Money at 30: Are FinTech Accounts Worth it When APYs are High?

After more than two years of near-nothing interest rates, high-yield savings accounts are back. Over the past several weeks, APYs across several accounts have skyrocketed and, in many cases, are now pushing toward 2% APY (as of this writing, that is). And, with the Federal Reserve widely expected to keep raising interest rates, these could go even higher shortly. So, the question for me has become: If more traditional savings accounts are paying high APYs, is it still worth dealing with some of the gimmicks of FinTech?

The problem with FinTech right now

Keep in mind, I say this as someone who’s been a big fan of the financial technology sector and who has reviewed dozens of these services before. In that time, I’ve seen services come and go, offerings get overhauled, and, yes, watched as APYs crashed and then rebounded. On that note, while most institutions and many other accounts slashed their rates in 2020 and beyond, there were still a handful of platforms that featured solid rates — you just had to work for them.

For example, a customer might need to make a certain number of purchases on a debit card per month in order to unlock an increased rate or, on the other end of things, may be required to directly deposit a set dollar amount on a regular basis to keep earning that enhanced rate. Furthermore, while these whole-digit APYs looked good in comparison to the decimal-followed-by-a-zero rates found elsewhere, they’d also often only apply on limited balances with higher savings earning lower rates. For example, Varo Bank requires you to have direct deposit of at least $1000/month but no more than $4,999 in your savings account to qualify for its 5% APY.

These requirements could legitimately be a big issue for a number of startups that have attempted to attract new customers by offering eye-popping interest rates (while downplaying the restrictions). Without this advantage — and with crypto frenzy dying down for the moment — I wouldn’t be surprised if we see more startups failing to meet their active user goals. Then again, there is the hope that perhaps the more creative FinTechs can come up with new features and offerings that will make their platforms worth trying. As it stands, it seems as though the “neobank” concept is growing to be homogenized as more intriguing twists on digital banking like Bella Loves Me failed to catch on.

The problem with “FDIC insured”

As I recently wrote about, one of the confusing aspects of FinTech is that, while funds are FDIC insured thanks to partner banks that startups hold deposits with, it’s unclear exactly what happens if these companies were to disappear without returning customer funds. That’s because, technically, the insurance covers deposits in the event that the bank itself fails, not if the immediacies go away. Because of this, while I continue to believe that most FinTech apps are fairly safe on the whole, they are not without at least some bit of risk.

Thus, when given the choice to earn 2% APY by keeping money directly with an FDIC insured bank or 3% APY by depositing money via an app (that will then keep the money with a bank), it’s understandable that many consumers would rather take the path of least resistance. To some degree, I’m right there with them on this point as, while I store at least a few dollars with a number of different FinTech apps, the bulk of my cash remains in more “traditional” accounts — although Current is a notable exception to this.

So… are FinTechs worth it in the current environment?

Ultimately, at this time, I’m much more inclined to simply rely on accounts such as Marcus, Discover, Ally, and others where I can get a solid APY on my savings without jumping through hoops. At the same time, I do think there’s still a space for FinTechs and different types of accounts. Unfortunately, finding new and interesting products that will stick around is becoming a bit more difficult by the day. But, thankfully, that’s what I’m here for — so stay tuned.

Also published on Medium.


Kyle Burbank

Kyle is a freelance writer and author whose first book, "The E-Ticket Life" is now available on Amazon. In addition to his weekly "Money at 30" column on Dyer News, he is also the editorial director and a writer for the Disney fan site and has recently starting publsihing his own personal finance blog at

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