Over the past twelve months, the average interest rate for a savings account has risen from .06% to .1%. Fintechs like Save and Fair are offering “alternative” savings accounts with supposed annual yields around 4%.

Why should we care?
These alternative savings accounts market themselves as stable, guaranteed streams of income—but they’re far from that. Save, for example, exposes your principal to customized securities; the company uses historical data from before its launch to suggest this investment strategy generates between 3.72% and 9.48% in returns per year. The company’s CEO, Michael Nelskyla, says there’s about a 15% chance a Save account fails to generate any returns in a given year. “If it’s very important to you to have positive yields and returns guaranteed, then we’re not the place for you to be,” he said. Fair’s model, meanwhile, makes depositors unsecured creditors of the company, but its longstanding marketing copy—which was removed from its website after the Wall Street Journal asked for comment—suggests its savings model is intuitive, if not relaxing. “All you need to do is sit back and watch your Wealth Building Account balance grow every month!” it read. In the larger showdown between fintechs and larger banks, the former have to be particularly transparent about the mechanics and risks of their financial products. Fintechs can’t weather upcoming volatility, let alone build a compelling use case against more established banks, if they scorn early adopters.