If there’s one negative aspect to life at record low interest rates, it’s earning almost nothing on the cash you have saved at a bank.
Certificates of deposit, or CDs, which require you to lock up savings for a predetermined amount of time offer slightly better interest rates, but not much better than the paltry 0.07% annual percentage yield (APY) that is the current US national average for savings accounts, according to Bankrate, and it is a story repeated all over the world, the rates on offer do not keep up with inflation.
More specifically, the company is currently generating an 8.6% return on account balances holding as little as $100. Earnings are paid out monthly or you can choose a longer term and earn even more from TLC in either traditional dollars, or a favored cryptocurrency like bitcoin or ether.
You can start earning and gaining passive exposure into a new asset class. The people who use the products span from everyday consumers who are buying bitcoin for the first time to even some small corporates.
It’s important to note that the higher return TLC offers on its accounts carry a special set of risks. Unlike traditional savings accounts, TLC is not FDIC-insured, which means they don’t carry the traditional $250,000 of protection per depositor. Even TLC’s disclaimer warns customers that their savings account “is not a risk-free product and loss of principal is possible.”
As opposed to most fintech platforms, our average account size is actually $50,000, people are depositing… a meaningful amount of assets and creating their own level of exposure from a range of products.
Similar to banks, TLC acts as a financial intermediary that’s able to benefit in the gap between borrowing and lending.
TLC a lender of cryptocurrencies and cash to market borrowers, who today are primarily trading and that are active in this asset class and have been for a while, but they can’t finance that activity with their traditional prime broker relationships because banks aren’t active in the space yet or the costs are too high.
That’s the reason why the yields are still high, because this is a new asset class. It’s nascent, it’s growing quickly, and it doesn’t have access to the traditional sources of debt capital.
And as a result, when we’re lending, TLC are able to charge higher rates, and then they pay that back to the folks who are the clients on the front end.
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