For many households, cash holdings are an important part of net worth, and so earning a competitive rate on your cash while maintaining liquidity and safety can be an important part of securing a comfortable retirement. For corporations and nonprofits, cash holdings are a key factor in their long-term success. Over the past decade, however, interest rates remained extremely low, and so there was little opportunity for many investors to earn more on their cash.
That all changed over the past few years. As interest rates began to rise, we noticed that most banks were not passing along these higher rates to their customers in their checking and savings accounts. The average APY for savings accounts is just 0.09% today.1 We believe the big banks are relying on depositor inertia and have little incentive to materially raise the rates they pay on savings and checking accounts.
We believe there is a significant opportunity to help investors earn a competitive rate on their cash holdings through a product designed for convenience, and so we assembled a world-class technology team to build Flourish Cash. We are excited to offer an account with a competitive variable rate that is up to more than 10x higher than the national average1,2 and FDIC insurance coverage of up to $2 million for an individual account,3 while at the same time working tirelessly to make the product as easy-to-use as possible.
Perhaps most of all, we set out to build a product that we wanted to use ourselves. Many of us personally know how hard it can be to overcome inertia and earn a higher interest rate while keeping our money safe, and we believe we have built a product that offers a better way.
Flourish Cash is offered through a brokerage account with Stone Ridge Securities LLC, an SEC registered broker-dealer. While Stone Ridge Securities LLC is not a bank, the money that you transfer to your Flourish Cash account is automatically deposited with our FDIC-member Program Banks. You can learn more about why your cash is eligible to receive FDIC insurance coverage here.
1 The national average is calculated by the FDIC as a simple average of rates paid (uses annual percentage yield) by all insured depository institutions and branches for which data are available. Data used to calculate the national rates are gathered by RateWatch. See Federal Deposit Insurance Corporation, National Rate on Non-Jumbo Deposits (less than $100,000): Savings [SAVNRNJ], retrieved from FRED, Federal Reserve Bank of St. Louis; https:// fred.stlouisfed.org/series/SAVNRNJ, 5/21/2020.
2 The current Annual Percentage Yield (APY) for Flourish Cash is available at www.flourish.com. This APY is variable and may change at any time. Flourish Cash currently has a tiered interest rate structure, as set forth in the rate tier summary. We deposit your cash first with one or more of the Program Banks in the tier with the highest interest rate, up to the maximum amount of deposits for that tier, and then continue depositing cash at Program Bank(s) in each successive tier until all cash has been deposited, subject to any Program Bank opt out elections you have made.The rate of interest paid by each Program Bank to Flourish Cash customers may be lower than the rate that could be earned by a customer opening a deposit account directly with such bank.
3 The cash balance in a Flourish Cash account that is swept to one or more Program Banks is eligible for FDIC insurance, subject to FDIC rules, including FDIC aggregate insurance coverage limits. FDIC insurance will not be provided until the funds arrive at the Program Bank. There are currently at least 6 Program Banks available to accept deposits for institutional Flourish Cash accounts (accounts for corporations, partnerships and other legal entities) and at least 8 Program Banks available to accept deposits for personal Flourish Cash accounts (individual, joint and revocable trust accounts), and we are not obligated to allocate customer funds across more than this number of Program Banks if there is a greater number of banks in the Program. Customers are generally eligible for FDIC insurance coverage of $250,000 per customer, per Program Bank, for each account ownership category. Thus, institutional customers are eligible for up to $1,500,000 of FDIC insurance and personal customers are eligible for (i) up to $2,000,000 of FDIC insurance for either (A) an individual account or (B) an account for a revocable living trust in which one person is the only grantor, trustee and beneficiary of the trust (“Individual Revocable Trust Account”) and (ii) up to $4,000,000 of FDIC insurance for either (A) a joint account with two owners or (B) an account for a revocable living trust in which the same two persons are each the only grantors, trustees and beneficiaries of the trust (“Joint Revocable Trust Account”). The total FDIC coverage for a two-person household is calculated assuming that each household member has an individual account and that both household members share a joint account. If the number of Program Banks decreases for a customer (either because a Program Bank is no longer participating in Flourish Cash, because a customer’s cash is not eligible to be swept to a Program Bank based on criteria set by the Program Bank (which will be disclosed at account opening), or because a customer opts out of having their cash swept to a particular Program Bank), the amount of FDIC insurance for which the customer would be eligible through Flourish Cash would be lower. Typically, all of a customer’s deposits at a Program Bank in the same ownership category (including deposits held outside Flourish Cash or held through multiple Flourish Cash accounts with the same ownership category) count toward the FDIC insurance limit for deposits at that Program Bank. Customers are responsible for monitoring whether they maintain deposits at a Program Bank outside of Flourish Cash and should consider opting out of having their cash swept to any such Program Bank to avoid exceeding FDIC insurance limits. Although Flourish Cash is offered through a brokerage account and cash held in brokerage accounts often has the benefit of SIPC protection, until such time as we offer securities products, customers likely will not have the benefit of SIPC protection for cash held in their Flourish Cash account. Further, SIPC protection is not available for any cash held at the Program Banks. For additional information regarding FDIC coverage, visit https://fdic.gov