French startup Lydia is best known as the dominant app for peer-to-peer payments. But the company has added more features, such as a debit card, account aggregation, donations, jackpots, and more. This week, the company is adding savings accounts through a partnership with French fintech startup Cashbee.
If you are new to Cashbee, the company allows you to open savings accounts through a mobile app. After connecting your bank account to Cashbee, you can transfer money between your bank account and a savings account.
Currently, Cashbee is partnering with My Money Bank for savings accounts. Cashbee does not keep your money, it simply acts as an intermediary between your bank account and My Money Bank. With these savings accounts, users can expect an interest rate of 0.6% after an introductory rate of 2% for a few months.
Lydia basically offers the same terms and conditions with a few differences. Instead of earning 2% interest for the first three months, Lydia users only earn more interest for the first two months.
The other big difference is that Lydia asks you to put at least € 1,000 into your savings account when you open it. If you go through the Cashbee app, all you have to do is put in € 10 or more. But users can do whatever they want after that when it comes to putting money aside and withdrawing money from the savings account.
But the fact that Cashbee is perfectly integrated with Lydia is interesting. This will expose Cashbee to a lot more users as Lydia has over 5 million users. This is also an important feature if Lydia is to become a great financial app.
This savings scheme competes with the Livret A, the most widely used savings account in France. Anyone can open a Livret A in a retail bank. You benefit from an interest rate of 0.5% net of tax. On paper, 0.6% is better than 0.5%. But Cashbee savings accounts are not tax free.
If you are a student and pay no tax, this is a better deal. But a lot of people pay 30% tax on accrued interest, which means you end up earning 0.42% interest net of tax with a Cashbee account.
But it’s hard to beat the simplicity of Lydia’s solution here. For example, you can save up to € 1,000,000 on your savings account while the Livret A is limited to € 22,950. In other words, if you’re already using Lydia to send, receive, and spend money, you might want to check out these savings accounts.