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New 2-4% Liquid Savings Product/Linked To A Bank

rhutnik | | 35 posts since 2017

Not really sure what this is but I'll leave this here: https://meetbeam.com/

How are they able to distribute 2-4% yields on liquid cash?

MidAtlantic | | 96 posts since 2012
Reading their website they say 2%APY guaranteed plus "you can earn 4%APY if you use other (free) features offered by the Beam mobile app". It appears to be a straightforward FDIC insured deposit account.

It also appears that all you can do at this point is join a waiting list.

Looks like we need Ken to do some investigation!
Ken Tumin
Ken Tumin | | 5,935 posts since 2009
Thanks for the news. I'm investigating now.

It may be another fintech company that's trying to be the next SmartyPig. Their interest rate promise does appear "too good to be true". I'm sure there will be a balance cap.
midas89 | | 12 posts since 2017
I read that they are initially considering a balance cap of $50,000 to $150,000 and that they stated it will depend on how things go with their set-up. Of course, if they do come into existence they might decide to start with a cap that is lower than what they first were thinking they could do.
me1004 | | 589 posts since 2010
First, the interest you will accrue is 2.0% APY, the guaranteed minimum. You only get more if you use certain services they offer, which are not listed, but it sounds similar to an account that gives a higher interest if you make a certain number of debit card purchases a month, such as a rewards checking account.

It says your money will be FDIC insured in a bank. But it does not name that bank.

They call Beam a platform. It sounds like an independent who has come up with some kind of software to process the money, and reached a contract with some bank for the rate based on the expectation of a large deposit from Beam. That is, it sounds like Beam is basically pooling everyone’s money into a huge deposit with which they can negotiate a higher rate. But I note, at the same time, the arrangement is that you are individually FDIC insured up to the normal $250,000 level.

Beam has not yet started, they are now taking names for their wait list. They will launch later this year, and with only 20,000 depositors to start. They say that will be a beta test to get any kinks out.

They say it is free, no fees, and will be free permanently. That might be so, but in reality it only means that those who start their accounts under that policy will be free permanently, they can change that at any time so new depositors do not have that permanent guarantee of no fees — an enticement to get in up front before that changes. So those first 20,000 will get that guarantee; what the rules are for subsequent depositors remains to be seen.

Beam will be operating under federal and California law, and it says any legal matters will be handled in court in San Francisco. But note, it says it has no responsibility or liability for anything said or done by a third party linked to from the Beam Web site. That language would include whomever this bank is, yet we don’t know who that is.

The Beam page has a block where in large lettering it says:

Trusted by our premier sponsors
IDG Capital

Who knows what that means. However, at another Web site, I see IDG Capital is a Chinese investment firm with various subsidiaries. They have so many names floating around, it can be difficult to follow it, but apparently IDG Ventures is in there somewhere. IDG Ventures is headquartered in San Francisco. In 2009, IDG Ventures China was renamed IDG Capital Partners.

So, this seems to be a Chinese operation, and there are subsidiaries in various countries, including India, South Korea and Vietnam.

They reserve the right to suspend or terminate your account at any time and without explanation. So, you might not be in this for the long run - it most likely depends on whether the beta works out.

The method to withdraw your money takes 1-2 days “to your checking account.” It doesn’t make clear whether it offers a checking account or offers only this savings account. It speaks in language that suggests you should link to an outside bank account. So I believe the way you withdraw is to ACH your money to the other linked account, and it says it takes 1-2 business days to transfer the money. So, you will never have instant access to your money, it will take at least 1-2 BUSINESS days.

It says everything is done electronically. I don’t see any way to phone them over an issue.
Ricochet | | 316 posts since 2010
cough cough Madoff ?
me1004 | | 589 posts since 2010
I find myself wondering if what this is is a brokered account, as might be common when a third party handles your account. Or is it one lump-sum amount Beam deposits in its account at that FDIC insured bank, and Beam on its side keeps track of what portion of that is YOUR account with them, as a mutual fund would do.

If similar to a mutual fund rather than a specific bank account for you, the FDIC insurance might not cover you, it might only cover Beam. If so, then if Beam goes bankrupt, your deposit could be lost, although I would have to think at least a good portion of it would be liquidated and returned to you via expensive bankruptcy proceedings and a lot of time.

I certainly hope that your money is being put in that bank in a separate account in YOUR name, not in Beam's name. Beam does not tell such details at its Website, simply says the money is FDIC insured. But it does appear that you must do you transactions through Beam, not direct with that bank.

Details, details. And be careful, the devil can be in the details.
midas89 | | 12 posts since 2017
If one takes the term "FDIC Insured" literally in this specific case, and if Beam's claim that our money is FDIC insured with this Beam account is totally honest, it would have to be that Beam is putting our money in our specific names at the bank or banks they decide to deal with. If the FDIC was just covering Beam only, they'd only be covered to $250,000, of course, unless they added beneficiaries or made it joint accounts...and it would be way too many people to do that.