min read

How to Choose the Right Crypto Savings Account

Wondering how to find the best crypto interest account for your needs? Find out how crypto savings accounts work in this article.

Further Readings

No items found.

Are you fed up with the savings interest rate you’re receiving from your bank? While the exact numbers vary, the average interest rate for new deposits with agreed maturity with the ECB is 0.28%. If you’re looking for better returns on your money, it’s time to diversify your investments.

That doesn’t mean active investing in risky, high return ventures like hedge funds, penny stocks, and cryptocurrency trading. There are lower-risk options like interest-bearing crypto accounts run by wealth management platforms. This is similar to a traditional savings account in a bank, where you deposit cash with a bank to earn interest. In exchange for depositing your crypto holdings with the platform, the investment team will identify optimal opportunities that’ll generate high yields, regardless of the sum you invest

In this article, we will explain everything you need to know about choosing the best interest accounts for cryptocurrency and how to get started: 

  • How to earn interest on your crypto holdings
  • What saving account risks are
  • What is APY in crypto
  • How to choose a fund
  • How to invest in a crypto savings plan

What Is a Cryptocurrency Savings Account?

How interest bearing crypto accounts work: you earn interest on the crypto you deposit with the platform. You entrust your crypto assets to a wealth management platform that lends customers’ funds to established over-collateralised DeFi projects at a high interest rate when you open a crypto "bank" account. The investment team has the requisite industry knowledge to navigate the complexity of DeFi and market volatility when it comes to crypto lending.

The difference is that returns are higher in cryptocurrency, so instead of a modest <1% per annum, you may get over 5% interest on your crypto

At Cabital, we ensure the lowest risks possible through multilateral analysis of all available investment options combined with additional checks by experienced investors, lawyers, engineers, and financial analysts who’ve worked with major banks and tech companies. We proceed with investing only when a project passes all quantitative and qualitative tests and gets approval from the expert team. Thanks to that, Cabital can combine the high yield of crypto with low risks and efficient strategies associated with major financial institutions. This way, we can offer some of the best interest rates for crypto deposits.

Crypto Savings Accounts Vs. Self-Custody Crypto Wallets

When it comes to storing your cryptocurrency, you have a choice between putting it into a cryptocurrency savings account, or storing it in a private hot or cold crypto wallet. The biggest difference between the two is that one lets you generate interest on your holdings, while the other doesn’t. 

Wallets are usually recommended as the storage option for users who require liquidity on their cryptocurrency investments, especially traders, who are always watching the market for the next opportunity. However, a crypto savings account like Cabital Earn’s Flexible Savings plans offer similar liquidity, where you are free to withdraw your funds any time, while enabling you to generate yield on your crypto assets held by the wealth management institution.

On the other hand, if you’re investing in cryptocurrency as a mid to long term investment, a crypto savings account will let you generate yield on your crypto up to 6% APY, creating a new steady passive income stream for you. It is also a lower-risk investment when compared to other crypto investment options, such as trading, and offers all investors an easy way to tap into the cryptocurrency market growth as a way of diversifying your investment portfolio.

What Does APY Mean in Crypto?

APY stands for Annual Percentage Yield and describes annual profits on investment or loan with the compounding factor.

The difference between fiat APY and crypto APY is simple: the former deals with interest paid in traditional money while the latter—in crypto. 

Because APY on your crypto holdings are paid in crypto, your earnings will depend on the crypto’s value. In the case of traditional cryptocurrencies, there is the potential for growth as well as the possibility of a decrease in value. If you’re looking to minimise your exposure to market volatility, you may want to consider investing in stablecoins and ensuring your returns are paid out in kind. USDT and USDC are pegged to the USD, and these stablecoins are backed by cash and equivalent assets to maintain their value. This ensures that holders can redeem their tokens at a rate of 1:1 with the USD.

On top of the stability offered by stablecoins, they are also some of the best crypto to earn interest on, as you'll be able to enjoy some of the best interest rates with stablecoins.

What about APR (Annual Percentage Rate)?

Unlike APY, which estimates the profitability of an investment over a year, APR addresses how much it will cost for a loan, covering the percentage of the principal sum that you pay each year, taking monthly payments into account. So as a borrower, it would be in your interest to find the lowest possible APR.

How to Choose the Best Crypto Interest Account for Your Needs 

Crypto Savings Account Checklist
Image 1: Crypto Savings Account Checklist

When choosing the best crypto interest platform to meet your needs, you have to keep in mind certain considerations beyond the best interest rates for crypto. They come down to the following:

  • Realistic interest rates offered by the platform
  • The platform’s policy as to using native tokens
  • Terms and conditions of the account

What are Realistic Interest Rates?

