ONE joins the fintech battle for banking customers with a 5% APY high-yield savings account

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ONE, a financial technology startup backed by Walmart, just raised its rate on savings balances to 5% APY. That’s more than 12 times the national average savings account rate of 0.4%, according to FDIC data.

ONE isn’t the only tech company to offer exceptionally high rates on savings accounts in the wake of multiple rate hikes by the Federal Reserve. Apple, for example, launched its own high-yield savings account in partnership with Goldman Sachs earlier this year, which currently offers a 4.15% APY. And Step, a platform designed to help teens and young adults become financially independent, now also offers 5% APY on savings.

These rates rival some of the best high-yield savings accounts on the market today. For example, financial institutions such as Varo Bank and My Banking Direct also currently provide 5% APY on their high-yield savings products. Many more have rates above 4% APY, particularly those that operate via the web.

At the same time, mainstream banking institutions have received some criticism for keeping their savings account yields low, despite the fact that the Fed raised rates 10 times since March 22, to a target rate of 5.00% to 5.25%. This has given tech-focused banks and financial platforms the opportunity to pull customers away with competitive yields. 

How to earn 5% APY with a ONE account

ONE users can qualify for this rate on balances up to $100,000 by setting up direct deposits of at least $500 per month, or maintaining a daily balance of at least $5,000. Any balance over the $100,000 threshold will earn 1% APY. 

This account doesn’t charge any monthly maintenance fees and there’s no minimum balance required.

What is ONE (and is it safe)?

It’s important to point out that ONE is a financial technology company, not a bank. Even so, deposits are protected up to $250,000 per depositor by the FDIC through ONE’s banking partner, Coastal Community Bank. Since it’s the banking provider, Coastal Community Bank is where these accounts are held. But ONE is the company that services your account. (So if you ever have any issues with your account, you should get in touch with ONE Customer Service.)

The concept behind ONE is “save, spend, and grow your money—all in one place.” To that end, ONE accounts are essentially checking accounts. They include a “checking” tab, as well as a “savings” tab that buckets your funds into primary savings and custom savings “pockets.” So while those various pockets might seem like separate savings accounts, technically, they’re subsections of one main account, which is a checking account.

The takeaway

When the Fed raises rates, it tends to impact lending more directly than deposit products. Still, a handful of financial institutions and tech companies have proven it’s possible to offer savings account rates of 5% and up—if that’s the priority.

Seeking out high-yield savings accounts is a smart way to help your savings grow faster. However, before depositing your money in a new account, verify that the bank is FDIC-insured and has a strong reputation.