‘They claim the funds are non-existent’: Over 85,000 Americans are unable to access their savings accounts, with over $100 million frozen. Learn how to protect your money during bank tech disruptions.A high-yield savings account is typically a secure place to store funds and earn interest. However, for many Americans, this is not the case as thousands have been locked out of their accounts since May 2024. Numerous bank customers have been unable to withdraw their money, resulting in over $100 million being effectively frozen, as reported by ABC 7 Eyewitness News.
Konstantin Tarnorutskiy is one of the affected bank customers who had been utilizing the Yotta fintech app to deposit money into his high-yield savings account backed by FDIC-insured Evolve Bank & Trust. The Yotta app offers users the chance to win prizes by saving money, a feature that appealed to Tarnorutskiy.
A legal dispute between Evolve Bank & Trust and Yotta has led to the current situation. Yotta accuses Evolve of withholding customer deposits, while Evolve blames the financial collapse of Synapse Brokerage, a third-party service responsible for transactions between fintech apps and banks, for the missing funds.
Despite efforts by Evolve to return funds, the whereabouts of the missing money remain unclear, leaving customers like Tarnorutskiy and Zack Jacobs frustrated and without access to their funds. Evolve emphasizes that efforts to locate the missing funds are ongoing.
To protect your savings during such incidents, it’s essential to stay informed and consider diversifying your accounts across different institutions. Keep a close eye on your transactions and promptly address any discrepancies to safeguard your financial assets.
High-yield savings accounts offer a low-risk way to grow your savings with interest for short-term needs. However, recent events like the Yotta/Evolve situation emphasize the need to understand the limitations of fintech apps and HYSAs. To safeguard your money and address any issues that may arise, consider the following steps:
1. Work directly with your bank: While some fintech apps work with traditional banks, they lack the same protections. Open accounts directly with established banks to avoid potential risks associated with third-party intermediaries.
2. Understand deposit insurance limits: The FDIC insures deposits up to $250,000 per depositor, per insured bank, but coverage may be complicated with third-party services. Verify if your funds are held at an FDIC-insured bank and stay within the insured limits.
3. Diversify your savings: Avoid keeping all your money in one bank or app. Spread your savings across different financial institutions to minimize risk in case of financial troubles with one.
4. Know your rights and act promptly: Monitor your account regularly for any issues. Contact customer support immediately if you encounter problems and document all communications. If the problem persists, consider reaching out to the FDIC, CFPB, or state banking regulators.
While high-yield savings accounts at reputable banks are generally safe, it is crucial to understand how and where your money is secured. By being cautious with apps, adhering to FDIC insurance limits, and monitoring your accounts closely, you can better protect yourself from potential losses. Remember that the information provided in this article is for guidance and does not constitute advice, and it is provided as-is without any guarantees.
