PayPal is the latest company to try to attract savers who aren’t happy with the current low interest rates of traditional savings accounts.
The financial services company, which has traditionally been used to make digital payments between individuals and businesses, has announced that its new app features include a high-yield savings account called PayPal Savings, which will be rolled out to consumers. American customers in the coming months.
The account, provided by Synchrony Bank, will offer an Annual Percentage Return (APY) of 0.40% – although the rate may change before PayPal Savings launches – and will not have a minimum balance or monthly fee. PayPal said via a press release that customers can automate transfers to PayPal Savings and transfer money between the account and their PayPal balance to make purchases with the platform.
Savings rates have been desperately low for years, with the interest rate on savings accounts in the United States averaging just 0.06% lately, according to the Federal Deposit Insurance Corporation. Even though the APY of high yield savings accounts is a far cry from the above 2% we saw in 2019, putting your hard-earned money somewhere with a 0.40% return is probably tempting, especially more than inflation makes it difficult to lower interest rates on bank accounts. match the price increase.
But PayPal Savings’ expected APY is not as high as some of its competitors. Savings accounts for online banks Ally Bank and Marcus by Goldman Sachs currently have an APY of 0.50%, while Vio Bank offers 0.51%. Before choosing the high yield savings account that’s right for you, check out Money’s list of the best high yield savings accounts of 2021 where we compare their APYs, fees, and top features.
The move to high yield savings is PayPal’s latest attempt to establish its platform as a holistic financial app rather than just an electronic payment system like Venmo or Cash App.
Other new features in the PayPal app include built-in shopping tools, and it will improve existing functionality around invoice management and paying up to two days in advance with direct deposit, the company said. PayPal also has a Buy It Now offer and allows customers to buy, sell and hold cryptocurrencies on the platform.
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