Many new investors got jittery due to the recent movement in the world of Cryptocurrencies amid different global events. Be it the pandemic, the Eastern European tension, or the crypto crackdown by the Chinese Government. Many crypto investors started asking whether it is possible to earn interest on crypto holdings. So in this article, we will be discussing how to earn interest on crypto.
As the crypto market took a sharp dive and the portfolios started turning red overnight, investors started losing hope in cryptocurrencies.
First of all, this happens to all financial markets, be it the housing market, stock market, bond market, etc.
All financial markets have a cycle and the crypto market is no different.
Portfolios will show negative returns during a market downcycle, but what could hurt investors, especially novice investors is, selling their assets (in this case, their crypto holdings) during these market downcycles.
But if those crypto coins and tokens provided a regular stream of income in the form of interest, young investors would remain motivated to hold (or HODL) on to their crypto assets, even during the market downcycle.
So to answer the very first question –
Can You Earn Interest on Crypto?
Yes, you can earn interest on your cryptocurrencies by investing them in a crypto savings account. There are multiple crypto platforms available that offer crypto savings accounts.
In this article, we will be talking about a few crypto exchanges, wallets and accounts, which provide handsome interest on holding cryptos in their platform.
First, we should talk about –
Why Crypto Savings Account is Important?
There are many benefits of having a Crypto Savings Account, but we at Money Premier think that 3 of the most important reasons for considering a Crypto Savings Account are –
- Turns a Dead Asset into a Yeilding Asset –
Any asset that doesn’t generate a cash flow on its own is a dead asset.
For Example, Physical Gold, Gems and Jewelleries, Unproductive Real Estate, etc.
You cannot realise your gains or profits on your investment until you sell your dead asset to the next person, at a better price than yours.
Most Crypto Coins and Tokens are very similar.
(We say ‘most’ because some coins or tokens have a concept called Reflections.
Reflections are distributed to Coin or Token holders according to the Tokenomics of the Coin or Token.
You can think of Reflections as dividends in the crypto world)
Until you sell your crypto holding you will not be able to realise your profits or gains on your investment, which makes crypto a dead asset.
But with the help of a Crypto Savings Account, you can turn your dead crypto assets into income-generating assets.
- Helps Weather the Market Downcycle –
People are less likely to sell their assets if it generates a regular flow of income.
And during market downcycles, novice investors are the ones who sell first.
But if their crypto is generating a regular stream of income, they are less likely to sell their crypto during a market downcycle.
- Borrow Fiat Cash against Crypto as Collateral –
Many Crypto exchanges and wallets allow users to borrow cash or fiat pegged crypto such as USDC or USDT against their crypto portfolio as collateral.
This comes in handy if you are in immediate need of cash and you don’t want to liquidate your crypto holdings.
So, the next question is –
How to Earn Interest on Crypto?
You can earn interest on your cryptocurrencies by holding or staking your cryptos in Exchanges or Wallets which provides interest.
So naturally, the next question that comes to mind is –
What are the Best Crypto Exchanges and Wallets to Earn Interest on Crypto?
Many Crypto platforms provide interest on holding or staking your crypto assets in their platform. But reliability and trust are big issues in the crypto community.
And, having too many options can sometimes confuse the users.
So we made a list of the 3 Best Crypto Savings Platforms which can kick start your journey of earning interest from your cryptocurrencies.
Now let’s talk a bit about each of the accounts in detail.
First, let us start with –
Nexo is a crypto exchange through which you can earn interest on holding or staking your crypto coins and tokens in their platform.
The average interest rate of Nexo varies between 8% and 12%. But on some crypto coins and tokens, Nexo provides an interest rate as high as 36%.
Here is a picture showing the high interest paid by Nexo.
At the moment Nexo support 32 Crypto Coins and Tokens and Nexo keeps on adding new cryptocurrency regularly.
Nexo recently added NEAR Protocol and Ape Coin into their list of supported digital assets.
There is no lock-in period on your crypto to be eligible to earn interest in Nexo. Your crypto assets start earning interest the moment you deposit your cryptos into your Nexo Savings Account.
