This Linus review focuses on providing you everything you need to know about this fintech company — including both the good as well as the risks involved – which is ideal in building your emergency fund.
Saving for our future has become necessary especially when the pandemic hit not just in the country but the world in 2020.
A lot of people struggled because of a lack of savings. It was very unpredictable no one was prepared for it to happen.
If there is one good thing, though that the pandemic brought us, a lot of people realized how valuable it is to have savings especially in case of unforeseen events. Many had to reevaluate how they spend and manage their money to hopefully become better at that, and so next time the same thing happens, they’re already prepared.
Now, if you are one of those people, here’s a tip.
If you are thinking about saving money in a financial institution, it is important to look into the options available.
Yes, there are lots of deposit account options out there. There’s checking, savings, money market, as well as a certificate of deposit accounts. Each has its respective pros and cons. Needless to say, you also need to look into the different banks out there and see what suits your needs and preferences.
In this article, obviously, we are going to focus on Linus, a financial technology company that provides a high-yield savings account.
If you are wondering what a high-yield savings account is, it basically is a savings account that offers a high annual interest rate.
While you may opt for a traditional savings account, in an article published by CNBC, they spoke with Shon Anderson, a certified financial planner and president at Anderson Financial Strategies. The expert recommends opening high-yield savings account especially for those who need to start using their emergency fund soon, or anyone worried that they have won’t be enough.
A high-yield savings account is the best account type for people who want to start building their emergency fund, which is very essential especially these days when everything is so uncertain. This helps you earn more from your money.
Unlike other deposit accounts like a certificate of deposit wherein you have to park your money in the bank for a specific term (and you can only withdraw until it matures), a high-yield savings account makes your money still accessible anytime you need it.
Going back to Linus, as mentioned, the company specifically offers a crypto-based high-yield savings account, which has no fees and is very easy to manage.
For your information, according to Investopedia, cryptocurrency is “a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.”
Moving on, in this Linus review, we are going to particularly tackle the following:
- What is Linus?
- Who is Linus best for?
- What does Linus offer?
- How does Linus work?
- Are there fees involved?
- How to bank with Linus?
- Is Linus safe?
- What to like about Linus?
- What not to like about Linus?
WHAT IS LINUS?
Before moving on to the more technical matters, let first and foremost know what Linus is all about.
Linus Financial, LLC or simply Linus is a financial technology or fintech company located in Nashville, Tennessee. It was founded in 2019, which means it’s one of those companies that are new in the industry.
Linus offers customers a flexible, excellent high-yield alternative to a traditional savings account.
Basically, the fintech company earns through digital asset lending. In return, it gets to offer consumers an interest rate that is very compelling.
Unfortunately, while the high-yield account seems very attractive, unlike banks and other financial institutions out there, Linus is not insured by the Federal Deposit Insurance Corporation (FDIC). It is not associated with any bank.
With that, it means there is more risk involved than saving money with a traditional bank. However, if you don’t mind it at all, and you are after the high-interest rate, then, it would be best to consider it more of an investment rather than a typical savings account.
Know more about Linus and what’s in store for you by watching this very insightful review by Eddie Yoon. This basically highlights the most important facts you need to know about the company.
WHO IS LINUS BEST FOR?
Now, obviously, in this section, we are going to talk about who would benefit the most with Linus.
Well, as mentioned, Linus is a fintech company that offers a crypto-based high-yield savings account, which means this should appeal most to those who want to earn more from their money without having to park it in a banking institution to be able to earn bigger interest.
It is best for those who want to start building their emergency fund, and be more ready should unforeseen circumstances happen in the future.
Linus is also ideal for those who are willing to take the risk. As mentioned, Linus is not affiliated with any bank, which means it is not FDIC-insured. So in case it fails, you won’t get any insurance. However, this should work if you see it as more of an investment rather than a typical savings account.
Ultimately, since Linus is entirely online and does not have branches like traditional banks, it should appeal most to those who like the idea of managing their accounts online, and do not mind not having a physical branch.
