Donut savings review

Earn at least 5% APY with this beginner-friendly DeFi savings account.

finder.com’s rating: 4.0 / 5.0

★★★★★

Donut is a DeFi savings account that strictly accepts deposits in US dollars (USD). Choose to earn a 5%+ savings rate from stablecoins, DeFi protocols or a combination of both using decentralized finance — also known as DeFi.

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Details

Intro or bonus offerEarn an additional 1% APY for 30 days for each of the first six referrals you make.
Deposit MethodsWire transfer
Supported cryptocurrencies1

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Expert review

Donut is best for crypto beginners looking to reap the benefits of cryptocurrency without buying coins. This app doesn’t require much know-how about cryptocurrency to earn strong yields, and it’s designed with a user-friendly, intuitive interface. Your Donut account works by letting you deposit and withdraw in US dollars, and then converting your US dollars into the stablecoin USDC.

Depending on your balance, you can earn 5% or 6% APY. Donut leverages cryptocurrency to offer APYs almost 30 times higher than the national savings account average of 0.17%. A Donut rep also confirmed that they’ve seen 24-hour APY boosts as high as 40% APY on top of the user’s existing interest rate. If you’re earning a 5% APY with the Save plan, a +40% APY boost would mean earning 45% APY for 24 hours. A one-day boost might not seem like much, but when you consider that Donut calculates and pays interest four times per minute, you could earn a pretty penny.

However, unlike traditional high-APY savings accounts, Donut isn’t FDIC-insured. Instead, the account backs its funds through big-name lending partners like Wyre and Genesis. You also won’t be able to open an account if you live in New York because of New York cryptocurrency laws, a downer that Donut is keeping an eye on.

How Donut works

Donut currently offers two plans — Save Basic and Save Upgraded. Both plans automatically take your money in USD and convert it to USDC, a fully-backed stablecoin pegged to the US dollar. Once you have an account minimum of $5,000, you can switch your plan to the upgraded Save plan in the Donut app and start earning the higher APY immediately.

Donut takes your digital dollars and lends them at high interest rates on the global, decentralized markets on platforms like Wyre and Compound. You’ll earn a fixed 5% APY on its basic option and 6% APY on its upgraded plan, and your interest accrues every second of every day. Plus, with no commitment or lock-in periods, you can add or withdraw money anytime.

Donut also plans to offer two additional plans — Build and Donut X — in 2022. You could earn up to 10% APY, but these plans are reserved for accredited investors.

How do I open a Donut account?

Sign up for a Donut account in about 5 minutes to start earning your savings rate.

  1. Go to the provider’s site and follow the steps to apply.
  2. Enter your phone number, then select Get started.
  3. Check your phone for a text from Donut and follow the link to download the app.
  4. Follow the instructions to open and link a funding account like Plaid or a bank account with your routing and account numbers.

Eligibility

You must be at least 18 years old and a US resident to apply for a Donut account. Due to state regulations, New York residents are not currently eligible for Donut.

Required documents

You must provide personal information to open a Donut account.

  • Full name
  • Date of birth
  • Email address
  • Phone number
  • Physical address
  • Driver’s license
  • Social Security number

5 benefits of Donut

  1. High APY. The starting APY is 5% on its basic plan. When Donut X launches later this year, accredited investors will earn 10% APY. This rate would be among the best APY we’ve seen on crypto savings accounts that accept USD deposits only, though you can find other stablecoin accounts with a higher APY.
  2. Earn higher rewards with APY boosts. Donut offers promotional APY boosts throughout the year.
  3. No fees or staking. Donut doesn’t require fees or a minimum balance unless you upgrade your plan. Unlike crypto savings accounts like Yield, Nexo and Crypto.com, Donut doesn’t require you to stake or lock away assets to earn its maximum APY.
  4. Automatic roundups. With Donut‘s Collect feature, round up purchases from linked cards or accounts and deposit the difference to your Donut account. You can accelerate your savings by enabling 2x, 5x or 10x multipliers.
  5. Referral bonus. Donut offers a 6% APY bonus on top of your current APY for any referral. The bonus lasts for six days after the person you referred makes their first deposit, and your referral bonuses are stackable.