But Nexo does have what is called Fixed Term.
Fixed Term in Nexo is like a fixed deposit or a CD.
Fixed Term do lock up your cryptos for a certain time and increases the interest rate you earn. But it is up to you whether you want to opt-in or not.
If you don’t want to lock up your cryptos in a Fixed Term and leave your cryptos idle in the Nexo Savings Account, still your cryptos will earn interest.
You can also withdraw your crypto anytime you want.
Crypto assets up to $375 Million in a Nexo Savings Account are insured by BitGo. So Capital-Loss won’t be an issue with Nexo.
You can buy cryptocurrencies directly via Nexo using a Visa card. Or you can transfer cryptos into your Nexo Savings Account from other exchanges.
The best way to fund your Nexo Savings Account is by sending Ripple (XRP) from other exchanges.
Buying cryptocurrencies in Nexo using a Visa card carries a 3% fee which is huge compared to Ripple’s network fee.
And Ripple also takes a minimal amount of time to transfer funds.
Later you can swap Ripple (XRP) with your preferred crypto inside of Nexo. Swapping XRP into other cryptocurrencies is Fee-less in Nexo.
You can also take out loans against your crypto assets kept in your Nexo account.
The loan amount or as Nexo calls it Credit Line amount is 50% of your portfolio value. It means if you have $100 in your Nexo Savings Account, then you will get a Credit Line of $50.
This is done to protect users from defaulting as the crypto market is quite volatile.
If you are thinking of borrowing from Nexo, then we would ask you not to utilize the whole Credit Line.
That is, don’t take a loan amounting to 50% of your portfolio value. Leave a 10% to 15% headroom.
You can borrow from Nexo in the form of Stablecoin such as Tether (USDT) or USD Coin (USDC). The borrowed amount will be deposited directly to your Nexo Saving Account.
You can also transfer your borrowed amount directly to your bank account.
In Nexo, interest is paid on a daily basis. This also means the interest accrued on your cryptos is compounded daily.
There are 2 ways through which you can earn your daily crypto interest.
One of the ways is to receive your interest in the same cryptocurrency.
That is, if you have Bitcoin in your savings account, then you will receive your interest in the form of Bitcoin.
Another way is to receive your daily interest in Nexo Tokens.
But if you choose to receive your interest payout in Nexo Tokens, then you will get a 2% bonus interest.
That means, if you were earning an interest rate of 10% on your crypto assets, now after choosing to receive your interest payout in Nexo Tokens, your crypto coins and tokens will earn 10% plus a bonus interest rate of 2%, amounting to a total of 12% interest.
Nexo also has a loyalty program, which can increase the earning interest and decrease the loan interest rate when users participate in the program.
You can participate in the Nexo loyalty program by just keeping a certain percentage of your portfolio value in Nexo Tokens.
There are a total of 4 loyalty levels in the Nexo loyalty program.
When you open a Nexo Savings Account and you don’t have any Nexo Token in your account, you are in the Base Level.
When you keep 1% – 5% of your portfolio value in Nexo Token, you rise to Silver Level.
Keeping 5% – 10% of your portfolio value in Nexo Token will get you up to Gold Level.
And if you keep more than 10% of your portfolio value in Nexo Token, you will reach the Platinum Level.
Here is a picture of all the Nexo Loyalty Levels.
If you are on the Platinum Loyalty Level in Nexo, you will get cashback even when you swap crypto coins and tokens.
If you want to invest in cryptocurrencies via Nexo, then we have a detailed article discussing how you can make a good crypto portfolio in Nexo.
Nexo also provides users with a Crypto Credit Card, which users can use as a regular credit card.
The amount used via the credit card will be deducted from the Credit Line account, which means you utilize the monetary benefit of your cryptocurrencies without selling them.
2% cashback on all purchases is among many other perks that the Nexo Card provides.
At the moment Nexo is rewarding its new users with $25 worth of Bitcoin, so if you want you can try out Nexo by clicking here.
Now let’s see and talk about the next platform.
