Frustrated with your financial institution and how much you’re paying for a savings account? This financial startup may have the solution: Pay it in “tips.”?
Early this July, L.A., Calif.-based investment firm Aspiration rolled out its latest feature, a personal account that doesn’t require a minimum balance or monthly fee.
For $10, clients can open up their own Aspiration Summit Account, which comes at a possible annual percentage yield (A.P.Y.) of one percent. That translates into significantly more cash than you would accrue at some of the top savings accounts nationally. To compare, both Barclay’s and GE Capital Bank have a 0.9 percent A.P.Y., according to data from NerdWallet.?
It’s worth noting, however, that the one percent interest rate only applies to accounts with at least $2,500 in daily funds. Smaller accounts will get just 0.25 percent. (Yes, that’s three quarters less.)?
The idea behind Aspiration’s Summit Account, according to co-founder and CEO, Andrei Cherny, is to compensate for the ethical shortcomings of bigger banks. “It’s no surprise that American families are fed up with their financial institutions,” he said in a press release. “Big banks pay basically zero interest on checking accounts while often charging unconscionable and hidden fees. Middle class families deserve to have access to a personal bank account that puts the customer first.”
Prior to launching Aspiration Partners LLC in November 2014, the 39-year-old entrepreneur worked as an advisor to high-profile politicians, including President Barack Obama and Hillary Clinton. He also served as a White House speechwriter (the youngest to date).
Cherny’s big emphasis with Aspiration is its effort to make complex investment portfolios more accessible to the masses — and by “masses,” he’s referring to the white-collar workers: lawyers, doctors, small business owners, and all the other non-billionaires of America.
The more interesting factor about Aspiration is its “pay what is fair” fee structure, a model that has been criticized. At the same time, it’s also what differentiates the firm from other asset managers. Cherny has faith in the idea that putting power directly into the hands of investors will motivate those who are doubtful of larger financial institutions to pay it forward.
Read more at?INC.