Now, if you think you fall in all these, then, you got to keep reading as Linus may probably the one you are looking for.
WHAT DOES LINUS OFFER?
In this part of our Linus review, we are going to dig deeper into the most important information you need to know — what Linus offers.
Using Open Finance protocols, the company provides retail consumers the opportunity to benefit from high-yield savings.
The company offers consumers a way to access the advantages of cryptocurrency investment without having to work hard for it at all.
With a $500 initial deposit requirement, customers are able to earn up to 4.5% on annual percentage yield (APY) on their savings account.
To compare, traditional savings accounts only offer around 0.08% APY. So, if you think about it, the difference is extremely high.
Another thing is that, unlike traditional or online banks, Linus does not require any maintaining balance. Needless to say, the company does not charge fees for its services.
So, if you come to think about it, you get to save yourself from all that, which definitely is a breather.
Linus is a relatively new fintech company having been established only in 2019.
Thus, the company is still working hard to attract more users. In order to do so, Linus currently offers a $20 bonus with your first deposit.
Apart from that, they do offer regular promotions to help boost your Linus account. You can get a $20 bonus every time you refer a friend.
Additionally, in September 2020, the company also offers a 1.0% bonus on deposit transactions. We won’t be surprised if Linus continues to offer promotions and bonuses in order to attract more new users.
HOW DOES LINUS WORK?
By this time, you are probably wondering already how Linus actually works. How in the world is the company able to produce such a high yield?
Well, the answer to that is simply converting your savings into cryptocurrency.
As mentioned in the previous section, Linus utilizes Open Finance protocols, which allows them to provide their customers with high-yield savings.
Furthermore, Linus also uses blockchain contracts via Ethereum. It is another cryptocurrency and set of blockchain protocols. This means that the company is also involved with blockchain credit markets.
Once you deposit your money into your Linus account, it is tokenized into USDC. USD Coin or USDC is a type of cryptocurrency that is referred to as a stable coin. A stable coin, meanwhile, is tied to some real estate asset.
Basically, USDC is backed one-to-one by US Dollars. Once your money is converted into USDC, it becomes available to digital capital markets. Unfortunately, Linus did not disclose the details of these markets, which could be a concern in terms of transparency as compared to banks that would provide those kinds of details.
Moving on, people get to borrow your USDC, which of course means they pay interest for borrowing.
Now, how does Linus avoid loan defaults in these digital credit markets? Basically, the markets used by the company require borrowers to put up collateral that is worth more than what they owe. This helps protect Linus’s investment.
So, how the company reduces risk? The loans that Linus are involved in are fully collateralized. More so, the company also sets aside a specific undisclosed amount of reserve based on deposits.
Everything, both digital trading and conversion happens behind the scenes.
Now, as an investor (which is a better term than the word saver given how it all works), you get to make deposits and withdrawals just like how you would do it with a regular savings account.
ARE THERE FEES INVOLVED?
Perhaps you are wondering about the fees.
Well, here’s some good news for you —
Linus does not charge any fees including transfer fees. Additionally, the fintech company does not require a minimum balance in your account.
However, it is important to be aware that if you keep a zero balance for an extended period of time, Linus may be forced to close your account.
HOW TO BANK WITH LINUS?
To open a Linus account, all you have to do is visit its website.
Again, Linus is a fintech company, which means, unlike banks, it does not have physical branches for in-person transactions.
Initially, you will be asked to provide your email address as well as your preferred password to start the online application process. To proceed with your account application, you will also be asked to provide some personal information including your legal name, address, phone number, date of birth, as well as an image of a valid government-issued identification such as passport or driver’s license.
There are two ways to transfer money into your Linus account.
First, you may use your bank’s debit card, and second, you may also use ACH to transfer money in and out of your account.
Good thing is, Linus does not limit the number of transfers you make in a month. However, it is important to remember that your Linus account is not a checking account and that it should never be like one.
