My name is Adam, and I’m a co-founder at Yotta (YC S20), an app that uses behavioral psychology to help people save money by making saving exciting.
We built a feature on Yotta where you can earn 9.62% APY via US Treasury I Bonds. (https://www.withyotta.com/i-bonds)
This is an absurd yield for a security that is backed by the full faith and credit of the United States Government - the strongest guarantee you can get. For comparison, most high-yield savings accounts with FDIC coverage are paying ~2%.
The backstory:
I Bonds were established by the US Treasury in 1998 to provide returns linked to inflation to protect consumer purchasing power. The rate on I Bonds is determined from the last six months of CPI data and is adjusted twice per year. Inflation is typically around 2% per year, so I Bonds have never been relevant since the rate was never that attractive.
Inflation spiked in 2022 driving I Bonds reached a record high yield of 9.62% APY. If you buy them by October 31st, you lock in this rate for six months from the purchase date. In the last 12 months, around $27B has been deposited as a result of the insanely high yield. This compares to $348m in 2020. Note that you have to hold I Bonds for at least a year and you forgo 3 the last three months of earned interest if you redeem before five years. You can deposit a max of $10k into I Bonds per calendar year.
So if you can get 9.62% APY on a government backed security when savings accounts are yielding 2%, why doesn’t everyone have I Bonds?
A few reasons.
1. Most people have never heard of them.
2. People don’t want to tie up cash for a year in a CD-like product.
3. The only way to buy I Bonds has been on the world’s worst website, Treasury Direct. You have to fill out long forms, click on a virtual keyboard to type your password, can’t use the back button, and make one mistake and you get locked out of your account. The whole thing is a colossal pain in the ass.
To solve 1) and 3), we wrapped an easy-to-use UI to buy I Bonds within Yotta. Users opt into Yotta creating a Treasury Direct account on their behalf, and we automate the painful part - interacting with Treasury Direct on the backend. This enables us to provide a great customer experience, making it easy for people to get the 9.62%. If anyone wants to control their Treasury Direct directly without Yotta, they can request it, and we will transfer over their account to no longer be managed by Yotta.
Hope you guys check it out and can take advantage of the 9.62% rate before 10/31! Note that if you already have a Treasury Direct account, we are unable to support you for I Bonds unfortunately.
Happy to answer any questions and looking forward to any feedback.
P.S. We were featured in Bloomberg for the launch last week if you want to check that out https://www.bloomberg.com/news/articles/2022-09-28/buying-i-bonds-there-s-an-easier-way-to-earn-9-62-interest
by Andrey
Azimov