Youth-Focused Neobank App Step Introduces 5% APY Offer
An all-in-one financial platform aimed at young adults is hiking the interest rate that customers can earn on their money. In fact, Step will now enable users to earn a rate that’s more than 12 times the national average.
Effective now, Step is offering up to 5% APY on savings (up to $250,000 in funds). However, to earn this, cusomers will need to make a qualifying monthly direct deposit of at leats $500 a month. Step does not list an APY for those who do not meet this requirment.
While Step is not a bank, they do partner with Evolve Bank and Trust — one of the largest FinTech partner banks. In turn, funds are FDIC insured up to $250,000 per depositor.
The enhanced APY is just one of several features Step offers. In addition to unlocking a higher APY, those who make a qualifying direct deposit will be able to earn rewards with their Step debit card, including 3x points on purchases at select merchants, 2x points on restaurant dining (including food delivery), 2x on charitable donations, and 1x points on entertainment, streaming, and gaming.
Elsewhere, customers can opt to automatically round up their purchases to their nearest dollar and deposit the “spare change” in their savings. Plus, Step can help users build credit, even before they turn 18.
Announcing the update, Step CEO and co-founder CJ MacDonald said, “Our goal is to help teens and young adults achieve their financial goals, whether that means going to college, buying a car, or starting a business with fewer financial burdens. We are reimagining how savings should work and putting our Step users first.” MacDonald added, “Our new 5.00% savings rate puts more money in their pockets that they can save, invest, or put towards their goals – all with their Step App.”
The 5% APY that Step is now offering does put the neobank near the top of the heap. Moreover, while earning this rate does require direct deposit, the $500 threshold is fairly reasonable. On the other hand, though, this move doesn’t put them on an island as FinTech-turned-bank Varo has a similar offer (although that one is capped at $5,000), and options such as Marcus are currently not too far behind at 4.15% and don’t have a direct deposit requirement. For those reasons, while this offer could be a great bonus for Step customers, it doesn’t seem too likely to bring many new users in. Hopefully, if nothing else, the offer raises Step’s profile a bit — both inside and outisde of its young adult target market.