on small balances and more on large ones, which matches their actual costs. A $5,000 account costs the bank roughly the same to maintain as a $50,000 account, but the $50,000 account generates more lending revenue. The curve lets banks pass some of that extra revenue back to the customer who brought it.

Banked curves also encourage customer loyalty. Once you reach a higher tier, you have an incentive to keep your balance there rather than move it elsewhere. Banks know this, which is why they advertise the top rate prominently — even though most customers never reach it.

Comparing banked curves to flat rates

A flat rate pays the same percentage on your entire balance, regardless of how much you have. A banked curve pays different rates at different levels. Over time, the difference compounds.

Imagine two banks: Bank A offers a flat 0.05% on all balances. Bank B offers a banked curve: 0.01% on $0–$50,000 and 0.10% on anything above. If you keep $100,000 in each bank for one year, Bank A pays you $50. Bank B pays you $75 (0.01% on $50,000 plus 0.10% on $50,000). The gap widens as your balance grows and as rates change.

The trade-off is complexity. A flat rate is easier to understand and compare. A banked curve requires you to calculate which tier your balance falls into and what your blended rate actually is. Many banks publish a "blended rate" or "effective rate" to make this easier, but you should verify the math yourself.

How to find your bank's curve and calculate your earnings

Your bank's banked curve should be listed in the deposit account agreement or on the rates page of their website. Look for language like "tiered rates" or "balance-based rates." The disclosure will show each tier, the balance range for that tier, and the rate paid on that range.

To calculate your actual interest, multiply each tier's rate by the portion of your balance in that tier, then add the results. If your balance is $80,000 and the curve is 0.01% on $0–$50,000 and 0.10% on $50,001+, you earn ($50,000 × 0.0001) + ($30,000 × 0.0010) = $5 + $30 = $35 per year.

Some banks offer online calculators for this. If yours does not, a spreadsheet or a simple calculator works fine. The key is checking the actual rate you earn, not just the top rate advertised.

When banked curves matter most

Banked curves make the biggest difference when you have a large balance or when interest rates are high. If you keep $500 in a savings account, the difference between a flat 0.05% and a banked curve is pennies per year. If you keep $500,000, the difference is hundreds of dollars per year.

Banked curves also matter more when rates are rising. In a low-rate environment (like 2020–2021), even the top tier of a curve might pay 0.01% or less. In a higher-rate environment, the same curve might pay 0.50% on the top tier, making the difference between tiers much more significant.

If you are shopping for a savings account or money market account, compare the blended rate you would actually earn at your expected balance, not just the advertised top rate. A bank with a lower top rate but a gentler curve might pay you more than a bank with a higher top rate but steeper jumps between tiers.

Frequently Asked Questions

Does my balance have to stay in a tier to earn that rate?

No. Your balance can move between tiers, and your rate adjusts automatically. If you drop below a tier threshold, you lose the higher rate on new deposits, but you do not lose interest already earned. Interest is calculated and paid based on your balance on the day it is credited.

Can a bank change its banked curve?

Yes. Banks can change rates and tier structures, but they must notify you in advance — usually 30 days for savings accounts. Check your statements and account disclosures regularly to catch changes. Some banks lower rates on lower tiers while raising them on higher tiers, which can reduce your earnings even if the top rate stays the same.

Is a banked curve better than a flat rate?

It depends on your balance and the specific rates. A banked curve is better if you have a large balance and the top tier rate is significantly higher than the flat rate. If you have a small balance or the curve is very shallow, a flat rate from another bank might pay you more. Always compare the blended rate you would actually earn.

What if I have multiple accounts at the same bank?

Banked curves usually apply to each account separately, not to your total balance across all accounts. A $30,000 savings account and a $30,000 money market account are treated as two separate $30,000 balances, not one $60,000 balance. Check your bank's rules — some banks do combine balances for rate purposes, but this is less common.

How often is interest calculated on a banked curve?

Interest is usually calculated daily and credited monthly, though some banks credit quarterly or annually. Daily calculation means your rate adjusts immediately if your balance crosses a tier threshold. The more frequently interest is credited, the more you earn, because you start earning interest on the interest itself sooner.