Traditional Savings Accounts and Neobank Yields Are No Longer Worth Your Time
Fluctuating economies, global instability, and the seemingly ever-increasing cost of living are facts of life. This predicament has millions of people questioning – are the returns offered by traditional financial institutions enough to keep my savings growing?
In short, if the APY on your savings account doesn’t keep pace with inflation, then it doesn’t support your financial growth; it merely helps you tread water while your savings slowly drown.
It’s time to examine the limitations of these traditional approaches to yield-bearing accounts and introduce some alternative models that really provide enough interest to inspire financial growth. Reminder, however, this is not financial advice, rather, it’s an informed perspective on the challenges of financial growth in today’s economy.
The Reality of Traditional Savings and Neobank Yields
Erosion of Purchasing Power
Inflation is a silent thief. It steals your purchasing power and diminishes the value of your savings. In an inflationary world, where currencies are constantly getting weaker, individuals face the choice of spending, investing, or seeing their money lose value.
This economic reality is why the financially savvy work so hard to “hedge inflation” by making investments to protect themselves against inflation, or even outperform it. Therefore, for those who are earning minimal interest, you are basically losing ground against the rising price of everyday goods and services.
Just ask yourself this – how much more does your weekly shopping cost now than it did a year ago?
The gap is widening. Inflation is highly unlikely to stop (there are very few cases of deflation in history, and even fewer where it has been a good thing).
Low Interest Rates
“High-yield” accounts are a bit of a myth. If you compare them to the standard savings accounts rates, they’re hardly any better. Take a quick look at the top banks and neobanks in your country and you’ll find the difference is pretty negligible.
Consider if your savings were getting 3% APY, but inflation was at 6%. There would be a clear deficit. Even if you were at 6% APY and inflation was at 6%, all you would be doing is maintaining the value of your savings rather than growing them, even if the balance increased.
Restrictions and Limitations
The fine print of your savings account may contain a finely spun web of restrictions and limitations that will hinder your chances of ever earning the full offered yield rate. There could be minimum balance requirements to meet, withdrawal limits to observe, and tiered interest rates that benefit big balance holders to make the rich richer. Some banks might make you jump through all kinds of hoops to get the full advertised rates. That’s the reality today.
Why People Are Looking for Alternatives
Well, can you blame them? Increased awareness of the limitations of traditional savings accounts has led people to seek more rewarding alternatives. The banks are banking on you not being aware that there are better options out there. So, it’s on you to understand just how short the banks fall, and how you can sustainably get more out of your savings.
Alternatives have emerged through different financial models and verticals, but there’s one that really stands out – decentralized finance (DeFi). This emerging space offers greater flexibility, higher returns, and more control over your financial assets, if you know where to look.
New financial alternatives have proven to be more transparent, efficient, and accessible than traditional banks, with their opaque and bureaucratic nature. People want simplicity and accessibility, regardless of who they are, where they come from, and how much they have.
How DeFi and Deobanks Are Changing the Game
Decentralized Finance (DeFi) represents a monumental shift for financial systems, aiming for improved efficiency, flexibility, and fairness. It goes beyond Bitcoin, encompassing many of the familiar financial services like lending and borrowing, as well as some new options like yield farming, fractionalized assets, and programmable money (smart contracts). All these can generate higher yield, but there are risks involved.
Maksym Sakharov, WeFi’s Group CEO and Co-founder, suggested that “WeFi makes high-yield DeFi opportunities as easy to access as a traditional savings account.” He added, “We simplify complex processes to deliver competitive APYs without technical barriers, while minimizing risks through multi-layered security audits, transparent on-chain tracking, and flexible custody options. Users can either choose custodial accounts for peace of mind or self-custody with safety guidelines, keeping control and growth in their hands.”
Within DeFi, there is a new trend emerging to fill the gap between traditional finance and demands of modern customers. Deobanks. These are decentralized on-chain banks that aim to bridge the gap between traditional banking, neobanking, and the benefits of blockchain technology. Deobanks are rewriting the rules on banking, and modern savers are flocking.
What WeFi Brings to the Table
WeFi is the first Deobank to provide high-yield opportunities through DeFi integrations, all of which keep the user SAFE and free from complexity, limits, or restrictions. Its APYs do not discriminate, and the design has abstracted away complex processes that might overwhelm the average non-technical person.
Roman Rossov, WeFi’s Co-founder and Chief Product Officer, explained that “WeFi combines DeFi’s growth potential with the simplicity of traditional banking. Whether users choose self-custody or custodial services, security is never compromised, returns remain competitive, and financial control stays in the customer’s hands..”
Another promise that WeFi keeps to its users, beyond simplicity, is autonomy. You see, WeFi offers both custodial and non-custodial accounts, meaning that users can choose to bank themselves via WeFi, or let WeFi take care of their funds on their behalf. There are numerous benefits to banking yourself, and it’s perfectly safe as long as you follow the key rules to crypto: never share your private keys or seed phrase with anyone!
Finally, WeFi leverages on-chain verification to ensure that all of its financial operations are completely transparent and fair. By doing this, they provide users with a clear and traceable understanding of how their funds are used, how returns are generated, and why they can feel safe trusting WeFi.
Rethinking Financial Growth in the Digital Age
It’s becoming even clearer that the yields currently offered by traditional savings accounts, and even Neobanks, are just not going to cut it for the needs of modern savers. It’s more crucial than ever that people take the time to genuinely explore their financial options and discover alternatives that ease the impact on their savings, or go one better and enable real financial growth.
WeFi is one of many decentralized financial institutions that has designed a compelling alternative that gives individuals access to the countless modern advantages of DeFi, presenting an alternative to outdated complexity and bureaucracy.
Interested in exploring smarter and more adaptable savings solutions? Learn more about how WeFi can help you achieve your financial goals: wefi.co.