BlockFi is a Crypto platform through which investors can earn interest on their crypto holding.
BlockFi is similar to Nexo, but the interest rates on BlockFi are on the conservative side.
BlockFi is the perfect crypto platform for new crypto investors who wants to start their journey of earning interest with a small crypto portfolio.
BlockFi claims that the crypto platform handles over $10 Billion in assets and has paid out more than $700 Million in interest and rewards.
The average interest rates on BlockFi vary between 5% to 8%.
As of March 2022, the highest interest rate paid by BlockFi is 11%, and that is on Polygon (MATIC).
BlockFi uses what is called a Tiered Interest Structure. It means that BlockFi will pay a certain interest rate on a crypto up to a limited number of coins or tokens.
Let us explain the concept of Tiered Interest Structure with the example of Bitcoin (BTC).
BlockFi pays an APY of 4.5% on Bitcoin.
But you will receive a 4.5% interest rate only up to 0.10 Bitcoin (BTC).
Any amount of Bitcoin after the 0.10 BTC limit and up to 0.35 BTC will only receive a 1% interest rate.
And anything post 0.35 Bitcoin limit will earn 0.1% (basically nothing).
This is because BlockFi uses Tiered Interest Structure.
Earlier, BlockFi used to pay a bit higher interest rate on their Interest Account.
On the 1st of March 2022, BlockFi revised its interest rate. You can check the latest interest rate paid by BlockFi on different cryptos here.
At the moment, BlockFi supports 20 Crypto Coins and Tokens.
BlockFi doesn’t lock up your cryptos. You can withdraw your cryptocurrencies any time you want.
You can fund your BlockFi Interest Account by wire-transferring USD or EUR Stablecoins. Or BlockFi allows you to transfer a handful of cryptos directly into your Interest Account from other exchanges or wallets.
As BlockFi doesn’t have Ripple (XRP) on their list of supported digital assets as of now, the best way to fund your BlockFi Interest Account is through Gemini USD (GUSD).
Later you can swap Gemini USD (GUSD) with your preferred crypto inside of BlockFi.
BlockFi doesn’t charge any fee for swapping GUSD into other cryptocurrencies, but people have complained that BlockFi increases the spread up to 1%.
Like Nexo, BlockFi too allows users to take a loan against their crypto holding.
As of now, BlockFi allows loans only against Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and PAX Gold (PAXG).
The lowest interest rate charged by BlockFi on a loan is 6.73% and that is against Bitcoin on a Loan-to-Value ratio of 20%.
Loan-to-Value of 20% means if you have Bitcoin worth $100 in your account, then your loan application amount should not cross $20.
The average interest rate charged by BlockFi on loans is 12.50% on an LTV of 50%.
In BlockFi, interest is accrued on a daily basis and is paid every month. That means the interest accrued on your cryptos is compounded monthly.
BlockFi allows 2 ways to earn your monthly crypto interest.
One of the ways is to receive your interest in the same cryptocurrency. That is, if you have Bitcoin in your account then your interest will be paid in the form of Bitcoin.
And, the other way is to earn your interest in the form of a cryptocurrency of your choice.
BlockFi doesn’t have a loyalty program like Nexo or have any correspondent token.
The most attractive offering of BlockFi is its Visa Signature Credit Card.
You will earn 1.5% cashback in the form of crypto on every purchase you make with the BlockFi Credit Card.
People who are into accumulating Bitcoin use this feature of the BlockFi Credit Card to earn more Bitcoin.
BlockFi also gives a trading bonus of 0.25% in the form of Bitcoin on all eligible trades.
The BlockFi Credit Card is also compatible with Apple Pay and Google Pay.
If you want to know more about the BlockFi Credit Card, click here.
At the moment, BlockFi is rewarding its new users with a $10 Bonus. If you want to try BlockFi, click here.
Note – Due to the recent issue with the SEC, BlockFi has stopped offering the BlockFi Interest Account (BIA) to US citizens.
Now let’s move towards our final crypto interest savings account.
Celsius is a decentralised financial (Defi) platform, that allows users to earn, lend and borrow cryptocurrencies.