Also, keep in mind that the money in your Linus account may not be accessible as soon as you want it. Don’t worry, though, as they’re not locked in your account like that of a certificate of deposit.
To make withdrawals, it’s pretty much the same as when you deposit money into your Linus account.
All you have to do is transfer money from your Linus account to your regular banking account.
It takes time, though, so make sure to have lead time when making withdrawals.
Typically, a wire transfer with Linus takes one business day to get into your bank account. Meanwhile, ACH transfers can take longer, between three to five business days.
To withdraw, just log into your Linus account and then link your checking account or debit card.
IS LINUS SAFE?
Since Linus operates entirely online, it is important to look into its security features as well.
Based on the information they provided on their website, Linus uses Passbase to store sensitive personal information. Passbase allows Linus to verify the identity of its customers without having to store their sensitive information on Linus’s server.
Linus also allows users to set up two-factor authentication to further strengthen their account’s safety and security.
While Linus seems to be a perfect choice to store your money and earn high interest, unfortunately, it lacks FDIC insurance, unlike regular banks.
If you open a Linus account, there are a number of risks to consider like the fact that its underlying infrastructure is based on cryptocurrency, as well as the use of new technologies to achieve high returns.
WHAT TO LIKE ABOUT LINUS?
This part of our Linus review will provide you with a list of things to like about Linus. These basically are the pros of using Linus, which includes the following:
- High-Yield Savings – Unlike regular savings accounts, Linus allows you to earn up to 4.5% annual percentage yield. It’s definitely high considering that traditional savings account only earn around 0.08% annual interest rate.
- No Fees – Another thing to like about opening and maintaining a Linus account is that it does not charge any fees at all. You can use the platform and make transactions absolutely for free, which is a not-so-common thing among financial institutions like banks.
- No Maintaining Balance Required – Linus does not also require any maintaining balance. You can even withdraw everything when you need it. However, it is important to note that Linus may close your account if you leave it with zero balance for a certain period of time, which is totally fair.
- Minimal Initial Deposit Requirement – Considering all the benefits you get, the $500 initial deposit requirement is definitely low. Needless to say, it’s the only requirement that the company asks you to comply.
- Ability to Deposit USD and Leverage into Cryptocurrency – With Linus, you no longer have to spend time studying cryptocurrency. They do everything for you. Once you deposit money, the company immediately turns it into USDC, and then, that’s it. You can just sit back and relax and wait for your money to grow.
- Online Access – Linus is accessible entirely online, which is how fintech company operates really. What’s nice about it is that you can access your Linus account anytime you want, and anytime you need without having to go through the hassle of visiting a branch like in typical banks.
WHAT NOT TO LIKE ABOUT LINUS?
Of course, to complete our Linus review, here are some of the downsides of this fintech company:
- Not FDIC-Insured – Linus is not affiliated or partnered with any bank, thus, it is not insured by the Federal Deposit Insurance Corporation (FDIC), which protects depositors in case of a bank failure. To be honest, this one of the greatest risks in opening a Linus account – unless of course if you see it as an investment rather than a savings account.
- APY Subject to Fluctuation – Linus says that customers can earn up to 4.5% APY. But of course, this is subject to fluctuation. You may earn big now, or a little lower next time. Nevertheless, the APY is still high compared to what regular savings accounts offered by banks.
- Entirely Online – For most, especially the tech-savvy ones, this is a pro. However, for those who are a little old-school, this may be a risk as well. Unlike banks, you can go to a branch anytime you have concerns, with this one, everything is done virtually.
FINAL THOUGHTS ON LINUS REVIEW
Linus is a fintech company that provides a crypto-based high-yield savings account. It is great for individuals who want to save their money and earn a high annual interest rate.
While it seems ideal, it does come with risks especially since Linus is not insured by the FDIC. Although it works like a savings account, Linus looks more like an investment, which is why it is a great choice to build up your emergency fund.
With that said, unless you are willing to take the risk, this may not work for you. Are you?