This post was updated on 7/23 & 24. I heard back from Beam and have provided their answers to my questions.
There’s a new FinTec app that’s getting some buzz right now called Beam. Beam is a high interest rate bank account that’s promising 2 – 4% APY and if that’s true then this will be a very successful product because most of the big banks offer are currently offering less than 1% APY.
I’m calling this post a ‘review’ of the service, but it’s really a sneak peek since the service doesn’t actually launch until later this year. Before it launches, and before I deposit any of my cash with Beam, I’ve got a few questions.
Table of Contents
WHAT IS BEAM
Beam is a high interest rate bank account that pays a guaranteed high interest rate of 2 – 4%. The service promises:
- Zero fees
- FDIC insurance
- 24/7 access to your money (i.e. this isn’t like a CD where your money is locked up for an extended amount of time)
This 60 second video from Beam does a good job of explaining the service.
WHAT BEAM IS NOT
Is Beam a traditional checking and savings account? Will it be connected to a debit card? Can I write checks out of this account? What about bill pay features and direct deposit?
The answers to these questions aren’t on the Beam website, so I reached out to them and have received some answers. Here’s what I found out.
“Beam is not meant to replace your primary checking account,” according to the Beam Team member that I’ve been working with. Instead it is a “higher-earning supplementary account.” When Beam launches in Oct. 2017 it will simply be an online bank account where you can park your cash and earn 2-4% APY. Nothing more, nothing less.
- Beam is NOT a traditional checking or savings account
- You won’t be issued a debit card or a check book
- Direct deposit isn’t available
- Bill pay isn’t available
Features normally associated with traditional bank accounts could be part of Beam’s future if there is sufficient demand for them. Note: the Beam Team is keeping an eye on this blog post for feedback, so if you’ve got questions or requests, feel free to leave them below in the comments section.
The sole point Beam is to give you a place to park your cash where it can earn a high interest rate. You can transfer funds from Beam back into your checking and savings accounts as you need access to your money. Beam will connect to all of the major banks and credit unions, meaning you’ll have access to your money 24/7 (the money transfer process can take up to 24 hours).
IS BEAM LEGIT
It’s no secret that I’m in a hurry to Get Rich Quick’ish and having my cash earn 4% is a hell of a lot better than the 0.75% I’m getting from CapitalOne. It almost seems too good to be true.
Beam has come out of nowhere and other than their own website, there isn’t a lot of information about Beam or their service available anywhere that I could find. I’m officially in the Cautiously Optimistic camp, but when some of the very best checking and savings account interest rates you can get today are less than 1% then I think it’s normal to have a bit of skepticism.
The Beam FAQs do a good job of answering many questions, but not all of them. So I reached out to the Beam Team (twice now) with the following questions.
I’d hoped to hear back from them before publishing this post, but they’ve not gotten back to me yet, so my questions remain unanswered for now. I’ll update this post if/when the Beam Team gets back to me or provides this information on their website. I heard back from Beam on 7/23; their answers to my questions are below.
QUESTIONS ABOUT BEAM
According to the Beam website, “Beam customers will receive a 2% APY guaranteed base rate, but that can climb up to 4% “if you use other (free) features offered by the Beam mobile app.” What are these free features and how must they be used to get (and maintain) the higher interest rates? Is there a chart that shows how the rates ladder up based on app usage?
Beam’s answer: “While we can’t reveal too many details about the new features yet (since we’re releasing the mobile app end of Oct, that would ruin the surprise factor :-p), what I can share with you is that they are free-to-use, “daily engagement” features. The core design principle set by our product designers is to give the highest APY rates–and the best deals–to the most active members (early evangelists) of our user community. I can also share with you that these are easy-to-easy features that place every user at equal footing, regardless of how many friends s/he has or how much money s/he can deposit with Beam. We know out there many other banking products put users through a lot of hoops; at Beam we don’t like that and would try our best to steer away from that.
My thoughts: From a business perspective I understand wanting to withhold details of a product launch in order to maximize impact, and to maintain a competitive advantage, but as a potential user of Beam, this is a non-answer.
We still don’t know what these free app features are, how they must be used (and how often), and how your APY will rise and fall based on app engagement. What we do know is that the minimum APY a person will get is 2%, regardless of their activity level with the app. 2% is more than double what I get today from my checking and savings accounts, but I’m not in love with the idea of needing to “engage daily” with my banking apps just to get a higher APY – especially if that daily engagement ends up being intrusive (like sharing a link, referring a friend, etc.).
Is there a main bank that is backing Beam? If so, which one?
Beam’s Answer: “As you already know from the FAQs on our wait list site, Beam partners with a US bank that has been operating (profitably) for decades. We are under strict confidentiality with our banking partner so are restricted to release their name until we launch, but rest assured you will have the name of the bank come October.
My thoughts: Again, I understand the need for confidentiality with business partners, but this is another a non-answer. Beam makes a point to call out that they can offer higher interest rates because, in large part, the big banks are just greedy. How then does Beam’s banking partner feel about their profits being undercut by Beam? Is Beam paying a kickback to this partner to make up for that lost revenue? Honestly, this raises several more questions, but until the service launches, I doubt there will be many answers.
What is Beam’s FDIC certificate number?
Beam’s Answer: “All banks in the US are required to have FDIC or equivalent coverage, so you’ll be able to look up the bank’s FDIC certificate number at that time.”
My thoughts: I’m not liking these non-answers.
Is there a minimum or maximum amount required to get 2-4%? Is there a max account balance for those that qualify for the 7% APY
Beam’s answer: “There is no minimum with Beam. We don’t like the concept of discriminating APY rates you receive by account balance you have, because we believe that’s not fair and is against the principle of promoting financial equality. Depending on the popularity of our wait list from now until our expected beta release starting from Oct 31, the account maximum will likely be somewhere between $50,000 – $150,000. Where it lands will depend on whether we want to serve more or less customers for our initial beta release, but we will make it crystal clear when your Beam account goes live. Meanwhile, if you have any particular feedback on what should be the appropriate setting here, please let us know and we will be sure to relay your feedback to our product people. :)”
My thoughts: So no minimum account balance, but there will be a TBD maximum that ranges from $50,000 – $150,000. This answer doesn’t specifically address the question about the lucky people that qualify for the 7% APY for the first 100 days of their account’s life, but I’m assuming the max balance will be the same for everyone, regardless of the APY you’re earning.
Thanks to the Beam Team for responding to my repeated questions. While I’m disappointed that they didn’t provided concrete answers to each question, I suppose I understand their reasoning; however, the lack of answers leaves me feeling a bit hesitant. I’ll need more details before I transfer any of my money into a Beam account.
So until Beam’s service is up and running it’s impossible to say with any degree of certainty how things will shake out. I’d feel a whole lot better about things if I could get some answers to these questions, but until then I’m holding out hope that this service pans out and that Beam delivers on their promises.
That’s why I’ve signed up with Beam to reserve my place in line, because if and when these answers do come to light I want to be able to take full advantage of these great interest rates as soon as possible.
Beam is launching to a limited audience in October 2017. If you want to get in early as well then you can sign up for Beam here.
Are you skeptical? If so, what questions do you have? Are there features you’d like to see from Beam? What are they? What APY do you get today on your savings account? My guess is that 2-4% would be significantly better. Are you going to secure your place in line?