Crypto Interest Account: Definition, Benefits, And Risks

Earning money with cryptoassets has now become as effortless as simply opening a crypto interest account. While starting an account is easy, determining the best strategy for how to earn can take a bit of work.

In this article, we will discuss what you need to know about crypto interest accounts as well as the risks and benefits so that you can proceed with confidence.

A Guide To Crypto Interest Accounts

With these accounts, there are several terms that are important to understand. Below are just a few of the many that will play a role in your wealth development strategy.

Crypto Exchange Platform

The first step to benefiting from a crypto interest account is finding the right crypto exchange platform to partner with. These platforms allow you to store your crypto and borrow, lend, and trade online.

Opening an account with these platforms, however, is about more than just earning money; it’s also about making sure your assets are safe. The platform you partner with should outline how they plan to secure the crypto you store with them.

Annual Percentage Yield

coins with crypto currency symbols

When you first store your assets with an exchange platform (like Vauld), the platform will clarify the annual percentage yield of the crypto you have stored.

The annual percentage yield is the total amount you can earn in one year, and the number will change depending on which rate you choose to earn with your crypto — a savings rate or a fixed deposit rate.

With Vauld, for example, the savings rate for BTC is 4.60%, while the fixed deposit rate is 6.70%.

Savings Rate

Storing your crypto with Vauld means you will immediately begin earning interest on your assets. Although not every platform offers competitive rates right away, Vauld offers some of the best in the industry as soon as you deposit your funds.

Fixed Deposit Rate

Those interested in earning more with their deposit can also opt for a fixed deposit rate. The benefit of this rate is that earnings are typically 2-3% more than savings rates. The downside is that you must lock in your funds for a designated period.

For anyone willing and able to part with their assets for a bit, fixed deposit rates are a solid strategy for earning the most with your crypto interest account. Just remember that once the funds are locked in, you can’t touch them until the designated period is over.

Compounding Interest

Be sure to check that the platform you partner with compounds your principal amount as Vauld does. What this means is that the interest is calculated not only on what you have initially deposited but also on the interest accumulated.

In other words, compounding interest is a way to build interest quicker at no extra cost to you. Choosing a platform that compounds interest is yet another way to assure you receive the best rate.

Interest Payout

Ethereum and Bitcoin symbols on coins

Receiving the money you have earned from your deposit is a satisfying reminder that your assets are being used to build your wealth. Be sure to verify that your platform makes it easy to receive these payouts.

At Vauld, users get an interest payout every week. Those with funds secured in a fixed deposit will receive their payout at the end of that term. This is because receiving your funds should never be a complicated part of the user experience.

Borrowing Rate

Not every individual with assets stored in a crypto interest account is seeking to earn. Another fantastic use of crypto is the ability to borrow money by using your assets as collateral.

When you borrow a loan using crypto, you pay a borrowing rate that varies based on the crypto being stored as collateral. The good news is that these rates are significantly lower than the rates a traditional bank will offer.

Crypto Wallets

Every crypto owner should have some knowledge of the type of crypto wallet they use.

The reason this term has found its way into our guide is that while many crypto exchanges allow customers to use an external wallet to access the platform, most will not allow interest to be earned using the external wallet.

Instead, platforms will require you to transfer funds from an external crypto wallet to a wallet provided by the exchange in order to earn interest. With Vauld, it’s easy to transfer funds to a secure wallet in a single click and start earning with your crypto interest account.

Deposit Fees And Withdrawal Limits

A few terms we would all be better off without are “deposit fees” and “withdrawal limits.” It seems that no matter which service we turn to, someone is waiting to charge a hidden fee or limit account usability. This is no different with certain crypto exchange platforms.

Thankfully, Vauld doesn’t have deposit fees, withdrawal limits, or any other hidden fees. From the first deposit to the hundredth and beyond, you can expect the same quality of service that you’ve always received.

Benefits Of A Crypto Interest Account

Opening a crypto interest account with the right platform is beneficial for several reasons, from asset security to passive earning. Below are some of the perks that come with opening an account and depositing crypto.

crypto tokens

Best Rates All Around

Earning interest on assets through means of a traditional bank is a long-forgotten part of the past. Rates that used to boast a smart and ideal way of earning capital are now at historic lows of below 1%.

With crypto, savings rates and fixed deposit rates are both remarkably high. At the time of writing, Dai (DAI) earns a savings rate of 9.41% and a fixed deposit rate of 12.68% through Vauld.

While the rates will fluctuate depending on which asset is deposited, commonly used tokens will offer a rate of return well above what a traditional bank offers.

Even borrowers can take advantage of these incredible rates. Some personal loans carry interest rates as high as 36%, but our rates often fall well below 13% and average even lower.

Quick And Easy Way To Store

Since cryptocurrency transactions are conducted online, you can expect an expedited process for almost all of your transactions. This is especially helpful when it comes to depositing and withdrawing crypto.

Our deposit and withdrawal process is almost instantaneous for users looking to secure their assets or take them out for trading and spending purposes. The only exception is if a withdrawal exceeds $100,000, a manual check will be conducted to ensure the assets are secure.

Instant Loan Approval

Approved for crypto interest account

Speed and efficiency aren’t only for lenders. If you’re using crypto to borrow a loan, you can expect to be approved within a few hours, if not instantly.

This is because a credit check is not required when borrowing with crypto. The exchange platform typically only needs to know that the borrower in fact has the crypto needed to take out the loan in order to be approved.

Risks Of A Crypto Interest Account

With the many benefits associated with opening a crypto interest account, there are also risks that should be taken into consideration.

Borrower Defaults

When a borrower takes out a loan, the risk can be seen from the perspective of both the borrower and the lender.

For the borrower, defaulting on a crypto loan can mean losing all cryptoassets used as collateral. You avoid the risk of your credit taking a hit and having property seized, but if your crypto’s value increases, you may end up losing more than you initially bargained for.

The risk that lenders accept is that a borrower may default on their loan. Avoiding this risk is as simple as ensuring your platform protects you in the event of a default and pays out using the borrower’s collateral.

Security Threats

crypto interest account protected by potential threats

When it comes to securing your assets, protecting crypto from potential threats should be one of the top priorities of the platform you sign up with. This means having clear security measures in place for users, both before and after a threat has been detected.

You can ensure your funds are protected before a threat ever occurs by partnering with an exchange that utilizes multi-factor authentication. For even more peace of mind, become familiar with the platform’s terms of service and security features so that you’ll know what to do if your account is hacked.

At Vauld, you’re covered. All funds are moved from your wallet to a centralized lending pool that’s insured for $100 million in BitGo, a digital asset trust and security company.

Opening Your Crypto Interest Account

Whether you’re lending, borrowing, or trading crypto, opening a crypto interest account is the best way to make the most with your assets — and choosing Vauld is the best way to receive some of the greatest benefits in the industry.

When you partner with Vauld, you’ll experience competitive rates, regular upgrades, quality customer experience, and added perks, like Vauld’s Crypto Circle community to discuss crypto-related topics.

To start building your wealth, sign up with Vauld today and never miss out on an opportunity to make the most of your crypto.

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