please ACTUALLY explain this like im 5 i genuinely cannot grasp this concept whatsoever. i’m opening a savings account and it says;
“The interest rate depends on your account balance. All rates are variable. 4.25% p.a. on balances less than $50,000. 4.25% p.a. on balances between $50,000 – $249,999.”
am i paying for my own savings account???? what??????? i am so confused i feel like im going crazy
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No, in a savings account the bank is paying YOU money for keeping your money in their bank (which then then use to give out loans to people, which is how banks make their money.)
And based on both numbers being 4.25% for the two different brackets, it seems like you bank has a set up where they could offer two different interest rates based on the money in your account, but are currently choosing to just keep it to one rate.
Now for that “All rates are variable” part, that just means In the future the bank could lower or raise them. Like if the bank started struggling financially they could lower the interest rate they’re paying you from 4.25% to 1% so they aren’t paying out as much money.
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