In Tiered Rate Account-Method A, what portion of the balance earns interest?

In a Tiered Rate Account using Method A, the structure of interest rates allows segments of the account balance to earn interest at varying rates based on tiers. Under this method, all portions of the balance that fall within the current tier threshold earn interest at that tier's specified rate. This means that if the balance reaches a certain threshold that defines a tier, any amount below that threshold still retains the interest benefits assigned to it based on its tier status.

Therefore, option B accurately represents this structure, stating that all of the balance at the current tier's rate earns interest. This method incentivizes account holders to maintain higher balances, as the interest rate can increase along with the tiers. For example, if the first $1,000 earns one rate and any amount over that earns a higher rate, every dollar within the first tier (up to $1,000) earns interest at that tier's rate, and so does any amount above that if it enters a higher tier. This is a common practice to encourage savings and reward users who maintain larger balances.