Should You Put Your Money in a High Yield Savings Account from Tellus?

The fintech app is offering interest rates up to 5.12% APR

Andy Spears

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Photo by Sasun Bughdaryan on Unsplash

Let’s face it, savings accounts for the last two decades have been paying out abysmal interest rates — making them a place to avoid if you needed to park money somewhere, earn interest, and have some liquidity.

Even now, a savings account is relatively safe, but also a way to achieve a net loss in money parked due to persistent inflation.

What if you could earn more than 5% APR on money you kept in a savings account? Plus, what if you could do all the work of managing that money from a convenient app on your phone?

Fintech app Tellus is counting on consumers choosing the convenience and high interest of a Tellus savings account.

They are apparently also counting on consumers NOT reading the fine print or investigating just how those high yields are made.

Fortunately, Jason Mikula over at Fintech Business Weekly provides some key insight into Tellus.

The bottom line: Stay away!

Here are some highlights of the Tellus savings product — these should give you pause if you were considering using the app for your savings needs:

“Tellus is not a bank. Tellus is not FDIC insured.”

Ok, so that alone is a huge red flag. There’s no FDIC backing for your money. Tellus loses the money b/c of its investment strategy? You lose, too! No guarantee.

If you’re not already walking away from Tellus, here’s more:

. . . it pools individual consumers’ funds in order to write super jumbo mortgages — which, in turn, may be sourced or underwritten in part based on data from Tellus’ rental property management platform for landlords.

Remember mortgage-backed securities, anyone? 2008? Great Recession?

Yeah, well, Tellus is asking for trouble. Deposits are not FDIC insured and they are offering great rates by writing super jumbo mortgages.

But wait, there’s more:

First, “short-term multi-million dollar loans at above-market interest rates to second-home buyers who…

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .