A Fintech Startup is Creating a Solution to Traditional Savings Accounts

Brandon Wang
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Apparently, we love playing the lottery.

Just last year, the United States totaled over $91 billion in lottery sales, according to the North American Association of State and Provincial Lotteries. If that fact seems absurd, New York state alone led all of North America with $10.29 billion in lottery sales.

That’s an average of $435.41 spent per person(of legal age) each year. Needless to say, almost none of those playing ever win anything substantial from the lottery.

Imagine that instead of spending that amount, we could put our money into a savings account and receive free lottery tickets the more we save.

Sound too good to be true?

The Newest Challenger to Traditional Savings Accounts

Disclaimer: I am in no way sponsored by or affiliated with Yotta Savings, and the following are my own honest experiences and opinions.

That’s where Yotta Savings comes in. Yotta Savings, a fintech startup that thrived in Y Combinator’s grueling accelerator program, provides an FDIC insured savings account that strives to deliver the same lottery experience that captivates so many Americans.

Their business is built off the same idea behind the United Kingdom’s massively popular premium bonds.

How Yotta’s Lottery System Works

Yotta offers a simple savings account where every $25 deposited into your account will create a recurring lottery ticket for Yotta’s weekly prize pools. For example, if you deposit $100 into your account, you will receive 4 lottery tickets each week. With these tickets, you can pick 7 numbers each Monday or have them be randomly assigned. Then at a certain time each of the seven nights of the week, one number is arbitrarily selected and matched with each person’s pre-selected lottery numbers.

If you match all 7 numbers, you win $10 million!

Luckily, many other much likelier prizes are available, such as winning $1,500 for matching 5 numbers or even $0.10 for just matching Sunday’s number. The best part is that you don’t even have to keep depositing money to get tickets as each $25 in your account generates a new ticket each week.

Not Just a Gimmick

Even without the prizes, Yotta currently has a 0.20% base APR which is still much higher than the vast majority of traditional savings accounts such as Bank of America or Chase.

There are also no account minimums or hidden monthly fees. Your money will also be FDIC insured up to $250,000 and backed by the U.S. government.

My Initial Thoughts from Trying Yotta Savings

Here are some of my own thoughts after trying out Yotta. I initially found out about Yotta from word of mouth and was immediately curious about the savings account.

  • The process of creating an account was pretty painless. I could download their app from the App Store, fill out my information, and connect my bank account through Plaid to start my initial deposit.
  • Immediately after depositing my money, I was notified that it would take a few days for my funds to settle, but I would be able to select my weekly lottery tickets right away.
  • I recommend depositing funds on a Monday if you’re able to. I had created my account in the middle of the week and missed out on matching a few of the earlier numbers in the week.

I’ll admit, it was pretty addicting to log in each night to see if I had a winning number on any of my lottery tickets. I actually had fun planning my savings and even ended up depositing more money after a week to get more tickets. In a sense, I think that Yotta can definitely make a huge positive impact on many individuals or families struggling to find the motivation to start saving more.

A Fundamental Change to the Saving Mentality

Psychologically, savings accounts are just plain boring to most people. Instead of a guarantee of a small return on your money, most people are much more excited by the tiny chance to win a huge life-changing sum, even if there’s no assurance if you’ll even keep your own money(i.e., traditional lottery tickets). It’s not surprising how much some people end up spending on lottery tickets.

In a society where just under 70% of Americans cannot save even $1,000, Yotta might just be the tool that will fundamentally change the way we treat our savings. If we look across the pond to our neighbors in the United Kingdom, they already have something similar.

Premium Bonds (A.K.A. Lottery Bonds)

Aside from being Yotta’s inspiration, the UK’s government offers premium bonds that work in a very different way than the bonds you might be used to. Normally, when you purchase bonds, you purchase a contract that states that you will be paid back the purchased amount along with a set amount of interest.

On the other hand, when you purchase premium bonds, instead of paying out interest, the money is accumulated into a separate prize fund in which the government randomly selects a number that corresponds to a bondholder to pay out prizes to. These prizes can range anywhere from £25 to £1 million.

This concept became so wildly popular that there are more than 22 million people in the UK that have purchased these bonds.

Can Yotta Replicate the Premium Bond’s Success?

Although new fintech startups are sprouting out everywhere we look these days, Yotta might just have the potential to be the newest unicorn on the block. They recently have secured almost $4 million from multiple famous investors, including FundersClub, Chapter One, CapitalX, Y Combinator, and various angel investors. There are even a few big YouTubers in the personal finance space, such as Graham Stephan and Nate O’Brien.

Combining an addictive lottery system with an above-average APR, Yotta Savings might be the newest fintech startup to shake up the personal finance landscape. Calculating the expected return of all the prizes with the base APR, Yotta is currently boasting an expected 1.6% rate of return on your savings.

From my initial experiences, I would say that Yotta Savings is definitely worth looking out for and even trying for yourself.

This article is for informational purposes; only not all information will be accurate. This should not be considered Financial or Legal Advice. Consult a financial professional before making any significant financial decisions.

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