Step, a neobank serving teenagers and young adults, now offers high yield savings of 5% on balances of up to USD 250,000 held at its direct deposit accounts. In order to be eligible, customers are required to deposit a minimum of USD 500 per month. 

In addition, the company launched an enhanced rewards program for clients who qualify for the 5% savings feature. It gives users 3x points for select merchant purchases, 2x points for dining out, food delivery, and charitable donations, and 1x points for entertainment spending.

Analyst QuickTake: The US Federal Reserve has raised interest rates since 2022 to combat inflation, but banks have been slow to pass on the benefits in terms of higher savings rates to customers. As a result, customers have been transferring their funds to money market funds in search of better yields and as a precautionary measure following the collapse of Silicon Valley Bank . Nevertheless, both traditional banks and neobanks have started offering higher-yield savings accounts to attract customers and deposits. In April, Apple launched a savings account that offers a 4.15% APY, while Step claims that the 5% yield it offers is 12x more than the national average.