Cash App’s Savings Product Takes on Traditional Banks – Forbes Advisor – Technologist

You’d love to grow your savings so you can reach your financial goals faster and be prepared for some of life’s costly surprises. Maybe you have your eye on finally getting a new car or earning a degree to start a new career. You may be trying to stash some extra cash in case a major repair bill, a medical emergency or an unexpected job loss sets you back.

But if you’ve tried using a savings account at a traditional bank, you may have run into a few obstacles to building that nest egg. For starters, most banks require an initial deposit of $25 to $100 to open a savings account, according to the Consumer Financial Protection Bureau. On top of that, many of them pay rates so low that your money can only grow at a snail’s pace, and then they commonly hit you with a host of maintenance, service and penalty fees.

Looking for an alternative to this frustrating approach to saving money? It may be worth considering Cash App.¹ A Cash App savings balance can offer a better, simpler way to save, and you can start with no minimum deposit, earning up to an impressive 4.50% APY,² or annual percentage yield, and never incur a fee.

APY offer

Up to 4.5% APY*

Get your Cash Card**

Order a free, customizable debit card that comes with a variety of rewards

Trust and security

FDIC insurance & 24/7 fraud monitoring / prevention

The Limitations of Traditional Savings Accounts

Young consumers have notably embraced the practicality of saving: 60% of millennials and Gen Zers plan to save a portion of their tax refund, according to a Cash App survey.

Yet, for all their good intentions about saving, many people have limited access to savings accounts that allow them to earn significant interest. The national average interest rate for a traditional savings account is around half a percent, according to the Federal Deposit Insurance Corporation (FDIC). A March 2023 survey by Forbes Advisor found that 43% of survey participants had never opened a high-yield savings account. Besides paying some of the lowest rates, traditional banks and credit unions often impose fees and have minimum balance requirements that threaten to deplete what little savings their customers are able to accumulate.

With so many challenges to building and maintaining a healthy level of savings at traditional banks, it’s no wonder many consumers become frustrated and less motivated to continue saving.

What Makes Cash App Savings Different

Cash App is continuing to disrupt traditional banking models by offering a no-fee savings product that includes several benefits you don’t typically get with a bank savings account. A Cash App savings balance gives you automated savings and goal-setting tools, along with other user-friendly features. Plus, Cash App’s universal accessibility and no minimum deposit make it easy for anyone to start saving.

How to Grow Your Money With Cash App Savings

Cash App Savings makes it easy to start with a small amount, and you can increase your deposits when you have more money to set aside. To earn Cash App’s top savings rate, you’ll need a Cash App Card³ and a few minutes of your time to set it up.

Customers can earn a rate of up to 4.50% by taking these three simple steps:

1. Get a Cash App Card.
2. Set up direct deposit.
3. Direct deposit at least $300 in monthly paychecks into your savings balance.

If you’re not using direct deposit and putting in the monthly $300 minimum for the maximum rate, you’ll still earn the regular interest rate—currently 1.50%–on your Cash App Savings as long as you have a Cash App Card.

It’s important to note that APY interest rates on a savings balance are variable and can change at any time.

How Cash App’s Automated Savings Tools Work

With an activated Cash App Card, you can utilize Round Ups, allowing you to round up your transactions to the nearest dollar and have the change automatically transferred to your Cash App savings balance each time you make a purchase. You can also automatically allocate a portion of your paycheck to your savings balance, allowing you to save seamlessly when pay day arrives.

Other Ways to Transfer

In addition to using these automated savings tools, you can also manually transfer money from your Cash App savings balance, which includes money accumulated from transactions with friends or family, or funds you have added from a linked external account to help you meet your savings goal. Money that you transfer into Cash App Savings is separate from your Cash App Cash balance, which consists of the funds you have available for transactions. Only the funds in your savings balance can earn interest.

Cash App offers unlimited transfers between your Cash and Savings balances with no transfer fees or monthly caps. The minimum amount for manual fund transfers is $1.

With a Cash App savings balance, you can also view your estimated monthly interest at any time and track your progress toward savings goals.

Enhanced Benefits With Cash App Savings

Customers who qualify for the enhanced interest rate of 4.50% are eligible to receive additional benefits, including:

• Free overdraft coverage: Up to $50 on Cash App Card purchases.
• Free ATM withdrawals: Unlimited free withdrawals at in-network ATMs and one monthly free withdrawal at any out-of-network ATM. Cash App’s “Find an ATM” app feature allows users to locate nearby ATMs to help access their funds without incurring additional fees.
• Priority phone support: Request a call from customer support directly from within the app.

How Cash App Savings Protects Your Money and Data

You can rest assured that both your funds and your personal information have robust protection measures in place with Cash App. Here’s why:

• Your savings balance is FDIC-insured through Cash App’s partner bank.⁴
• Cash App’s cutting-edge encryption and fraud detection technology can help protect your money and data.
• Cash App is built on a single, secure platform.
• Cash App’s advanced security features are intended to protect every transaction that takes place on the platform.

Ready to Start Saving?

Cash App makes creating a savings balance hassle-free. Here’s how you can take advantage of a faster, simpler, more accessible way to grow your money with Cash App Savings and get on the path to financial freedom. Keep in mind, as with a traditional savings account, you may have to report and pay taxes on your Cash App interest earnings and should always consult with your tax advisor.

APY offer

Up to 4.5% APY*

Get your Cash Card**

Order a free, customizable debit card that comes with a variety of rewards

Trust and security

FDIC insurance & 24/7 fraud monitoring / prevention

Cash App Savings Balance Eligibility Requirements

To earn 1.50% APY:

• You must be 18 years or older.
• You must use your personal account, not a Cash for Business account.
• You must order a free Cash App Card if you don’t have one yet.

To earn 4.50% APY:

• You can follow the above steps and deposit $300 in paychecks a month into your savings balance.

Setup Process

• If you have a Cash App account, you don’t need to start a new account. Simply open a separate savings balance with Cash App.
• If you don’t have Cash App yet, download it and sign up for a free account.
• Click on the Money tab, located beneath Cash Balance. Then click the Cash App Savings tab.
• Tap “Start Earning Interest.”
• Verify your tax information via an EW-9 form.

Disclosures

1. Cash App is a financial platform, not a bank. Banking services provided by Cash App’s bank partner(s).

2. *To earn the highest interest rate on your Cash App Savings balance, you need to be 18 or older, have a Cash App Card, and direct deposit at least $300 monthly into Cash App. APY is accurate as of 4/9/2024. Cash App will pass through a portion of the interest on your Savings balance held in an account for the benefit of Cash App customers at Wells Fargo Bank, N.A., Member FDIC.

3. **Prepaid debit cards issued by Sutton Bank. Direct Deposit provided by Cash App.

4. Up to $250,000 of your cash and Savings balances in Cash App is covered by FDIC insurance through our partner bank Wells Fargo Bank, N.A., Member FDIC.