Beginner’s GUIDE to Choosing a Crypto Savings Account [2024]

Instead of storing your crypto in a software or hardware wallet, you can also store your spare crypto in cryptocurrency savings accounts to earn you some interest in return.

This article will explain what a crypto savings account is, the factors to consider before choosing one, and how it works for the platform and for you.

What exactly is a Cryptocurrency Savings Account?

A cryptocurrency savings account (also known as a crypto interest account) allows you to earn crypto interest on the cryptocurrency you deposited on their platform. You deposit crypto in your savings account, just like the traditional bank savings account.

The platform lends your crypto out to borrowers for a specified time period and agrees on interest. In return, you get paid a portion of that loaned interest.

What is the difference between APY and APR crypto interest rates?

When you are depositing (i.e. lending) your crypto, you should look at the APY rates, including compounding interest. Some platforms give interest on a daily or weekly basis. Thus, APY rates are more accurate for the investor as it shows you how much you will earn on your deposit.

APY (Annual Percentage Yield) is the annual rate of return AFTER you factor in compound interest. It’s a return based on one year.

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When you are loaning (i.e. borrowing) cryptos, you should look at the APR rates because this is simple interest that you have to pay to borrow.

APR (Annual Percentage Rate) is the annual rate of return BEFORE factoring in compound interest. It only takes into account simple interest.

What are some examples of earnings from APY/APR rates?

If you invest $1,000 in a 14% APY crypto savings account, you will get back $1,140. The earned interest is $140. This is calculated via this formula;

1,000 X 0.14 = 140 

Principal Sum x APY rate = Earned Interest

Some crypto savings accounts offer a 7-day, 14-day or 30-day deposit term. Using the above same example of a $1,000 investment in a 14% APY crypto savings account, you can use the formula below to calculate your earned interest for a 7-days term. The earned interest is $2.68.

(1,000 x 0.14/365) x 7 = 2.68

(Principal Sum x APY Rate/365 days in a Year) x 7-day deposit term = Earned Interest

Is APY/APR rate the only important factor when choosing which savings account to go for?

No. You should also look at the withdrawal fees involved. There is no point in earning a high-yield interest rate but paying a heft withdrawal fee subsequently. This article will list down all the withdrawal fees involved for your consideration.

What are the factors to consider when choosing a crypto savings account?

When choosing a crypto savings account, the following three (3) factors should be considered;

a) APY Interest rate – APY refers to the annual percentage yield. Generally, the higher, the better your returns.

b) Withdrawal terms and fees – The lower, the better. For example, some platforms offer high APYs, but you need to pay high withdrawal fees.

c) Safety of the platform – The reputation and the security of the crypto savings platform to that we entrust our crypto assets.

How does withdrawal fees affect a crypto savings account?

Some platforms advertise their APY interest rates as exceptionally high to attract new customers. This can go as high as 10% or more.

Always read the FAQs and look out for the withdrawal terms and fees.

Several platforms charge a high withdrawal fee, e.g. USD $35 for every withdrawal of stablecoins each time or a certain amount of the withdrawing cryptocurrency. These withdrawal fees are on top of the network/miners’ fees that are still required to be paid by the user for making the withdrawal transaction. In short, the user has to pay two (2) times;

a) Pay withdrawal fees to the platform offering the high-APY crypto savings account and;

b) Pay the blockchain network/miners fees for verifying the transaction.

Many platforms offer free withdrawal or minimum withdrawal fees as well. The aim is to strike a balance between withdrawal fees and APY rates. In other words, how much you are willing to pay for the withdrawal fees and how much APY interest rate you can accept.

How does the safety of the platform affect a crypto savings account?

We entrust our crypto assets to the platform by depositing them into their wallet. The platform lends out our cryptos to exchanges, crypto institutions and borrowers on an agreed term and a return interest amount. In return, we get a portion of that return interest in the form of the advertised APY rates.

The following points can be found by reading up on their website’s FAQs/Support/Announcements/Blog section.

• The platform needs to have good technical security to safeguard our crypto assets from theft and loss.
• Ideally, the platform should buy some form of insurance to protect users and themselves. If yes, these platforms will surely state them on their website.
• The platform needs to be mentioned by other crypto companies in the crypto space. You can google them and check.
• Ideally, the platform should have some initial investors backing them up.
• They should have some form of social media presence, e.g. Facebook, Discord, Telegram, Twitter, etc.

Which are the BEST Cryptocurrency Savings Accounts with HIGH APY Interest earnings?

Here is the list of high-paying APY rates offered by various crypto savings platforms.

S/no	Crypto Platform	No. of Supported Coins	Interest Rates (APY)
1	MyConstant	13+	14% APY for USDC and USDT 4% APY for the rest of the supported coins/tokens
2	Hodlnaut	8+	9.4% APY for USDC and USDT 5.3% APY for BTC 5.4% APY for ETH and many more.
3	BlockFi	19+	3% APY for BTC 10% APY for SOL and ADA 7.25% APY for USDT and many more.
4	AAX	30+	4% APY for BTC and ETH, 6.5% & 6.35% APY for USDC and USDT respectively and many more.
5	Ledn	2	5.25% APY for BTC 7.50& APY for USDC
6	Vauld	100+	6.70% APY for BTC and ETH 12.68% APY for USDT and USDC and many more
7	Pokket	17+	4.00% APY for BTC and 4.50% APY for ETH 9.00% APY for USDT and USDC and many more.

You may notice that stablecoins like USDC and USDT are always high in APY interest rates. Yes, this is generally true for a lot of crypto savings accounts. Stablecoins earns more interest than most cryptocurrencies in savings accounts.