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Interest

Interest is the amount of money paid to a deposit account for keeping funds on deposit. The interest rate is set by your bank partner(s) and applied to the deposit account's balance at the end of each day. You decide, per deposit product, how that interest is split between your end customers and your organization.

Accrued Interest​

Accrued interest is the interest that has accumulated on a deposit account's balance but has not yet been paid out.

Interest accrues using the Daily Balance method: each day, interest is calculated on that day's end-of-day balance and added to the accrued total. Accrued interest is paid out once a month, around the first day of the month (for example, interest accrued in May is paid on June 1st, and appears as a transaction on June's statement).

To retrieve the accrued interest for an account, use the Get Total Accrued Interest endpoint. To include an account's interest terms in the account response, pass extraFields[account]=interestTerms to Get Account by Id.

Interest Payment​

When interest is paid out, an Interest Transaction is created on the end customer's account, and an Interest Share Transaction is created on your revenue account for the organization's share. Both transactions raise a transaction.created event.

Interest Calculation Modes​

Every deposit product uses one of the following modes to determine how much interest an end customer earns, and how much the organization keeps:

  • Proportional: total interest earned is split between the end customer and the organization according to a predefined percentage share.
  • Customer Formula: the end customer's interest rate is set directly by a formula, which may reference Federal Reserve rates (for example, FED_UPPER_BOUND - 50). The organization receives the remainder of the total interest earned.
  • Tiered Customer Formula: like Customer Formula, but with a different formula per account balance tier (for example, 1% up to $1,000, then 2% above $1,000), enabling progressively higher rates as a balance grows. A tiered formula combines its tiers in one of two ways:
    • Blended: the balance is broken into segments, one per tier it crosses, and each segment earns interest at its own tier's rate. The end customer's interest is the sum of all segments. For example, with the tiers above, a $1,500 balance earns 1% on the first $1,000 and 2% on the remaining $500.
    • Whole: the single tier that contains the full balance sets the rate for the entire balance, not just the portion inside that tier. For example, with the tiers above, a $1,500 balance falls into the 2% tier and earns 2% on the full $1,500.

In the Customer Formula and Tiered modes, the organization's share is never negative: if a formula would produce customer interest greater than the total interest earned, the customer receives the full amount earned and the organization receives none.