How Crypto Interest Accounts Work

Crypto interest accounts are secure cryptocurrency wallets that generate interest on the digital assets stored within. While that may sound familiar if you’ve already been using traditional savings accounts for years, crypto interest accounts have much higher returns.

Besides offering a far more attractive annual percentage yield than their traditional counterparts, crypto interest accounts are also more versatile.

Whether you’re holding Bitcoin, Ethereum, Litecoin, or a mixture of several cryptocurrencies, crypto interest accounts let you deposit and profit from them.

What to Look for in a Crypto Interest Account

As fledgling financial tools, crypto interest accounts are adding new features daily to make your experience simpler and more rewarding. Moreover, many crypto interest accounts return higher yields with far less risk than if you opted to try your luck at trading them on exchanges.

With that in mind, opening a crypto interest account these days means there are options for most risk tolerances and almost every major cryptocurrency asset.

So, no matter which digital assets are in your wallet, there’s probably an account out there for you. Choosing one is straightforward when you compare the following account features and see which offers what you’re looking for.

Minimum Deposit Requirements

The minimum deposit required for a crypto trading account is the least amount of an asset you can deposit to generate interest. Minimum deposit amounts vary by platform, type of asset (BTC, ETH, USDT), and who the intended user is.

In general, the minimum deposit is lower for stablecoins (USDC, PAX, TUSD) and higher for cryptocurrencies (TRX, XLM, BCH, LINK).

Coins Accepted

The best crypto interest accounts accept a wide range of coins. Simply put, the more assets you can deposit, the less you’ll worry about opening different accounts as you diversify your portfolio.

Look for crypto interest accounts that accept major cryptocurrencies and stablecoins, with points given to those who provide options for depositing lesser-known altcoins.

Flexible Withdrawals

All crypto interest accounts make it easy to deposit coins, but not all are equal when it comes to withdrawal. Ideally, the crypto interest account you choose allows for flexible withdrawals, meaning there is no lock period, and you can withdraw instantly at any time.

Annual Percentage Yield (APY)

APY is a crypto interest account’s most significant selling point. The higher the APY for a given asset, the more attractive that account will be. After all, there are few reasons to choose an account with 3% APY for BTC deposits over one offering 8% APY.

However, make sure to read the APY fine print. Crypto interest accounts often boast of APY interest up to a certain amount, but that doesn’t mean you’ll snag anywhere near that. To complicate matters, some APY interest rates shift daily, making it harder to predict your returns.

Payout Options

A great advantage of using a crypto interest account over a traditional savings account is the versatility of cashing out fiat or a potentially more lucrative cryptocurrency.

Some crypto interest account platforms allow you to withdraw to the platform’s native token instead of cash. If that token trends up in value, your APY amount is compounded by the reward token’s new value.

User Reviews

As always, do your own research when choosing a cryptocurrency interest account. It’s not enough to take one person’s word.

Read as many user reviews about the interest accounts on your shortlist before making a final decision.

How to Get Started

After choosing the best crypto interest account for you, the next step is to sign up, get verified, and deposit funds. To do so, create and follow a checklist of the necessary documents like the one below.

1. Personal email address
2. Residential address
3. Government-issued ID
4. Camera for taking a selfie
5. Social Security number (Americans only)

Additionally, you should download a two-factor authentication app such as Google Authenticator to secure your crypto interest account login immediately. Once you’ve gathered all the required information, it’s time to sign up.

Sign Up

The sign-up process with most major crypto interest platforms is straightforward and usually app-based. Signing up for an account is as simple as downloading the app on your mobile phone, then registering your email address, Facebook, Twitter, or Google account.

Once done, the next step is to create your pin-protected wallet, which gives you a destination to deposit funds.

Get Verified

Registering your email and wallet are the first steps toward using a crypto interest account, but the most crucial part is verifying your identity. Identity verification helps platforms know that you are who you say you are and clears the way to use the service legally.

