If you recently started putting money in your savings account, you may be psyched to know that you now have other ways to save your money. Many people think investing would be fruitful in the long run.
The idea of cryptocurrencies and wallets has been aflare on the internet for quite a while, but for people who don’t know enough about it, the whole concept may seem intimidating. If you’ve ever talked to a parent, they will advise you to put your money in a savings account and sign up for a 401k.
Bank accounts have certain drawbacks too. So, how do crypto savings accounts measure up to regular bank savings accounts? We’re telling you all you need to know.
How Do Crypto Savings Accounts Work?
People made these accounts so more could deal with cryptocurrency as a secondary money outlet. If you’re the only person dealing with your crypto wallet, the chance of losing money is higher than you may believe.
However, if you have someone who can take the money in your wallet, invest it and then pay you the dividend, you could earn more with a crypto savings account. That’s how the crypto savings account functions.
Many notable crypto agencies allow you to invest in such savings accounts. The interest rate they provide is also quite a bit compared to what you would otherwise get in a traditional bank which is the main attraction of these crypto-saving options.
Why Are People Interested In Crypto Savings Accounts?
Crypto savings accounts are trendy. There are a lot of conversations surrounding crypto on social media, with people like Gary Vee and other content creators boosting its benefits everywhere.
However, some people are looking into the benefits of decentralized finance, which makes matters more equal globally. It reduces the idea of matters like exchange rates between countries. Thus, it only makes sense that people are interested in it.
Furthermore, for younger investors, it’s a way to diversify their investments. Many people want to take advantage of crypto if it is going to be massive; thus, they are investing important money into it.
Is a Crypto Savings Account Better Than A Bank Savings Account?
The simple answer is no. You want to have a bank savings account because that will always be much more stable than a crypto savings account.
Anyone who knows even a little about crypto will inform you that it’s extremely volatile. Especially the year 2022 was evidence that you can completely bank on cryptocurrency.
For this reason, with crypto, you want to invest early and then know when to get out. It does have benefits.
Some benefits of a crypto savings account include a higher return rate of 3-12% compared to the bank’s 0.06%, and they use simple interest rates. On the other hand, they also have exchange rate risk and withdrawal restrictions making it necessary to be careful with these savings accounts.
Crypto Savings accounts are a great way to diversify your savings, but they should not be the primary savings account in which you invest your hard-earned money. They are volatile many times and can cause you to lose an insane amount of money. Crypto is also not backed up by FDIC or NCUA, which makes it much riskier.