ING is just an example here as I was looking into its account requirements but this challenge could apply to some other banks as well. One of the requirements to get a higher interest is to have a higher balance at the end of the month than the previous month. i.e. if savings account balance in the previous month-end was $10,000, then this month-end it should be $10,001 for the account to be eligible to earn the variable/ extra interest (otherwise the default interest is very low, almost near zero). This sounds quite straightforward. Also, any balance above $100,000 balance doesn't earn the extra interest anyway.
(Here comes the fun part) However, you still need to keep maintaining an increasing amount in balance even if your original balance was above $100,000, to be eligible for the bonus/ extra interest on even the first $100,000. It means, let's say one had $120,000 in balance in the previous month. They will need to have at least $120,001 in balance in the month-end to be eligible to earn the bonus interest which is only paid on the first $100,000 (so the additional $20,001 will earn minimal interest only).
At this point, someone may decide to open a savings account in another bank e.g. Up bank (or any other) to move the extra $20,000 to that account because it's not going to earn them any interest in ING. However, at the month end, they will still need to put that money back into ING for a day so that the balance on the last day of the month is higher than the last month's balance. If they do it, their balance in Up bank will be near zero on the last day of the month resulting in zero interest and no benefit of opening the new bank account. All banks look at the amount at the end of the month and it's not possible to use the same $$ to maintain balance in two different accounts on the same day, which is the last day of the month. And if they don't do it, then they won't earn the variable interest in ING account that month since they didn't meet the minimum balance requirements.
This means that you will have to let go the interest for at least one month in order to break the chain of ING requirement. Is this correct? How do people deal with it (wondering if there's any workaround)? Excuse me if any of my understanding is incorrect here. I haven't gone through this but this is based on my reading of the fine prints of the account requirements.
PS: As per the comments, most banks calculate interest on daily basis and pays out monthly, so the loss in interest will be only worth a day and not a month but juggle still needs to remain as long as ING is in the equation unless one compromises for a month and set the balance lower than max limit on which they pay bonus interest.
Drop amount in ing down to 99,900. Set up a transfer of $1 each month into it.
Seems like a lot of hassle for 1% interest.