Friday, April 19, 2024

How can Revolut offer 5% on savings?

By DAC000 , in fintech bubble Revolut , at October 8, 2020 Tags: ,

First, let’s look at the details on this offer before we explain how. US based customers holding Revolut’s Premium or Steel accounts (monthly fee applies) will receive an interest rate of 5% on savings, structured as a base plus a 4.5% bonus, which applies to prior month spending. Customers not holding one of these premium accounts still will receive 4.75% all in. Not bad really, considering Bankrate suggests 0.83% is highest rate currently paid in The US on current accounts.

SO how can Revolut pay such a high rate you ask? The old fashioned, dot-com style of business model — by losing money. About a four-minute read.

Comment: regular readers will know the Fintech bubble is already bursting, so how long can such business practices continue? Until the last investor cuts and runs. We saw all of this before in the dot-com bubble. The Fintech bubble won’t end differently. Until then, get the popcorn.