What characterizes a stepped rate account?

A stepped rate account is characterized by having multiple interest rates that are structured to change over time, typically based on the duration the funds remain in the account or specific milestones like balance thresholds being reached. This means that at account opening, the financial institution will disclose the various interest rates that will apply at different intervals or conditions.

This structure can appeal to customers who plan to keep their money in the account for a longer period since the rates can increase over time, offering potentially higher returns as they meet specific conditions outlined in the account agreement.

What sets this type of account apart from others is the presence of these multiple rates and the intent that the account will earn higher interest as it ages or as conditions are met, which is not addressed by accounts with a single interest rate or those that merely have varying balance requirements. Accounts with a single interest rate offer consistency but lack the potential for increased earnings through a stepped rate structure, and accounts with changing minimum balance requirements focus on the balance rather than varying interest rates.