Did you know that the average interest rate on a savings account is just 0.06%? With rates like that, the more money you have deposited in your savings account the more you’re losing due of inflation! Meanwhile, the big banks are making a yield of approximately 5% on every dollar you deposit!
Beam wants to shake up the banking industry by offering better interest rates than you’ll find anywhere else. Beam guarantees that all customers will receive a yield of at least 2% and could see up to a 4% return on their money.
A 4% APY on a savings account?! You might be thinking that sounds too good to be true!
Well, you’ve come to the right place for answers. I recently participated in Beam’s Private Beta (Beam still hasn’t fully launched yet) and was part of a limited group that gained early access to the app. I tested the app for approximately three months before writing this review. I hope I can answer your questions about Beam’s features. Plus, I promise I’ll tell you what you’ll have to do to earn that 4% APY Beam is bragging about.
What is Beam?
Beam is a Fintech startup on a mission to change the way people bank. Beam offers mobile-only, high-interest bank accounts with a guaranteed base interest rate of 2% APY. With some effort (more on that below), users can boost their rate as high as 4% APY.
For the sake of comparison, most traditional banks pay only 0.01% a year in interest. Beam thinks they can cut many of the unnecessary overhead costs that traditional banks encounter. Beam intends to minimize expenses associated with physical locations and advertising and pass the savings on to users. Whether Beam can be profitable with that type of business model remains to be seen.
What Beam Isn’t
Beam itself acknowledges that is not a full-service financial institution. You can’t open a traditional checking or savings accounts. That means you shouldn’t sign up for the app thinking Beam will serve as a replacement for your primary bank account. Beam is designed to be used as a supplementary account where you can stash your cash to earn a higher interest rate.
Getting Started with Beam
Currently, Beam is only available as an iOS app. It’s easy to download – just go to the App Store to get started. Now, it’s worth mentioning that Beam hasn’t fully launched yet so you’ll have to wait in line for a while before you can open an account. Use this link to claim your spot on the Beam waitlist.
What About Fees and Minimum Balance Requirements?
First of all, Beam doesn’t charge any fees. It’s completely free.
Plus, there’s no minimum account balance with Beam. That means you’ll receive a risk-free yield of at least 2% APY whether you deposit $10 or $10,000.
While there’s no minimum balance, Beam has set a limit of $15,000 per account during the Private Beta phase. Beam will increase that limit to $50,000 upon full release of the app.
How Do Beam’s Interest Rates Work?
Beam users will receive a base rate of 2% APY. And unlike some bank account products that feature tiered interest rates depending on account balance, all Beam users are guaranteed a minimum 2% APY.
While users start at 2% APY, they can boost their rate up to 4%. Unfortunately, the amount of effort necessary to get that 4% rate is probably the app’s biggest drawback. Let me explain.
The only way to boost your daily APY is by earning what Beam calls a “Billie.” There are two ways to earn Billies:
1. Users receive one free Billie a day. Users must claim their Billie by logging into the app between 6 and 7 PM. If you don’t login and claim your Billie during that one-hour window, the Billie disappears.
2. You’ll earn three Billies for every new user you refer to Beam.
Why does Beam wants to incentivize users to log into their account everyday between 6 and 7 PM? I don’t understand it. And to be honest, I don’t care for the tactic. It’s counter to conventional wisdom that says, save and invest wisely and ignore your money so it can grow.
On top of that, Beam doesn’t allow users to automatically apply their Billies to boost their daily rate. You have to login and apply them manually. To maximize your savings, you’ll have to manage your account EVERY SINGLE DAY.
Can You Really Earn 4% APY?
It’s possible to earn 4% APY. But in reality, it’s practically impossible for the average person to actually earn 4% APY.
First of all, your one free Billie a day will only boost your daily APY to 2.5% if your lucky. So unless you’re a walking talking Beam billboard generating buckets of referrals, you’ll have a tough time earning enough Billies to maintain a daily APY of 4%.
Plus, you could have all the Billies in the world and you still might not consistently earn 4% APY. That’s because Billies don’t have a fixed value. One Billie might boost your daily APY by 1.35% while another might only boost it by 0.17%. And Beam only allows users to apply up to four Billies a day.
Here’s one time where I applied four Billies and was only able to boost my daily APY to 2.91%! That wasn’t uncommon during my trial. In fact, during my three months of using the app, I only reached 4% on a handful of occasions.
Is Beam Safe?
According to Beam, customer privacy is a top priority. Beam says they will not sell individual data or private information. On top of that, Beam’s mobile app employs bank-level security standards and 256-bit data encryption to safeguard consumer data.
Funds deposited with Beam will be held by an FDIC-insured bank partner. That means balances of up to $250,000 will be covered in case Beam or their banking partner goes bankrupt.
No Fees. It’s free to open a Beam account.
- No Minimum Balance. No minimum deposit makes it easy to get started.
- High Interest Rates. Even if you don’t care to jump through the hoops to earn up to 4% APY, the base rate of 2% APY is still more than most banks offer.
APY Resets Daily. Interest rate reverts back to 2% APY each day.
- Lots of Effort Required to Increase Interest Rate. Users need to log into their account every day to claim and apply their daily “Billie” to increase their APY. That’s a lot of work for what’ll probably amount to a few cents a day.
- You Won’t Actually Earn 4% APY. As I mentioned earlier, Beam advertises an APY of up to 4% but it’s highly unlikely that users will actually secure that rate.
- Another Account to Manage. Beam isn’t a full-service bank account so it won’t make managing your finances any simpler.
Is Beam Right for You?
You can certainly do far worse than Beam’s base rate of 2% APY. And with some effort you can increase your daily APY. But for me, I’d prefer an account that makes it easy to park my emergency fund there and forget about it. The last thing I want to do is check up on my account on a daily basis.
I don’t like jumping through hoops. And I don’t like feeling jerked around or mislead. That’s how I felt during my experience with Beam. I don’t understand why Beam insists on users logging into the app between 6 and 7 each night to increase their yield. And I don’t like that their advertised rate of 4% APY is virtually unobtainable.
It’s worth mentioning that Beam is a newly launched start-up and the app is a work in progress. During my conversations with the folks at Beam, they indicated that there are still changes to come. I’ll be curious to hear what Beam does down the road to improve their product. But for now, I’d rather open an account with a more established, trustworthy online bank like Ally or Varo, even if that means accepting a slightly lower interest rate.