Advertised rates can sound too good to be true, which is why you need to look at realistic interest rates. Realistic interest rates are what you earn, after considering the preconditions set by the different platforms (e.g. tiered interest rates based on the deposit amount, accepting interest in, or holding a certain amount of native tokens).

Interest rates for cryptocurrency savings accounts depend on the firm's investment plan. At Cabital, we can offer leading APY rates on USDT because we share a significant percentage of our investment income with our customers. We only lend to over-collateralised DeFi platforms that are looking to meet the demand from traders. These platforms must have an extensive audit history to ensure the safety of our customers' deposits. 

Does the Maximum Interest Rate Require Staking Platform Tokens?

While these tokens are often presented as reward programmes, all tokens are subjected to market movements. Instances of artificially induced price rallies or token failures due to sudden market swings have occurred in the past, so converting your investment into such assets is a risky endeavour. An abrupt fall in the value of a platform token may exceed the promised yield and cause irreparable loss.

For that reason, Cabital has a No Platform Tokens policy. We won’t offer these as we believe in protecting our customers from volatility risks inherent in this class of cryptocurrency. 

What Else Should I Know Before Choosing a Savings Platform?

When choosing the best interest-bearing crypto account, you should also look into the following areas:

  • Withdrawal policy: It may be easy to deposit but is it equally easy to withdraw? In some cases, you can withdraw funds for free as often as you’d like; in others, you have to pay a withdrawal fee every time. Make sure that the provider’s withdrawal policy corresponds with your plans and expectations.
  • Deposit terms: Some providers have a minimum deposit amount and a minimum period, which may affect the liquidity of your assets. Others may offer lower interest than advertised due to tiered rates based on the size of your deposit. Make sure you read the terms very carefully.
  • Payout frequency: Expecting the provider to pay you every week and discovering it actually practices monthly payouts could be a huge downer. Make sure that you know the payout frequency and that it suits your individual needs. 
  • Instant Redemption: If you're planning to invest in Flexible savings plans as a passive income source while waiting for a favourable trade, would you be able to redeem your funds instantly so that you can pursue opportunities as they come?

Understanding Crypto Interest Rates in Savings Accounts

Typically, crypto interest rates are higher than those offered by traditional banks. Still, they vary across the world of cryptocurrencies. Crypto "bank" account plans are usually available for the following assets:

  • The biggest cryptocurrencies like Bitcoin and Ethereum
  • Cryptocurrencies with predictable exchange rates, i.e. stablecoins

Due to their high popularity and prominent role in the crypto space, stablecoins are some of the best crypto for earning interest. They are widely used as mock fiat on popular decentralised exchanges and are in high demand as a means of simplified cross-border remittances. Some of the most popular stablecoins featured in crypto saving plans are USDT and USDC

For investors planning to earn interest on Bitcoin or Ethereum, you will find that the interest rates here are noticeably lower than in stablecoins. This is because Bitcoin or Ethereum loans are less popular with institutional players, and their demand directly impacts the rates offered by different platforms. If your holdings are mainly in Bitcoin and Ethereum and you’re looking to maximise your interest returns, an option would be to convert these into stablecoins for a higher interest rate on your assets.

Crypto Savings Account Risks

That said, however, crypto is associated with elevated risks, at least for now. While boasting relatively low risks, crypto savings accounts are still riskier than a bank's low-interest-rate savings account. Understanding those risks is a prerequisite to starting your own crypto savings account. Those risks come in several groups:

  1. Insurance
  2. Complicated withdrawals
  3. Market risks
  4. Counter-party risks
  5. Technological risks


Unlike savings accounts at a bank, crypto savings accounts are not subject to mandatory insurance. In the EU, for example, there are deposit guarantee schemes requiring banks to insure every deposit for at least €100,000, which means that in the event of a collapse, the depositors will get their money or some part of it back. Similar measures are in place in other major jurisdictions. There is, however, no such requirement for crypto deposits. 

At Cabital we’ve set aside a provision for extreme unexpected events, and our security provider Fireblocks supplies us with an insurance policy covering assets in storage, transfer and E&O (Errors and Omissions).

Complicated Withdrawals

Another issue one may have with crypto interest accounts is withdrawal policies on different platforms. Some platforms have a limited number of free withdrawals or impose a fee. If you’re looking to withdraw your crypto and convert to fiat currency, you may need to use multiple platforms and pay transaction fees on every platform. 

