Savings accounts frequently advertise a rate that includes a bonus lasting twelve months, after which it disappears. The structure is designed around how savers behave after the bonus ends.
Acquisition is cheaper than universal repricing
Raising the rate on every existing balance to attract new money would be enormously expensive, because most of the extra interest goes to customers who were not going to leave.
A bonus restricted to new accounts pays the premium only where it changes behaviour, which makes the same marketing budget attract far more balance.
The bonus is therefore best understood as a targeted acquisition cost rather than as an indication of what the account pays over time.
The expiry is where the economics work
Banks model what proportion of bonus customers will move when the rate drops, and the model consistently shows that a large share do nothing.
Those remaining balances then fund lending at a materially lower cost, and the profit from that period is what justified the introductory payment in the first place.
The arrangement only works because inertia is reliable, which is why the bonus is structured to expire quietly rather than with a prominent notification.
Advertised rates blend components
A headline figure often combines an underlying variable rate with a fixed bonus, and only the bonus portion is guaranteed for the stated period.
The underlying rate can be cut during the bonus period, which reduces the total being paid without the bonus itself having ended.
Reading which part of the rate is guaranteed, and for how long, is the only way to know what the account will actually pay in month eleven.
Conditions narrow eligibility
Bonus rates are commonly restricted to new customers, sometimes excluding anyone who has held any account with the institution within a defined period.
Others require a minimum monthly deposit, limit the number of withdrawals, or cap the balance on which the top rate applies, with amounts above the cap earning far less.
These conditions are what make the offer affordable, and failing one of them typically removes the bonus for that month rather than triggering any warning.
What rate chasing actually costs
Moving balances annually captures the difference between bonus and standard rates, and on a substantial balance that difference is meaningful.
The cost is administrative rather than financial for most savers, since deposit accounts do not carry transfer fees and protection limits apply the same way at each institution.
The practical constraint is remembering to act, which is why setting a reminder for the expiry date captures most of the available benefit with very little ongoing effort.