French startup Lydia is better known as the dominant app for peer-to-peer payments. But the company has been adding more features, such as a debit card, account aggregation, donations, money pots, and more. This week, the company is adding savings accounts thanks to a partnership with French fintech startup Cashbee.
If you aren’t familiar with Cashbee, the company lets you open savings accounts through a mobile app. After connecting your bank account with Cashbee, you can transfer money back and forth between your bank account and a savings account.
Right now, Cashbee partners with My Money Bank for savings accounts. Cashbee doesn’t keep your money; it just acts like a middle person between your bank account and My Money Bank. With those 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 make more interest during the first two months.
The other big difference is that Lydia asks you to put at least €1,000 on your savings account when you open it. If you go through Cashbee’s app, you only have to put in €10 or more. But users can do whatever they want after that when it comes to putting some money aside and withdrawing money from the savings account.
But the fact that Cashbee is seamlessly integrated into Lydia is interesting. It will expose Cashbee to a lot more users as Lydia has more than 5 million users. It’s also an essential feature if Lydia wants to become a super financial app.
This savings feature competes with Livret A, the most overall savings account in France. Everybody can open a Livret A in a retail bank. You get an interest rate of 0.5% net of taxes. On paper, 0.6% is better than 0.5%. But Cashbee’s savings accounts aren’t net of taxes.
If you’re a student and don’t pay any taxes, that’s a better deal. But many people spend 30% in taxes on accrued interests, which means that you end up earning 0.42% in interests net of taxes with a Cashbee account.
But it’s hard to beat the simplicity of Lydia’s solution here. For instance, 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 those savings accounts.