At Cabital, when you’re ready to withdraw your crypto and convert it to fiat, it’ll soon be an effortless process to enter your bank account and convert your crypto holdings into euros, with more currencies to come.

Market Risks

Then there are risks inherent in crypto itself. Depending on which platform you choose, your savings may be exposed to enormous market swings, and the value may plummet. That is not the case for Cabital, as we don’t offer high-risk crypto options, but abrupt price fluctuations are never entirely off the table, even in the safest of havens when it comes to crypto.

To minimise your exposure to market volatility, you can consider implementing a dollar-cost averaging (DCA) approach, where you spread your investment out over a period of time instead of investing the entire sum upfront. 

Counterparty Risks

Counterparty risks are also crucial. The crypto savings account provider loans your money to a counterparty with high interest, hence the interest rates. Still, a provider is not a bank, so a series of defaults may cause the entire scheme to collapse. This risk, however, is mitigated by over-collateralising the loans, which reduces it down to risks inherent in market conditions. 

Cabital only loans to over-collateralised platforms with audited smart contracts to minimise risks. 

Technological Risks

Finally, the entire ecosystem heavily relies on IT solutions varying from smart contracts to app architecture. There could be bugs all along the way that create critical vulnerabilities in the system. 

That’s why Cabital only lends to reliable investment projects with substantial total value locked (TVL) and extensive audit histories like AAVE and Curve. As mentioned above, our security is handled by Fireblocks, which acts as our custodian and provides insurance on digital assets held by Cabital, and we conduct comprehensive reviews on projects before investing in them. 

How to Invest in a Crypto Savings Plan

Generally, the process of investing in a crypto savings plan looks as follows:

  1. You choose the plan that suits your needs with your selected service provider
  2. If the service provider is regulated, you register through a compliance procedure using your ID (KYC - Know your customer: This process is necessary for financial services as part of the company’s anti-money laundering policy) 
  3. You deposit the desired amount of your assets to the platform’s wallet
  4. That’s it, sit back, relax, and enjoy reports on how much you have made
  5. If necessary, reallocate your assets, add or remove something to increase your profits or decrease risks
  6. Withdraw the funds when you believe it’s time

The process isn’t that different from opening a savings account at a bank. Just like with modern neo-banks, your physical presence is not necessary. 

Start Earning Interest on Crypto with Cabital’s Savings Account 

While keeping all considerations in mind might be challenging, Cabital unburdens you by professionally handling all of them as you sit back and enjoy the potential and growth of the crypto economy and your wealth.

Unlike other platforms, Cabital boasts some of the highest interest for crypto savings accounts, while keeping all risks at the absolute minimum. 

There is no minimum deposit amount, so you can try Cabital's 30 Day USDT Fixed Savings plan that boasts a leading APY rate with any amount of USDT you're comfortable with.

Join Cabital and enjoy the difference.

This article has been prepared by Cabital Fintech (LT) UAB  (the “Company”) and is general background information about some of the Company’s activities at the date of this presentation.

This article does not contain all the information that is or may be material to you and should not be considered as advice or a recommendation to you in respect of the holding, purchasing or selling of digital assets and does not take into account your particular objectives, financial situation or needs. This article has been made to you solely for information purposes. This presentation may be amended and supplemented as the Company sees fit, may not be relied upon for the purpose of entering into any transaction and should not be construed as, nor be relied on in connection with, any offer or invitation to purchase or subscribe for, underwrite or otherwise acquire, hold or dispose of any digital assets, and shall not be regarded as a recommendation in relation to any such transaction whatsoever. The contents of this presentation should not be considered to be legal, tax, investment or other advice, and you  should consult with your own counsel and advisers as to all legal, tax, regulatory, financial and related matters concerning an investment in or a disposal of such digital assets and as to their suitability for you.

This presentation and its contents are proprietary to the Company, and no part of it or its subject matter may be reproduced, redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (excluding the relevant person’s professional advisers) or published in whole or in part for any purpose without the prior written consent of the Company.

This article contains forward‐looking statements. Such forward‐looking statements involve known and unknown risks, uncertainties and other important factors. Certain forward‐looking statements are based on assumptions or future events which may not prove to be accurate, and no reliance whatsoever should be placed on any forward-looking statements in this article.

The information in this article has not been independently verified. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the presentation and the information contained herein and no reliance should be placed on it. Information in this article (including market data and statistical information) has been obtained from various sources (including third party sources) and the Company does not guarantee the accuracy or completeness of such information.