Promotional APYs, Decoded: What Happens After the Teaser Period Ends

A savings-account advertisement featuring an unusually attractive APY, paired with a small asterisk or a "new money only" qualifier, is describing a promotional rate — a temporary pricing decision designed to attract deposits quickly, with an expiration built in from the start. The rate itself is real for as long as it lasts. The part worth understanding before you open the account is exactly when it stops lasting, and what it turns into afterward.

It's also worth watching for a variant pattern: some promotional structures don't step down to a fixed, disclosed reversion rate at all, but instead simply track whatever the institution's then-current standard rate happens to be at the time the promotional window ends — a rate that isn't knowable in advance because it hasn't been set yet. This version requires slightly different diligence: rather than confirming a specific reversion number today, you're confirming that you understand the promotional period is temporary and that you'll need to actively re-check the account's rate once that window closes, since no fixed number was ever promised for afterward.

Why promotional rates exist

A promotional rate is a customer-acquisition tool, functionally similar to an introductory offer in any other industry: it's priced to win a decision quickly, not to represent the institution's ongoing pricing philosophy. Offering an aggressive rate for a limited window lets an institution grow its deposit base fast, in a way that offering the same rate indefinitely would be too costly to sustain. This isn't a deceptive practice as long as it's disclosed — and it generally is disclosed, just not always in the same size type as the headline number.

Finding the actual expiration terms

The step-down date and the reversion rate are almost always specified, but rarely in the same visual weight as the promotional APY itself — look for language like "for the first [N] months," "introductory rate," or "new money bonus rate," typically in the account disclosure or a footnote near the advertised number. The two facts worth extracting before opening the account: exactly how long the promotional rate lasts, and exactly what rate it reverts to once that window closes. Both are usually stated plainly once you know to look for them — the issue is rarely concealment, it's that the reversion terms require more reading than the headline number does.

The reversion rate is the real number that matters

Here's the part savers most often skip: the promotional rate is temporary by design, but the reversion rate is what you'll actually be earning for the overwhelming majority of the time you hold the account, assuming you don't move the money again once the window closes. An account with a spectacular six-month promotional rate and a mediocre standard rate afterward can easily underperform, over an eighteen-month horizon, a competitor offering a merely good rate consistently from day one. Comparing the promotional headline alone, without weighting by how long it actually applies, systematically overstates how good a deal you're getting.

Walk the blended calculation through an illustrative example. Suppose a promotional account offers a strong rate for the first six months and a much more ordinary rate for the following twelve months you plan to hold the account. Weighting each period by the months it applies and blending the two rates produces an effective annual yield for that eighteen-month window that sits meaningfully below the headline number — often closer to the reversion rate than to the promotional one, simply because the promotional period is the shorter of the two. Compare that blended figure against a competing account offering a single, unglamorous, consistent rate for the entire eighteen months, and the ranking can flip entirely from what the two accounts' headline numbers alone would suggest. This is not an argument against ever choosing a promotional account — sometimes the blended math still favors it — but it is the specific calculation that turns an advertisement into an actual, honest comparison.

Doing the blended math

A useful exercise before opening a promotional-rate account: calculate the blended effective rate you'd actually earn over your realistic holding period, weighting the promotional rate by the months it applies and the reversion rate by the months after. That blended number, not the headline, is the fair comparison point against a competing account's steady rate. It often reveals that a headline-grabbing promotional offer and a boring, consistent competitor land closer together than the advertisement implies — sometimes with the boring option actually ahead, once the full holding period is considered.

"New money only" is its own trap

A related and separate qualifier worth watching for: many promotional rates apply only to money that's new to the institution, explicitly excluding funds transferred from an existing account you already hold there. A saver who assumes moving money between their own accounts at the same bank will qualify can be surprised to find it doesn't — the promotional rate was never available to that money in the first place. This detail is usually in the same disclosure as the expiration date and is worth checking with equal care.

The practical rule

Treat any promotional APY as two numbers, not one: the rate itself, and the calendar. Before opening the account, know precisely when the promotional window closes and what the standard rate becomes afterward, then decide with the blended math in hand — not the headline number alone — whether the account is actually the better choice for how long you plan to keep the money there.