Varo vs. Big Banks: The Savings Rate Challenge

Money

You’ve scrimped, you’ve sacrificed, you’ve brown bagged your lunch all year in order to build up your nest egg. Now it’s time to get the most out of your savings with a high-interest Savings Account.

At Varo, we’re thrilled to announce the Annual Percentage Yield (APY) on the Varo Savings Account is starting at 2.02% APY** and then moving up to 2.80% APY** based on certain requirements (see table below) — significantly higher than the national average of 0.09%** APY.

APY Balance Requirements
2.02% None
2.80% The Savings Account balance must be $50,000 or less and the customer must meet both of the following requirements:

  • Make at least five Varo Visa® Debit Card purchases in each calendar month
  • Receive total direct deposits of $1,000 or more in the same calendar month

 

(For details see the Rate information section of the Varo Savings Account Agreement.)

Here’s what you need to know about opening a Varo Savings Account:

  1. It’s free. There are no minimum balance requirements and no fees. It’s just a great place to stash cash and earn high interest on it, whether that’s your first $500 toward a rainy day fund or your $2,500 tax refund.
  2. It’s accessible. You can access your savings account 24/7—you don’t need to wait for a weekday or banking hours. Need to tap into savings? You can move money out of your savings account up to six times per month (that’s a federal regulation).
  3. It’s easy. Your Varo Savings Account is attached to your Varo Bank Account. You can move money from your Bank Account into your Savings Account as much as you like.
  4. It’s automatic. When you turn on Save Your Change, we’ll round up every transaction you make and transfer the difference from your Varo Bank Account into your Varo Savings Account. With Save Your Pay, we’ll automatically sweep a percentage of each direct deposit into savings.

Why are Varo’s rates so awesome (and some big bank rates so dismal?)

Great question. We offer great rates to our customers for a few reasons.

First, we’re all online—our only branch is right there on your smartphone. That means our costs are low; we don’t have to pay for buildings, or parking lots, or other expensive infrastructure.

Next, our mission is not just to make banking better but to also improve your financial health. While the Varo app has great features to help you budget and see how you’re doing money-wise each month, we don’t want you to miss out on getting the most out of your savings too.

So now, you’re probably wondering why some big banks have such low rates in comparison. Well, one reason is that they have no real incentive to raise them—they are hoping that customers who have been with them awhile will just stick around for no other reason except inertia. But that inertia has a real cost to you.

Consider a savings pot of $10,000. With Varo’s 2.02% APY*, you’ll earn about $202 in interest in 12 months. That same $10,000 parked in a savings account at one of these big banks would only earn you about $9 on average.**

Beyond the low rates, many big banks also have minimum balance requirements or monthly fees. It’s up to you read the fine print.

People deserve better—that’s why Varo is here.