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Step<\/a>, the digital banking service geared toward teens and young adults, is now offering a 5% rate on its savings accounts.<\/p>\n With just 1 in 3 Americans having adequate savings for emergencies<\/a>, Step is among dozens of startups, like Current<\/a>, Greenlight<\/a>,\u00a0Super.com<\/a>\u00a0and Hyve<\/a>,\u00a0focused on helping people save.<\/p>\n There are no monthly fees and no minimum balance requirements on the Step accounts, and customers who open an FDIC-insured savings account with up to $250,000. However, to secure that 5%, users have to set up a monthly direct deposit of $500 or more from a payroll provider or employer.<\/p>\n \u201cThe direct deposit is to encourage people to utilize the full suite of Step products,\u201d CJ MacDonald, co-founder and CEO of Step, told TechCrunch.<\/p>\n And to be clear, \u201cthe savings percentage is not interest, but instead earned as cash rewards directly funded and managed by Step,\u201d according to the company.<\/p>\n Speaking of rewards, also new is Step\u2019s elevated rewards program. Customers who qualify for the 5% on their savings will also earn 3x points on purchases at select merchants; 2x points on restaurant dining, food delivery and charitable donations; and 1x points on entertainment, streaming and gaming.<\/p>\n The news comes about a month after Apple launched its savings account balance of 4.15%<\/a>. When that announcement was made, current data from Bankrate<\/a> showed savings accounts APY rate of 3.5% to 4.75%. As of May 17, the APY range is 4% to 4.85%, so it\u2019s safe to assume that Apple\u2019s entry into the market perhaps inspired neobanks and others financial organizations to close the gap.<\/p>\n Step always had a goal to offer the highest percentage among competitors in order to attract and grow with customers, so Apple\u2019s move didn\u2019t inspiration it to launch the high savings rate, MacDonald said.<\/p>\n \u201cThe hard thing with interest rates is that they keep changing,\u201d MacDonald said. \u201cIn the last year and a half, rates have been going up. Each time they go up, the [Federal Reserve] Fed Fund Rates<\/a> go up, and for any institution getting paid, the interest is going up, too. If they continue to rise, the 5% could go even higher. Based on today\u2019s rates, it\u2019s important to give customers back essentially what Fed Fund Rates are at.\u201d<\/p>\n Step is working with its long-time bank partner Evolve Bank & Trust on the savings accounts. Meanwhile, the company, which has raised over $500 million in venture-backed funding \u2014 most recently last October<\/a> \u2014 has over 4 million account holders.<\/p>\n<\/p><\/div>\n