How to earn passive income with checking vs. savings accounts in PointPay?
The digital money revolution is now making its way into the banking sector. Decentralized finance has enabled a wide range of services that previously were offered exclusively by financial institutions.
Defi facilitated the emergence of crypto-banks — institutions that handle a range of standard money-related transactions, such as funds transfer, savings, lending, and investing in a broader range of financial instruments. While this also perfectly describes a usual bank, crypto companies integrated blockchain into these financial functions.
How are crypto banks different from traditional banks?
In PointPay crypto bank, you can easily open an account, transfer funds, lend crypto, or deposit assets and start earning passive income. The interface is generally similar to traditional financial institutions. However, there are some principal differences:
Type of currency used
Traditional banks use government-issued money as a medium of exchange, while crypto banks use cryptocurrencies.
Technologies used in the banking system
Traditional banks use their banking software in daily operations. Crypto banks work with blockchain technology. Distributed ledger makes it practically impossible to change, hack or defraud recorded information since the data is duplicated and distributed across the network.
Asset storage
Traditional banks store your money in safety-deposit boxes. You can open savings or checking accounts to keep digital fiat money. Usually, only one type of fiat money can be stored in your account. Business accounts allow storing more than one fiat currency, but there are some restrictions.
With a crypto bank, you can easily create a wallet to store and transfer your funds. These wallets work on the blockchain. Anyone can open an account with multiple digital assets supported.
Higher interest rates
Traditional banks lend out their customers’ deposits and pay them a portion of the profits as interest. Cryptocurrency companies take a similar approach: they pool deposits to make loans and pay interest to depositors. However, crypto banks offer a much higher interest rate. For instance, you can earn up to 8% APY on your assets at a PointPay blockchain-based bank that is much higher than on average bank accounts.
Access to the banking services
Banks still hold a monopoly on loans; therefore, they charge relatively high-interest rates. Traditional lending is very time-consuming and costly. Furthermore, if you want to take out a loan from a traditional bank, you will be asked to prove your credit score.
Crypto banks allow anyone to take out loans in a few minutes. Crypto loans usually do not require a credit check because digital assets secure the transactions.
Banking card
Traditional banks have an established network of ATMs, debit, and credit cards. So far, crypto banks do not have such a developed system. However, in some countries, there are already ATM centers for the convenience of crypto account holders. You can also order a cryptocurrency card and use it as a regular bank card to pay at a restaurant or store.
How can you earn interest on your crypto with PointPay?
PointPay Bank allows users to earn daily compound interest on cryptocurrency deposits. There are two options for generating yield — checking and savings accounts.
You can use the checking account in your daily life as there are no limits on the number of transactions you can make. However, the annual percentage return for a checking account is lower than for a savings account.
The savings account is suitable for holding funds and has a higher APY. However, you can only withdraw cryptocurrencies from this account only three times per month. If you exceed this number of transactions, the interest rate will be reduced.
It’s very easy to earn interest on cryptocurrencies with PointPay — all you have to do is deposit your funds from another wallet on the “deposit” tab or buy them with a credit card. To get higher interest rates, transfer your balance using the “Transfer” tab.
How much can you earn on your crypto with a PointPay account?
In the table below, you can see the average percentage returns for different cryptocurrencies in PointPay’s savings account. Please note that price fluctuations may affect the actual returns at the end of the period.
Blockfi and Celsius offer slightly higher rewards for stablecoins compared to PointPay. However, if you want to store cryptocurrencies, our savings account is more profitable. Also, be careful because both Blockfi and Celsius have multiple interest tiers for different-sized account balances. The more crypto you want to store, the less APY you’ll receive. Furthermore, Celsius’ interest rates are different for international- and US residents.
Crypterium has slightly lower APYs than PointPay, but you have to lock your assets for a certain time to receive yield. If you close your account earlier, you will get your original deposit back with no accrued interest. You can withdraw your funds at any time along with the generated yield in the PointPay crypto bank. If you make more than three transfers per month, your APY will be decreased, but you will still be eligible to receive rewards.
Let’s imagine that we have invested $1,000 in USDT. You can earn compound interest at the end of the period by reinvesting the interest instead of paying it out. You can see the approximate monthly returns on your savings account in the chart below. Please note that the actual returns may differ from the estimated.
Stablecoins offer you a higher percentage return compared to other cryptocurrencies. USDT, USDC, or DAI is a great solution for investment during the bear market. Even though the yield generated on Bitcoin and altcoins is lower, you can earn much more due to the growth of the exchange rate. You can minimize your risks by diversifying your portfolio.
What’s next?
We are confident that crypto banking will improve the financial system in general. We are committed to providing the best service to our customers. That is why we have created a simple and transparent system that allows you to receive interest on your assets with just a few clicks. Furthermore, there are no restrictions on the amount of time you have to hold your balance to earn rewards. There are no hidden rules or confusing multiple APY tiers. You can try the PointPay platform by simply transferring your favorite cryptocurrency and start earning passive income today!
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💡 Check PointPay Live-Roadmap (PointPay development in real-time): https://pointpay.io/live-roadmap/
🏦 Remember we are PointPay and we are beyond banking!
