Saving cash is an important part of your financial planning. While “cash is trash” and similar headlines are spreading, having cash set aside is important for an emergency or making a big purchase soon. The reason why “cash is trash” has been going around is for two reasons: (1) interest rates on borrowing money is near record lows, and (2) the return on investing in the stock market has been massive over the past decade.

Banks offer little return on your money, so where is the best place to set aside cash? Online savings accounts have grown in popularity by offering higher interest rates than traditional brick-and-mortar banks. These are especially popular with younger generations. Unfortunately, rates are still low.

The national average interest rate for savings accounts in the United States is 0.07%. (As of now, some online savings accounts offer a whopping 0.5% interest rate.) At that rate it would take over 1,000 years to double any money saved, per the rule of 72. The largest banks in the country only offer 0.01% – that is $1 for every $10,000 saved. While savings account are not meant to be investments to earn a large return, earning nearly nothing defeats the purpose of using a savings account versus a checking account.

Another option is a lottery savings account, like Yotta. Yotta is an app-based, FDIC-insured savings account that offers 0.2% interest plus recurring weekly lottery tickets to win up to $10 million dollars. Realistically, you will earn between 1-2% on your money, on average; however, the lottery tickets make saving fun. Yotta is partnered with Evolve Bank based in Memphis, TN. Yotta offers 1 recurring lottery ticket for every $25 you have saved each week. Additionally, you can use a debit card with your account for easy access to your money (plus earn bonus lottery tickets as “cash-back” for using the debit card, even with Venmo).

Savings accounts first originated in the United States in Boston in 1816. The purpose of these accounts were to encourage individuals to save money so that the banks would have more capital to lend out in the form of loans. Today, savings accounts serve a similar function of providing capital for banks to lend out at higher interest rates. Banks prefer savings accounts to checking accounts as the savings accounts tend to have more restrictions on accessing your capital than checking accounts do.

The lottery savings account and other prize-linked savings accounts have existed for years and are proven to motivate people to save more than traditional savings accounts. Similar to buying lottery tickets, the chances of winning big outweighs a guaranteed small return. Studies have shown that these lottery savings accounts have increased savings rates among users.

If you sign up using the Referral Code: JULIA118, you can test the app with 100 bonus tickets to see if you like it. https://www.withyotta.com/

Please comment if you have used these types of apps before or if you have any questions!