How much you could save with Donut Collect

See how example amounts that you could save with Donut‘s Collect feature, which rounds up your debit or credit card purchases to the nearest dollar and deposits that amount to your Donut account.

Purchase amountRoundup amountMultiplierAmount deposited in to savingsTransaction total
$1.50$0.501x$0.50$2.00
$1.50$0.502x$1.00$2.50
$1.50$0.505x$2.50$4.00
$1.50$0.5010x$5.00$6.50

4 potential drawbacks of Donut

  1. Deposit minimums. Donut accepts deposits of $10 or more, barring smaller transactions.
  2. Limited ways to fund your account. Donut lets you fund your account through bank transfers or by using Plaid. While you can use your debit card as a payment method on its round up program to invest the difference, you cannot fund your account directly via your debit card.
  3. Not available in New York. Donut is not available for residents of New York due to state regulations around DeFi.
  4. Need to avoid overdrafts with the roundup feature. Before choosing a multiplier to boost savings, make sure that your linked account has a high enough balance to avoid Donut withdrawing more than what’s available.

Compare to other crypto savings accounts

See how Donut stacks up to competitors, looking for their rewards rates and how many cryptocurrencies are supported.

1 - 2 of 2
Name Product Supported cryptocurrencies Insurance Offer
Crypto.com Earn
Crypto.com Earn
40+ cryptocurrencies and stablecoins available
N/A
Earn top-tier APYs on more than 40 cryptocurrencies and stablecoins. Not available in New York and not FDIC insured.
Nexo Earn
Finder Rating: 3.8 / 5: ★★★★★
Bonus
Nexo Earn
34+ Supported cryptocurrencies
$10 in BTC after deposit worth $100
This account accrues up to 16% APY on crypto, and interest gets deposited into your account on a daily basis. Not FDIC insured.
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Compare up to 4 providers

How Donut protects your money

Like all crypto savings accounts, Donut account balances aren’t insured by the FDIC, SIPC or any other regulatory body. Donut partners with the FDIC-insured Evolve Bank to hold your virtual currency in a digital wallet until you want to access it, but federal guidelines do not cover virtual currency.

Like a traditional bank, Donut borrows money deposited into its accounts to lend to regulated lending partners like Wyre and Genesis. You earn a portion of the interest a vetted borrower pays on the loan as an APY.

Donut‘s transparent about its reliance on methods designed to protect the money in your account. Overcollateralization is one such method, which requires borrowers to put up a large amount of collateral — from 1.25 and up to 2 times the amount they are looking to borrow — before approval.

There’s still risk, but because of the high collateral, your original balance is protected theoretically. In the event of a price crash, Donut can liquitize or sell the collateral provided by the borrower, converting the stablecoin DAI back to USD to cover your balance.

Donut accounts are encrypted according to AES-256 standards, and the app requires two-factor authentication to access your account.

How do I deposit or withdraw my money?

The only way to move funds into or out of your Donut account is to initiate an ACH transfer from a linked checking or savings account. This kind of transfer can take one to five days to complete.

You also have the option to automate recurring deposits.

How to contact Donut about my account?

Contact support in three ways.

  • Call 213-377-2982 on weekdays from 9 a.m. to 6 p.m. PT.
  • Email support@donut.app.
  • Reach out via social media. You can find Donut on Twitter, Instagram, LinkedIn and TikTok.
  • Reach out to a rep in the Donut app.

Crypto savings ratings

★★★★★ — Excellent

★★★★★ — Good

★★★★★ — Average

★★★★★ — Subpar

★★★★★ — Poor

We analyze top crypto savings accounts and rate them one to five stars based on factors that are most important to you. We rate accounts by these factors: highest potential APY, staking requirements, and how often interest is paid.

Read the full methodology of how we rate crypto savings accounts.

Disclosure: The writer owns a range of cryptocurrency that includes DAI and USDC.

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