Finance & Money
How to compare savings rates accurately
Two accounts advertising the same number can pay noticeably differently. The gap is in the conditions attached, not the number.
The first thing to check is whether the advertised figure is a rate or a yield. A yield accounts for compounding over a year and a plain rate does not, so the two are not directly comparable even when they look alike. Institutions are required to publish the yield, and that is the one to compare.
The second is whether the headline figure is introductory. A rate that applies for a few months and then reverts is a perfectly normal product, but the number worth comparing is the one that applies afterwards, because that is what most of the money will earn.
The third is the balance band. Some accounts pay the advertised figure only up to a ceiling, or only above a floor, and some pay it only in months where a set number of transactions happen on a linked account. These conditions are in the product's terms, not in the advertisement.
Last, check that the institution is covered by federal deposit insurance and in whose name. This is a yes-or-no fact, it is published, and it matters more than any difference in the rate.
What to do next. Compare published annual yields after any introductory period, and confirm the deposit insurance before moving money.
studentaid.gov outranks this page. Rules, figures and dates change
between academic years. This is written to help you read the official sources, not to
stand in front of them. Start there.
Nothing here is a determination. We cannot tell you what you qualify
for, and no website can. The programme and the office that runs it decide that, after
you apply.
Still have a question?
Describe what you are trying to work out and a member of the team will answer, or direct you to the office that makes the decision.