Many savings accounts pay an elevated rate for an initial period and a much lower one afterwards. The structure is an acquisition tool, and its economics depend on savers not moving.
The bonus is a marketing cost with a defined life
A bank attracting new balances competes on the rate that appears in comparison tables, and the cheapest way to appear at the top is to pay well for a limited period.
The elevated portion is budgeted like advertising: a known cost incurred to acquire a customer, expected to be recovered over the subsequent relationship.
Paying the same rate indefinitely would cost far more, because it would apply to every existing balance rather than only to newly arriving money.
Inertia is what makes the arrangement profitable
Most balances remain in place after the bonus ends. Moving money requires attention at a moment when nothing prompts it, and the drop is rarely announced prominently.
Once the introductory period closes, the same deposits fund the bank at a materially lower cost than they did during the promotion.
The whole structure is priced on that expected behaviour, which is why the post-bonus rate is often set close to the minimum the institution can offer.
Bonus rates and underlying rates move differently
The headline figure responds to competitive pressure and to what rivals are offering this month. The underlying rate responds mainly to the bank's own funding needs.
They can move in opposite directions, so a strong introductory offer says little about where the money will sit in a year.
Reading the reversion rate at the point of opening gives a better picture of the account than the headline, since that is the rate the balance will spend most of its life earning.
Restrictions shape who actually receives the rate
Bonus offers commonly apply only to new customers, only to money not previously held at the institution, or only up to a balance cap.
Withdrawal limits are also common, with the bonus forfeited if the account is accessed more than a set number of times during the period.
Each condition narrows the population that receives the advertised return while leaving the advertised return unchanged, which is what makes the offer affordable.
Serial switching is the counter-strategy and it has costs
Savers who move at the end of every introductory period capture the elevated rate repeatedly and avoid the reversion entirely.
Doing so requires tracking expiry dates, opening accounts regularly and tolerating the transfer delays, which is a real ongoing effort rather than a one-off.
The practice works because it is uncommon. If most balances moved on schedule, the introductory structure would stop being profitable and would be withdrawn.