Users can earn interest on holding their cryptocurrencies on the Celsius platform, and users can also borrow money at a favourable interest rate against their cryptos.
The main aim of the Celsius Network and its founder Alex Mashinsky is Financial Freedom for the masses.
As of March 2022, Celsius manages assets worth more than $20 Billion and has paid out interest and rewards worth more than $965 Million since its inception.
Assets managed by Celsius are verified by a third-party asset verification and auditing company Chainalysis.
The average interest rate on Celsius varies from 5% to 7%. But on some cryptos, Celsius pays interest rates as high as 14.05%.
Celsius uses a mix of Tiered Interest Structure like BlockFi on a selected set of cryptos and regular interest structure on every other supported crypto.
In the case of Bitcoin (BTC) – Celsius pays an interest rate of 5% on your first whole Bitcoin, and any amount of Bitcoin after a whole Bitcoin will attract a 1.5% interest rate.
In the case of Ethereum (ETH) – Celsius pays an interest rate of 5.35% on your first 30 Ethereum, and any amount of Ethereum post the first 30 Ethereum limit will get an interest rate of 3.52%.
But on every other cryptocurrency, Celsius doesn’t have a limit on the number of coins and tokens.
Click here to check the latest interest rate paid by Celsius.
Celsius supports the highest number of digital assets among all the platforms through which you can earn interest on crypto. As of March 2022, Celsius supports 52 cryptocurrencies.
Celsius also support Gold Tokens like Paxos Gold (PAXG), Tether Gold (XAUT) and Wrapped Digital Gold (WDGLD) which are attached to real physical gold.
Celsius doesn’t have a lock-in period and your cryptos start earning interest the moment it arrives in your Celsius Crypto Interest Account. And you can withdraw your cryptos any time you want.
You can fund your Celsius account via credit card or bank transfer. You can also transfer cryptos from other exchanges or wallets into your Celsius account.
Money Premier Investment Tip
Investing using a Credit Card is not a very good idea.
We at Money Premier definitely DO NOT recommend doing it.
Investing borrowed money, in general, is never a good idea.
Celsius also has a Swap feature where you can swap one crypto for another for free. But the Swap feature is in beta mode as of now and is only available on the Celsius smartphone app.
The best way to fund your Celsius account is either through a bank transfer or an individual crypto transfer.
By the time you are reading this article if the Swap feature of Celsius has made out of the beta stage, then use Ripple (XRP) to transfer funds as the network fee of Ripple is nearly negligible.
Later swap the XRP with the crypto of your choice.
Buying crypto in Celsius using a credit card would cost you a $10 minimum fee.
If you live in the European Union region or the UK, you will be charged a fee of 2.99% on your transfer value. And for other Global users, the credit card fund transfer charge is 3.5%.
Whereas, if you use ACH bank transfer or SEPA bank transfer, you will be charged 0.1% or 0.5% on the transfer amount, respectively.
Like any other crypto lending platform, Celsius also allow users to borrow stablecoin or cash against their crypto holdings.
Celsius lend on the LTV ratio of 25%, 33% and 50%.
Lower the Loan-to-Value ratio, lower the interest you have to pay on your borrowed money.
If you are borrowing from Celsius against any other crypto other than stablecoins, then we would suggest you leave a 5% to 10% headroom on your LTV ratio.
Let’s understand with an example.
If you have $100 worth of Bitcoin in your Celsius crypto interest account, then borrowing $25 will cost you the least amount of interest rate.
You could borrow $33 or $50 using Bitcoin worth $100 as collateral, but it will cost you a far higher interest rate.
But we suggest that the maximum amount you should borrow against $100 worth of Bitcoin is $15 to $20.
As cryptocurrencies are super volatile assets, this 5% to 10% headroom will give you enough time to top up your collateral margin.
In Celsius, interest is paid on a weekly basis. Interest earned on your cryptocurrencies is credited to your account every Monday.
In Celsius, interest accrued on your cryptos is compounded weekly.
Like Nexo, Celsius also have a loyalty program.