To verify your identity, you need a legal form of identification (driver’s license, passport, national ID card) along with a camera to submit a selfie. If you’re a US citizen, expect to input your social security number as an additional identity check. Most accounts are approved within minutes.

Deposit Funds

Once you’ve successfully verified your identity, the last step before earning interest on your cryptocurrency is depositing funds to your wallet. If you are only depositing Bitcoin, a stablecoin, or another cryptocurrency, this step is effortless—send it straight to your wallet address.

However, if you’re depositing several different cryptocurrencies, pay close attention to the wallet addresses for different asset types.

Why? Because an easy mistake is depositing the wrong type of cryptocurrency in a wallet.

How to Get Paid

Getting paid is the reason you created a crypto interest account in the first place. That’s why you want to be clear about how different crypto interest platforms pay their clients.

Choose Your Payment Currency

Every company offers a different structure for putting money back in your pocket. Some, such as Nexo and Celsius, give you two main options:

1. Get paid in the same currency you deposited (if you deposited BTC, your interest is paid in BTC)
2. Get paid in the interest platform’s native token at a higher interest rate, often referred to as a bonus rate. Celsius offers CEL token, while Nexo offers NEXO token.

Additionally, Celsius allows you to select different payment currencies for each asset you deposit. If you deposit BTC, ETH, XRP, and USDC, you can choose whether to receive payment in the deposited currency or in CEL for each wallet.

Compounding Interest

All major crypto interest platforms, including YouHodler, Nexo, and Crypto.com, offer compounding interest. In a nutshell, compounding interest is the act of reinvesting interest gained to increase interest on the principal amount.

The effect of compounding interest is that your actualized APY amount can, potentially, go higher than the APY estimate at the time of sign up.

For instance, if you deposit 100 USDT in a crypto savings account with a 10% APY, your balance will be 110 USDT at the end of the first month.

The following month’s interest is generated based on the 100 USDT principal plus the 10 USDT interest amount, meaning the next month’s interest amount is based on 110 USDT.

As such, the third month’s interest is based on 121 USDT, and so on, for as long as you continue to HODL the principal amount plus reinvested interest.

Cash Out Earnings Daily, Weekly, or Monthly

Cryptocurrency interest accounts are incredibly flexible when it comes to payment periods. Each of the major crypto interest platforms lets you cash out your earnings daily, weekly, or monthly, depending on your preference.

When you check your crypto interest account, you’ll see interest earnings stack up in real-time, adding great convenience to staying on top of your finances. As soon as you’re ready to withdraw, apps like Celsius let you do it with the click of a button.

After a few short moments waiting for the requisite network confirmations, you’ll see the withdrawn funds appear in your specified account.

Tips for Maximizing Your Earnings

The best reason to start using a crypto interest account is to maximize your otherwise idle earning potential. When your cryptocurrencies sit in a non-interest-bearing wallet, they’re not working for you — it’s that simple.

However, the quest for making your crypto assets work hard doesn’t end at depositing them in an interest account. There are quite a few tips and strategies for making them work even harder to bring home as much interest yield as possible.

Switch Between Crypto Interest Accounts

Crypto interest accounts allow you to withdraw your funds daily at any time of your choosing. With the freedom to come and go as you please, what’s to stop you from moving your funds between crypto interest accounts with higher APY interest?

In truth, nothing. Staying on top of the daily APY interest offerings for different assets on various platforms enables you to jump ship from one account and join another when it offers better rates.

If you’re really on the ball, doing so can help you generate stable returns from interest accounts returning high yield on in-demand assets. While high APY interest rates often come and go in a flash, catching them early can be quite profitable.

Deposit Stablecoins

The demand for cryptocurrencies like Bitcoin is high, but that doesn’t always translate to high-interest yield. Instead, stablecoins such as USDT, USDC, DAI, and PAX often feature higher (and more stable) APY interest rates.

What’s more, because they don’t fluctuate in value, your return is predictable, whereas the volatility of cryptocurrency assets can tax you in terms of opportunity cost.

Trade Crypto Volatility

Cryptocurrencies automatically begin generating interest when deposited into an interest account. However, as the cryptocurrencies themselves rise in value, you earn additional percentage gains on top of your interest.

It isn’t difficult to understand how this can quickly become profitable—but, what happens when your cryptocurrencies drop in value? To protect (and even maximize) your crypto interest profits, you can trade crypto volatility when markets are trending higher.

This way, you sell at a given price, thus locking in both your principal and interest profits. Then, you can rebuy the original crypto asset at a lower price before redepositing it into your crypto interest account.

As easy as this sounds, carrying out a successful cryptocurrency trade requires experience and luck, so beginners best avoid this approach.

FAQs About Crypto Interest Accounts

Cryptocurrency interest accounts are an entirely new way to save and generate interest on digital assets. But, if crypto adoption by global powerhouses like PayPal tells us anything, it’s that crypto is here to stay—and so are the financial products forming around the industry.

If you’re just arriving on the scene, you surely have more questions than answers about how crypto interest accounts work. If you’re still deciding whether a crypto interest account is for you, find answers to your questions below.

What is a Crypto Interest Account?

A crypto interest account is an interest-generating cryptocurrency wallet. Instead of keeping your cryptocurrency in a wallet that does not generate interest, a crypto interest account puts your crypto to work generating a passive income.

How Do You Earn Interest on Crypto?

To earn interest on cryptocurrency, deposit your digital assets in a crypto interest account at one (or more) of today’s leading crypto finance platforms.

Bitcoin, Ethereum, Litecoin, USDT, and dozens of leading cryptocurrencies are accepted forms of interest-generating assets on platforms like Nexo, Celsius, and YouHodler. Each platform varies in the assets it accepts.

You’ll be required to sign up for an account and verify your identity before you can deposit any assets, but this is a quick and easy process.

Is Crypto a Good Investment?

Cryptocurrency is a nascent digital asset class that is just getting started. Globally recognized financial institutions including Goldman Sachs, JP Morgan, and PayPal have all begun wading into the crypto industry, while others, like Visa, are exploring digital asset technology.

As such, we believe cryptocurrency is a good investment for those seeking a potentially revolutionary asset class that is upending traditional finance.

Note: This is not professional investment advice. We are not financial advisors—just believers that the future of crypto is bright.

What is the Interest Rate on Bitcoin?

The interest rate on Bitcoin varies by platform and whether you receive payment-in-kind (BTC) or in the platform’s token (CEL, NEXO).

For most platforms, including Nexo, Celsius, and Crypto.com, the Bitcoin interest rate is 6% for payments accepted in a platform token or for those depositing more than 2.5 BTC.

For deposits under 2.5 BTC, or for in-kind payments, the Bitcoin interest rate hovers between 3%-4.6%.

Decentralized finance platforms such as Compound offer floating interest rates on BTC of between 1.5% and 5%.

What is the Best Crypto Interest Account?

The best crypto interest account is the one that offers the most bang for your buck without being overly complicated. Depositing digital assets should be simple, extremely secure, and begin generating interest immediately.

Look for competitive Bitcoin interest rates that increase with the size of your deposit and industry-leading insurance coverage. We rank Nexo and Crypto.com as the best Crypto Interest Accounts.

How Do I Cash Out Crypto?

You may be wondering if it is possible to cash out your crypto holdings whenever you want to, and the answer is yes—you can convert crypto to cash at any time. Most apps provide straightforward instructions for cashing out your crypto. For example, Crypto.com instructs you to:

Final Thoughts on Crypto Interest Accounts

Crypto interest accounts are an exciting and modern way to not only save money but generate more of it from your existing assets. There are endless claims about ways to create a passive income around the web, but they’re almost always too good to be true.

However, there’s nothing exaggerated about the earning potential of opening a crypto interest account. While traditional high-yield savings accounts have difficulty topping 1% APY, Bitcoin interest rates often head north of 6% once they start compounding.

If you’re seeking a new way to maximize your crypto earning potential, look no further than today’s best crypto interest accounts.