When it comes to savings accounts, many of us are familiar with the traditional tiered structure, where higher account balances earn higher interest rates. However, not everyone is aware of reverse-tier savings accounts like our Power Savings Account, which do exactly the opposite—offering higher interest rates for lower balances. This type of account can be a good option for various savers, especially those looking to build their savings on a smaller scale.

So, who stands to benefit most from a reverse-tier savings account? Let’s break down some of the groups who might find it a perfect fit.

New Savers and Younger Adults

If you’re a young adult or anyone just starting a savings journey, you may find a reverse-tier savings account works to your advantage.

A good example of a new saver would be a recent college graduate just entering the workforce who might not have a large amount to save right away, but can still earn a competitive interest rate on the initial contributions. This creates a positive incentive to continue saving consistently, even if the amounts are relatively small at first.

For example, our Power Savings Account offers 5.50% APY on the first $1,000 and 1.50% APY on balances between $1,001 - $2,500.^* Many reverse-tier savings accounts also have a low or no minimum balance requirement, making it easy for anyone to start saving. Our Power Savings account has no minimum balance requirement.

Those Looking to Maintain an Emergency Fund

A reverse-tier savings account can also be a great option if you are focused on building and maintaining an emergency fund. An emergency fund typically covers three to six months of living expenses, and since it’s often separate from other savings goals, it’s usually capped at a specific amount rather than growing indefinitely. By keeping your emergency fund in a reverse-tier account, you can maximize the interest earnings without needing to maintain a high balance.

Individuals with Fluctuating Income

If you have irregular or seasonal income, such as a freelancer, contractor, or gig worker, you may also find value in a reverse-tier savings account. When monthly income can fluctuate, it can be challenging to maintain a high balance consistently. With a reverse-tier structure, you can still earn a competitive interest rate even when your balance dips, helping to stabilize your savings growth.

This flexibility is especially valuable for those who may rely on these savings during leaner months. Knowing your savings can grow even without a large balance provides a financial cushion and peace of mind.

Anyone Looking to Diversify Savings Goals

Some savers benefit from having multiple accounts for different financial goals, such as vacations, holiday spending, or home renovations. A reverse-tier savings account can be ideal for short-term savings goals, where the balance isn’t expected to grow indefinitely, but still needs a good interest rate for the time being. This approach allows account holders to earn higher interest on each targeted savings amount without combining it with larger funds, which might lower the interest rate in a traditional account.

A reverse-tier savings account offers a unique opportunity to earn higher interest on lower balances, making it well-suited for new savers, emergency funds, those with fluctuating incomes, and anyone with smaller, dedicated savings goals. By maximizing returns on modest amounts, a reverse-tier savings account can help your savings grow efficiently and effectively—no matter where you are in your financial journey.

*APY = Annual Percentage Yield. Limit one Power Savings Account per member. The interest rate is applied to the average daily balance and is paid at tier rates on the balances within each tier. Dividends are compounded and credited monthly based on the average daily balance present in the Power Savings Account. Member eligibility is required. The APY for the Power Savings Account is current as of 09/16/24. Rates and terms are subject to change at any time without notice. Fees may reduce earnings on the account.