3 Things to Consider When Choosing a Crypto Bank – HaruBank Blog
The hottest trend of 2020 in the crypto industry is, without a doubt, crypto banking. Just as traditional banks offer, crypto banks offer interests to clients who deposit assets while lending those deposits to a borrower. Crypto banks, unlike conventional banks, take cryptocurrencies as deposits with a higher interest rate in return.
In less than five years since the concept of crypto banks has emerged, it has shown explosive growth. Many crypto banking services are available out there, and it is quite confusing when choosing the right service. In this post, we would like to introduce three criteria for making a smart decision.
1. Does the interest compound?
If you have ever ignored the power of compound interest, it’s time to change that. Compound interest refers to the interest rate you earn on the profit of the investment plus the investment itself.
The graph below shows the growth of $1,000 in 30 years with 12% annual interest, with and without compounding interest. What you also need to know is that the compounding interval matters as well; the monthly compound is better than the annual compound, and the daily compound is better than the monthly compound.
When choosing a crypto bank, look more closely into whether the bank offers you compound interest. If they do, check the compounding interval as well. Remember that a small difference in interest compound policy will make a big difference in your final balance.
2) How long is the deposit period?
Another essential ingredient in earning an excellent yield other than compound interest is the time left to grow. The longer you deposit your asset, the more you can make. Even if the interest is high and compounds, with a short deposit period, you barely earn anything.
Many crypto banking services promote their ‘high’ interest rate, with the shortfall of a very minimal deposits period. If one promotes it will give you a 52% annual interest rate on your deposits for two weeks, you should not expect a 52% return. It means that you can only earn an interest rate of less than 2% (=52% / 52 weeks * 2 weeks) in the end. ‘Annual’ interest rate that does not apply for a full year is not your real interest rate. It is that kind of marketing trap you can easily fall into.
3) Is withdrawal available anytime?
Last but not least, compound interest and deposits period do not mean a thing if you cannot withdraw your asset anytime—it means that you do not have full control of your asset. Still, many of us fear the crypto market volatility. When the market is crashing, there is nothing more dreadful than losing control of your asset.
If you are looking for a crypto bank that checks all three boxes above, HaruBank is the one for you. HaruBank offers you a variety of deposit options that feature no lock-up, withdrawal anytime, or a higher interest rate of up to 12.7% APR with a monthly lock-up.
HaruBank does not put a limit on the deposits period — which means that ‘annual interest’ gets to be the real number that you can earn over a year. Even better, all the interest compounds daily at HaruBank.
Open an account at HaruBank today and enjoy the power of compound interest!
Published at Mon, 10 Feb 2020 08:33:29 +0000
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