Celsius uses the CEL token as the platform utility and loyalty classification token.
Celsius have 4 loyalty levels, namely – Bronze, Silver, Gold and Platinum.
Holding 5% of your total portfolio value in CEL tokens will take you to the Bronze loyalty level.
Whereas, holding 25% of your portfolio in CEL tokens or 25,000 CEL tokens, whichever is lower, will grant you the Platinum loyalty level.
Though Celsius provide tremendous rewards to Platinum members, we definitely won’t recommend allocating 1/4th or 25% of your portfolio towards a single coin or token.
Taking such concentrated risk in the crypto market is not the ideal way to invest.
If 10% to 12% of your portfolio amount to 25,000 CEL tokens, then only you should aim for the Platinum membership.
You can receive your weekly interest either in the same crypto you have invested in or in CEL tokens.
Earning in CEL tokens increases the interest rate that you get.
The Celsius smartphone app even allows you to select particular cryptos whose interest you want to receive in CEL tokens.
For example –
You can opt to receive your Bitcoin and Ethereum interest in BTC and ETH and every other crypto’s interest in CEL token.
Celsius is on the verge of releasing a Fee-less Crypto Credit Card. At the moment users can join the waitlist.
Celsius is rewarding new users with Bitcoin worth $50. If you want, you can try out Celsius by clicking here.
Now, let’s answer the main lingering question –
Which is the Best Crypto Interest Account?
Every crypto interest account has its own merit.
Nexo pays a relatively high-interest rate compared to BlockFi and Celsius, BlockFi has a Credit Card with tremendous utility and high functionality and Celsius has the biggest list of supported cryptocurrencies.
The choice of which Crypto Interest Account you should use depends on what you want from that crypto interest platform.
If you want an above-average interest rate on your crypto portfolio, then you should have a Nexo Interest Account.
If you want to use your cryptos as collateral and spend it on your purchases, then BlockFi would be ideal for you.
And, if you want to diversify your crypto portfolio among 50+ coins and tokens to mitigate the risk of concentration, then Celsius is the best crypto interest account for you.
If you are not a spender but a HODLer, then we would suggest not using BlockFi. At the moment BlockFi neither provides industry-above interest rates nor has a long list of supported digital assets.
If this is the first time you are going to lend your crypto to earn interest on it, then we would suggest you start with Nexo.
Nexo has a super-simplified user interface.
High interest in Nexo will give your crypto portfolio the initial boost it needs to land on the moon.🚀
The daily interest payout of Nexo will motivate you to grow your account.
Cryptos available in Nexo are vetted by professionals, so there is no asset risk associated with Nexo.
We have discussed and built some sustainable, long-term crypto portfolios in Nexo. You can check it out here.
After you have grown a sizeable account in Nexo, we would suggest you diversify into other crypto interest accounts like Celsius.
This is to diversify and mitigate as much platform risk as possible.
Or, you can simultaneously fund a Nexo and a Celsius Interest Account by equally dividing your investable corpus among the 2 platforms.
But, a smaller investment in each platform means smaller interest in each platform, in the initial days. That might demotivate new crypto investors.
You should never hold 100% of your total crypto portfolio on a single platform. Divide your crypto portfolio among at least 3 platforms. 4 would be ideal.
That was it.
Hope you liked the comparison we did among all the 3 crypto interest platforms.
If you found this article helpful, do Upvote us using the Upvote Button below. It motivates us to make more such articles.
And if you have any questions regarding any of the platforms that we talked about today, do let us know in the comment section.
We will try our best to clear your queries.
Do share this article with your friends and family if they are into crypto too.
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And as usual, in the end, we will say –
Good Luck and Happy Investing! 😊
Disclaimer: The views, investment tips, presumptions, and calculations expressed on Moneypremier.net are not of the website or its management. This article is for Educational Purposes only. Moneypremier.net advises users to check with certified experts before making any financial decisions.
Ownership Disclosure: People associated with Money Premier (https://moneypremier.net/) have stakes in the Cryptocurrency/ies discussed in the above article.