Only 30% of low-income families have a savings account. The typical savings account median amount had roughly $1,010.
In addition to job loss, and taking care of a family, having financial stress only fuels the fire. Plenty of people are either underbanked or unbanked too. There has to be an alternative.
You've become accustomed to earning interest with your fiat-based savings account. Blockchain protocols and cryptocurrencies operate a bit differently. You won't earn interest by just holding.
Blockchain protocols can often be intimidating or confusing. A crypto savings account offers an elegant solution for those who don't want to just let their crypto sit there.
Companies will pay you interest by holding with them. To learn more about crypto savings accounts, read our guide below.
How Crypto Savings Accounts Work
A crypto savings account works similarly to a traditional savings account. The company (with where you are holding your crypto) will lend, invest, or stake your crypto. They will then pay you a percentage of regular passive income interest payments.
Many of these companies are exchanges. Companies like Coinbase, Binance, BlockFi, Celsius, and Nexo offer crypto savings accounts to their customers. The interest rates will vary as well as annual returns, lock-up periods, and how often you'll earn interest payments.
For example, with BlockFi, you will see variable rates of up to 11% APY.
It'll depend on the cryptocurrency too. Bitcoin and Ethereum tend to have lower interest rates (~3%). Stablecoins (GUSD) and altcoins (ADA, SOL, AVAX) tend to have higher interest rates (~10-11%).
A savings account with one of these crypto exchanges will offer you more favorable rates if you agree to lock up your crypto for an extended period of time. The same is true if you hold with a platform-specific token. For example, holding the NEXO governance token on Nexo will grant you ~4% interest rates.
Keep in mind with some of these crypto exchanges (Binance, Crypto.com) you won't be able to sell that crypto if it's locked up.
This is why it is important to do your due diligence and do your own research (DYOR).
Why Consider Crypto Savings Accounts?
A crypto savings account allows anyone to access financial services. Unlike legacy fiat-based platforms, these services would only be available to institutional investors.
Aside from the passive income, you'll earn by opening a crypto savings account, they offer a convenient solution that diminishes the risk. These crypto companies are backed by insurers and work with established custodians (BitGo).
Best Crypto Savings Accounts
With so many crypto savings accounts available, it's easy to get overwhelmed. Let us guide you on the best crypto savings accounts available below.
Many agree that KuCoin is one of the best cryptocurrency exchanges around. What you may not be aware of is their savings option—KuCoin Earn. KuCoin Earn offers a high APY (~6.1% APY with USDT) by saving, staking, or promotional offers.
You will love how many more crypto assets KuCoin offers too.
Nexo is another way to earn savings on crypto. You will love their minimal lock-up times (less than 24 hours) and third-party guarantees.
You can even earn a high yield with fiat in addition to cryptocurrencies.
Opening a new account will earn you $25 in bitcoin too. You just have to deposit at least $100 and hold it for at least 30 days.
Binance is one of the most popular exchanges that also offers a savings option. With Binance Earn you are presented with a suite of products for you to grow your crypto holdings easily.
These products include Flexible Savings, Launchpool, BNB Vault, etc. You can expect to see Binance continue to come out with products for you to use.
There are two types of earnings with Binance—Guaranteed and High Yield. You can decide if you want predictable returns or higher yields.
OKX offers a "Savings" product too on their exchange. Users love the fact that you can earn interest hourly and deposit/withdraw crypto assets whenever. The hourly interest will help you achieve maximum efficiency for your crypto assets.
No need to concern yourself with the borrowing demand, you'll get the highest interest rate regardless. Investing in larger amounts will earn you even more with increased limits.
Gateio offers a savings solution too with HODL&Earn. Users can earn passive income just by holding. No early withdrawal is allowed for the lock up and earn product.
The team is trying to offer as many crypto assets as possible. Head to their support page to see what coins and APY they currently offer.
Crypto Savings Accounts vs. Crypto Wallets
You'll want to familiarize yourself with the similarities and differences between a crypto savings account and a crypto wallet. Read below for the comparison.
When you hold crypto in a crypto wallet, the number of coins won't change over time (unless more is sent). With a crypto savings account, the number of coins you own will increase over time.
The key difference between a crypto savings account and a crypto wallet is who has access to the private keys.
With a savings account, you give up access to your private keys. This allows for the exchange to lend your crypto to other users.
With a crypto wallet, you own the private keys. With great responsibility comes great risk. Follow best security and safety practices if you go this route.
If you lose your private keys with a crypto wallet, you can kiss your crypto goodbye. The same is true if you lose your phone or it gets stolen. This remains true even if you have 2FA.
Crypto savings have built-in redundancies to secure the private keys. They have taken certain practices from bank-level security to the next level.
Hold Your Crypto Savings and Prosper
These days, people don't have to rely on traditional banking systems to earn interest. Savings accounts are available to all with crypto exchanges.
With so many crypto exchanges offering savings solutions, it can be difficult to decide on one. The good news is you don't have to choose just one. That is the beauty of crypto.
We encourage you to check out our savings page and subscribe to ones you fancy. Many offer high APY percentages and flexible durations.