We knew this was coming and this afternoon LendingClub has released the details of its Founder Savings Accounts for individual investors. This is the account they first mentioned when they announced last October they were closing down their retail investor platform.
The Founders Savings Account will provide investors a way to park their cash in an FDIC-insured savings account earning an excellent rate compared to other savings accounts. Of course, this is not really an alternative to investing in LendingClub notes but a way to have your cash earning something while you decide what to do with it. Last month I put together a list of ideas if you are looking for true LendingClub alternatives.
LendingClub will pay a sliding scale of interest based on the balance in the account. Here are the details on the rates:
- 0.75% on balances up to $20,000
- 0.50% on the portion of balances from $20,000 to $50,000
- 0.25% on the portion of balances greater than $50,000
There is an auto-save feature that will move the money from your Notes account to the new savings account on a weekly basis. You will also be able to access your account through the Radius Bank app. There are no fees, no minimum balance requirement and the account is FDIC-insured up to $250,000.
The Founders Savings Account has been designed for LendingClub investors to earn interest on their loan repayments. It is not meant for the general public or for new deposits. From the announcement: “This means in most cases, only cash balances from a Notes account can be deposited into this account.” It is not clear what “most cases” means but we should not think of this as a regular savings account.
I checked out Bankrate today for the best rates on savings accounts and the highest you can get is 0.60%. So, clearly you will not find a better rate than the 0.75% that LendingClub is offering on balances below $20,000.
This is a decent start. But I am still looking forward to actual high interest offerings from the new LendingClub Bank. I would like to see something that gives investors a chance to earn close to the 5-7% that retail investors were earning for many years.
Every LendingClub investor should be receiving an email shortly with the details on this new savings account.
[Update: LendingClub just informed me that email invitations for the Founders Savings Account will be going out over the next few weeks so don’t be concerned if you don’t receive it right away.]