Having discussed what a crypto savings account is in the last article, we shall now be looking at how you can get started with these accounts.
To get started with a crypto savings account, the first thing you need to do is to compare account providers. Some of the factors you should consider in an account provider will be discussed in the next section.
Factors to Consider Before Choosing a Crypto Savings Account
Some of the factors to look at before choosing a crypto savings account provider are discussed below.
Safety: When comparing crypto savings account providers, make sure to look at security first. Because crypto savings accounts are not insured by the FDIC, you should assess the company's financial stability as well as its cold storage solutions to protect your investment.
Purchase availability: You should consider an account provider that offers both market access and a savings account if you don’t already have cryptos. Coinbase, for example, allows you to buy cryptocurrencies instantly using a variety of methods, and it also gives you savings account access.
Coins supported: Only a limited number of cryptocurrencies are supported by cryptocurrency savings accounts. No account provider will allow you to earn interest on every coin available in the market. If you own a cryptocurrency already, make sure you select a provider that offers interest on the coins you are interested in.
Interest rates and earning requirements: Different account providers offer different interest rates and earning requirements. So, you should compare what you’ll earn on your crypto deposits with different providers.
Deposit and withdrawal fees
You need to consider not just interest rates but also deposit and withdrawal fees. Deposits are usually free, but if getting your coins off the platform costs an arm and a leg, you may need to consider other platforms.
Ease of use
Another factor to consider in a crypto savings account provider is the ease of use of the platform. Some platforms have bad interface design, and you can get confused when you try to use such platforms. So, make sure you opt for platforms that are simple to use and that have easy-to-understand displays.
Difference Between a Crypto Savings Account and a Crypto Wallet
A crypto wallet is not the same as a crypto savings account. The ability to earn interest is the fundamental distinction between them. Money kept in a crypto savings account accrues interest over time while money kept in a crypto wallet remains the same; it does not accrue interest with time.
Most cryptocurrency wallets are like this; however, some crypto wallets now allow you to earn interest on your cryptos, all thanks to the decentralized finance (DeFi) industry. Coin access is one of the benefits of keeping your coins in a wallet rather than a savings account.
You have complete control over your coins when you keep them in a crypto wallet. You can exchange them, withdraw them, or move them as you see fit. However, when you keep your coin in a crypto savings account, you give the account provider permission to loan out your original investment. So, the provider may limit the time you can withdraw your coins.
It may be a better option for you to keep your coins in a crypto wallet rather than a savings account if you need liquidity on your crypto investment.
We’ve discussed in this article the factors to consider before choosing a crypto savings account. Before investing, make sure you compare different savings account providers to see if they meet up with the factors mentioned.
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