Interest Bearing Accounts

What types of Interest Bearing accounts does Synapse offer:

  1. IB-DEPOSIT-US nodes
    These are FDIC insured interest bearing deposit accounts held in the end-user's name at our partner bank.
  2. IB-SUBACCOUNT-US nodes
    These are subaccounts held on the end-user's behalf within a platform's fiduciary account. Subaccounts are eligible for FDIC insurance with the appropriate disclosures and account setup. Interest accrued on the fiduciary account as a whole will be distributed among subaccounts as rewards*.

    *Please refer to the disbursement of your fiduciary account's interest as 'rewards' , rather than 'interest'. This is because the interest belongs to your platform's fiduciary account, which is automatically distributed as rewards to end users.

How much interest can I earn?
Initial interest rates are determined while negotiating your contract. These rates are subject to fluctuation as federal interest rates fluctuate.

What limits are placed on interest bearing accounts:
Limit on the number of transactions:
We impose a limit of 6 debits per month on IB-DEPOSIT-US or IB-SUBACCOUNT-US accounts (per Regulation D requirements). Transfers above that limit will will be cancelled. To monitor the number of allowed debits remaining, use the API to GET node, then check the "monthly_withdrawals_remaining" field inside "info".

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Limit on the number of accounts:
Multiple interest bearing accounts are allowed if there is a legitimate purpose for opening more than one savings account, other than increasing the number of transfers or withdrawals. However, users are not allowed to open multiple interest bearing accounts for the purpose of avoiding the 6 debit per month transfer limits stated in Regulation D.

How frequently is interest distributed?
Interest (for IB-DEPOSIT-US) or rewards (for IB-SUBACCOUNT-US) is distributed on a daily basis. Synapse will also track fractional interest and distribute when the fractional interest reaches an integer amount.

What disclosures do I need to provide?
In addition to our standard notifications and disclosures, interest bearing deposit accounts (IB-DEPOSIT-US nodes) will need an interest bearing deposit agreement. Note that this is different than our standard deposit agreement.

Platforms with interest bearing fiduciary accounts (opening IB-SUBACCOUNT-US nodes for end-users) will need to include disclosures within their Terms of Service regarding reward disbursement.

How do users view their 1099-INT Tax Forms?
For IB-DEPOSIT-US nodes, Synapse will generate users' 1099-INT tax forms at the end of the year. This can be accessed via an API call.

For IB-SUBACCOUNT-US nodes, 1099-INT tax forms are not applicable because the end-users are receiving rewards, rather than interest. In this case, Synapse only generate a platform's 1099-INT tax forms for their fiduciary account.

 

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