How to Actually Compare a Savings Account Without the Teaser-Rate Trap

The Four Numbers That Actually Matter

An advertised APY is one number. The real comparison requires four: the promotional APY (and how long it lasts), the ongoing APY (what you earn after any intro period), the compounding frequency (daily versus monthly compounds meaningfully over a year), and the balance tiers (is the rate capped at $10,000?). A bank paying 5.25% compounded monthly on a $10,000 balance earns you $537. A bank paying 4.90% compounded daily earns you $501. The difference is real money, not basis points.

Teaser-Rate Anatomy

Teaser rates are a marketing convention, not a fraud. The regulatory disclosure is technically correct — the fine print says 'promotional rate for first 90 days' or similar. What most comparison sites do not show you is the post-promotional rate, because that number is disclosed in the account agreement, not the rate table. The check: look for language like 'promotional,' 'introductory,' 'limited-time,' or an asterisk on the rate. If any of those appear, the rate is not the ongoing rate.

Compounding Frequency: Small Numbers, Meaningful Results

At 5.00% APY, daily compounding returns $51.27 per $1,000 over a year. Monthly compounding returns $51.16. The $0.11 difference per $1,000 sounds trivial — over $100,000 it is $11, not nothing but not transformative. Where compounding frequency genuinely matters is on multi-year CDs: a 5-year CD at 4.50% compounds to $24.75 per $100 daily versus $24.55 monthly. On a $250,000 retirement CD that difference is $500. Worth checking.

Balance Tiers and the Rate Cliff

Some savings accounts, and most money market accounts, advertise their highest tier prominently. A bank may show '5.00% APY' when that rate applies only to balances above $100,000, and balances below $10,000 earn 0.50%. Read the tier schedule — not the headline. For balances under $25,000, high-yield savings accounts at online-only banks will almost always beat tiered money market accounts at regional banks.

Withdrawal Limits Still Exist at Some Banks

Regulation D, which historically capped savings-account withdrawals at six per month, was suspended by the Federal Reserve in April 2020. Many banks kept the limit in their account agreements anyway. A limit of six monthly withdrawals is not illegal; it is a contractual term. If you draw on your emergency fund regularly — for example, during a job transition — a bank that converts or closes your account after the seventh withdrawal is a material problem. Check the account agreement, not the rate table.

My Personal Checklist Before Opening

Before I open a savings account for my own cash, I check five things. First: is the APY the ongoing rate, or introductory? Second: what is the compounding frequency? Third: is there a balance cap on the advertised rate? Fourth: what are the withdrawal terms? Fifth: is there a monthly maintenance fee and what triggers it? If any of those questions cannot be answered from the public disclosures — if I need to call the bank to find the answer — that is itself information about how the institution handles transparency.

Primary Sources

1. [1] Federal Reserve Regulation D amendment, April 2020 — federalreserve.gov
2. [2] FDIC Deposit Insurance FAQ — fdic.gov/deposit/deposits/faq.html
3. [3] CFPB Truth in Savings rule overview — consumerfinance.gov