In November 2022, we announced our newest product — a high-yield savings account for our M1 Plus users to begin earning a competitive 5.00% APY* return on their cash. But why should you consider a HYSA for your personal finances?
For one, you can continue to make money passively on your saved funds towards your financial goals.Additionally, since you can invest, borrow, spend and soon save with M1, you can manage all your funds conveniently in one place.
Here’s what to consider with the upcoming launch of the M1 HYSA, and how you can use it to your advantage.
Earning cash on your cash, with less hassle
At a traditional bank, earning a meaningful return on your cash deposits in a checking or savings account is rare. For the last 10 years, returns have been effectively zero for customers at even the biggest banks. And the fact that most of them are still at historically low rates today, even with rates rising, reflects the underlying greediness of big legacy banks and the fundamental disrespect they show for their customers. At M1, we think this is wrong.
We’ve led the way on rewarding our deposit clients as we’ve offered 1% APY on checking balances for Plus members since 2021 — and now it’s 0.00% APY**. With the high-yield savings account, M1 will launch with at least 5.00% APY for our Plus members, and 0.05% for our non-Plus members.
So, what is the vision for the M1 High-Yield Savings Account?
Ben Reid, the GM of M1 Save says, “The lines between checking and savings accounts has blurred for today’s digital banking customer. The M1 HYSA will begin as a straightforward savings account with a very competitive APY, but we intend to add features to it over time so that it can meet client needs in addition to just yield, including many things traditionally associated with checking accounts.”
One example of this blurring between savings and checking features that Reid refers to is transfers. Historically, savings accounts were limited by regulation to no more than six withdrawals per month, but this regulation (Reg D) has been indefinitely waived since the pandemic began, which means savings accounts are able to behave just like checking accounts in this regard. (It’s worth noting that some banks are still choosing to enforce the six-per-month limit, although M1’s banking partners do not. Be sure to check your bank’s policies.)
Use a high-yield savings account to potentially accelerate your financial goals
It’s clear that the M1 HYSA will help clients earn attractive returns on their cash but, for some people, it can really help them achieve their financial goals if they first define what they are savings for. Here are just a few ways you may consider using a HYSA for your own personal finances:
- An emergency fund for you and your family
- Saving for a home or investment property
- Saving for a wedding
- Saving for a vacation
- Saving for a new vehicle
- A home renovation project
Now that Regulation D has been waived by the Federal Reserve, you can safely store your cash in a yield-maximizing account like the M1 HYSA with the comfort that you can still access that cash how and when you need, at a moment’s notice. So what does interest earnings look like in this account? Here are your estimated earnings if you earn 5.00% APY with the M1 high-yield savings account.
| Yearly deposit | Balance after one year without any withdrawals or deposits |
| $10,000 | $10,449.80 |
| $25,000 | $26,124.90 |
| $100,000 | $104,497.95 |
| $1,000,000 | $1,044,979.55 |
The M1 bottom line
A high-yield savings account can be a great addition to your financial toolbelt as it gives you effortless yield on your cash without risk of market volatility. It also gives you quick access to an emergency fund in case of unexpected expenses, and the yield provides a way to buffer your savings from inflationary pressures.
Before the recent rate hikes, Reid says, “it didn’t make sense for many investors to allocate too much capital to cash given the low yield and what was going on in the stock market.” But now, according to Reid, many investors are asking “hard questions” about the stock market. These days, it makes sense for some investors “to pursue low-risk yield on cash as part of their portfolio strategy.”
*Obtaining stated APY (annual percentage yield) or opening an account does not require a minimum account balance. Stated APY is valid from date of account opening. Account fees may reduce earnings. Variable APY rate subject to paid M1 Plus subscription. Stated APY (annual percentage yield) for M1 Savings accounts is subject to change prior to product launch due to changing federal funds rate.
** No minimum balance to open account or to obtain APY (annual percentage yield). APY valid from account opening. Fees may reduce earnings. Rates may vary.
M1 newsletters reflect the opinions of only the authors who are associated persons of M1 and do not reflect the views of M1. They are for informational purposes only and are not a recommendation of an investment strategy or to buy or sell any security in any account. They are also not research reports and are not intended to serve as the basis for any investment decision. Prior to making any investment decision, you are encouraged to consult your personal investment, legal, and tax advisors. Any third-party information provided therein does not reflect the views of M1.
M1 Spend is a wholly-owned operating subsidiary of M1 Holdings Inc. M1 is not a bank. M1 Savings Accounts are furnished by B2 Bank, NA, Member FDIC.
M1 is not a bank. Savings Accounts are furnished by B2 Bank NA, Member FDIC and Equal Opportunity Lender
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