Looking for an alternative to an online savings account? While most high yield savings accounts will offer around 1.5% APY, Mango brings a unique and fresh offering to the mix with the opportunity to earn up to 6% APY on balances under $5,000.
Don't let the initial 6% APY sticker shock blow your mind though. There are plenty of hoops to jump through to get that rate. Whether or not it is worth it will depend on how much you'll be able to put away in a savings account and whether or not you have it in you to maintain two more banking accounts.
Here's what you'll need to do to make the most out of that 6% APY:
Step 1: Open a Mango checking account. Mango prides itself on having a simple fee structure, so it's not a terrible option for checking alone. The most notable fees are the $3 monthly maintenance fee and the $2 ATM withdraw fee. If you're opening the checking account primarily for the savings account, you'll need to deposit at least $700 in your savings account to make $3 in interest a month.
Step 2: Set up $800 a month in direct deposits. In order to qualify for the 6% APY, you must have monthly direct deposits totaling $800. If you don't hit this minimum, your APY on savings will be 2%. Two percent is still a better rate than most high yield accounts can offer and might sound appealing, but keep in mind there is a $3 monthly fee. Most online savings accounts come without a monthly fee, so those will be a better bang for your buck if you can't hit the minimum direct deposit requirement.
Step 3: Open your savings account, ideally with $5,000. Balances over $5,000 will earn an APY of 1/10% (That's right. One tenth of a percent.), which is terrible. Once you cross the $5,000 threshold, we'd recommend parking the remainder of your cash in another savings account or in another Mango account if you have a significant other. ; )
Step 4: Keep track of the math. A standard online savings account will pay about 1.45% APY as of 1/9/2018. That nets out to be about $15 in annual interest on a $1,000 balance. Mango would bring in $60, but also add in $36 in monthly fees. In this scenario, you still come out $9 ahead for the year.
This is certainly an interesting offer. If you can capitalize on the 6% APY and don't mind using Mango as a primary checking account for bill pay, you can earn about $264 a year in interest ($300-$36 in monthly fees). If you compare that to the $80 or so you'd earn in a standard high yield savings account, you'll come out $180 ahead for the year. Free money is free money, right?