Is a Promotional Savings Rate Worth It? Calculate Your Real Return
Use our calculator to see if a savings APY boost beats other accounts after the promotion period ends.
Some savings accounts advertise a temporarily boosted annual percentage yield (APY). That boost can be valuable, but that rate does not reflect what you’ll earn over a full year.
A promotional APY can beat a low ongoing savings rate, but it may not outperform a strong year-round rate elsewhere.
Use our calculator to estimate an account’s blended APY and compare it with other savings accounts or certificates of deposit.
» Explore more: Read NerdWallet’s list of the best high-yield savings accounts
What is a blended APY?
A blended APY combines the temporary boosted rate and the ongoing rate. It helps provide an estimate of your combined return over one year.
For example, if an account pays a promotional 4.00% APY for six months, then drops to 3.00% APY for six months, your one-year return is not 4.00%. It’s about 3.50% when the rates are blended together. Having a combined APY gives you a better way to compare the offer with accounts that pay a steady APY.
This calculator helps you answer these questions:
What would I actually earn with this promo?
What is the blended APY?
Could I earn more with another savings account or CD?
How to use the blended APY calculator
Enter the following information:
Savings balance.
Promo APY.
Number of months the promo lasts.
Ongoing APY after the promo ends.
Comparison APY, such as another savings account or CD rate.
The calculator assumes no additional deposits or withdrawals and no fees. For a more detailed estimate that includes monthly contributions, use our compound interest calculator.
Say you have $10,000 in savings. An account that pays 4.00% APY for six months, then 3.00% APY for six months, would earn about $350 after one year. That’s much more than an account paying 0.01% APY for the full year, which would earn about $1.
But it’s less than an account paying a steady 3.75% APY for the full year, which would earn about $375.
Keep in mind that the larger your balance, the more the rate difference matters. With a a smaller deposit, the extra interest may be modest. But if you enter a $50,000 starting balance in the calculator, for example, the interest difference is much greater than with a $10,000 balance.
How to tell whether the APY boost is actually worth it
A higher promotional APY is only part of the decision. Here are some other factors to weigh:
Consider whether the boosted rate is guaranteed. If so, you may be able to plan with more confidence. That predictability can help if you’re saving toward a specific goal, such as a down payment, vacation or emergency fund.
Compare with CDs. CDs offer rate certainty, too. The catch is they usually require locking up your money for a set period of time. Early withdrawal penalties typically apply. (See NerdWallet’s list of the best CD rates.)
Think about where rates could go next. Ongoing savings rates can change at any time. You could come out ahead if other rates fall (after a Fed rate cut announcement, for example). But if rates rise, the offer may be less attractive, especially if the ongoing APY is lower than what competitors are paying.
Check the account’s other perks and requirements. If the blended APY is lower than what you can get elsewhere, look at whether the account offers other benefits, such as no fees, easy access, strong digital tools or a new customer bonus.
A short-term savings promotion may not be the best option if the blended APY is lower than a competitor’s ongoing rate. But if the blended rate is good enough, and the account offers benefits you value, the total package could make it a winner.
» Learn more about how to calculate interest in a savings account