People are paying closer attention to savings accounts after the Fed raised rates more than 5% in less than 17 months. And if you aren’t paying attention to interest rates, you should.
As we all look to identify the best high-yield online savings account options, Raisin has emerged as an intriguing option. As you’ll see, this fintech has partnered with local and regional banks to offer some of the best rates on the market.
But Raisin itself is not a bank. So is your money safe and FDIC insured at all times? And are you going to get adequate customer service?
I’ll answer those questions and more in my Raisin review.
Table of Contents
- What Is Raisin?
- How Does Raisin Work?
- Why Are the Interest Rates So Good?
- Is My Money Safe and FDIC Insured When I Deposit and Withdraw?
- Is Raisin the Best High-Yield Savings Option for You?
- Negative Trustpilot Reviews Center Around Customer Service
- Raisin Review: Pros
- Raisin Review: Cons
What Is Raisin?
Raisin offers customers high-interest options on deposit products such as high-yield savings accounts, high-yield CDs, no-penalty CDs and money market accounts.
It is a fintech company that partners with more than 400 banks in more than 30 countries. Raisin was founded in 2012 but opened for business in the United States in recent years as SaveBetter.com. In June 2023, the company rebranded to Raisin (the name of the parent company).
How Does Raisin Work?
Small and regional banks pay Raisin to send them new customers and deposits in lieu of traditional advertising.
As a result, Raisin is able to negotiate interest rates that are almost always superior to what you’d get straight from those banks themselves.
Raisin does not charge you any fees (although you may face penalties if you’re in a high-yield CD and you break the terms and redeem your money early).
It allows you to, under one user account, spread your money across multiple savings accounts and CDs. You get $250,000 in FDIC insurance at each partner bank that you choose ($500,000 for joint accounts).
So you can secure many millions in FDIC insurance from Raisin while accessing some of the best interest rates available in the United States.
Since Raisin is a fintech company, and an atypical option for high-yield savings accounts, I decided to get first-hand experience with the product. I opened my own Raisin account. I’ll relay my experience with Raisin as I walk you through the steps to using their services.
1. Getting Started
In order to open an account with Raisin, you start by looking through their offers. In my case, I chose Western Alliance Bank and OceanFirst Bank. At the time, they were offering 5.25% interest, tied for the best rates available through Raisin.
You start by choosing a single offer and putting in the amount you wish to deposit. Raisin will ask for your email, a password and your first and last name. It’ll also give you the opportunity to review its terms and conditions.
To use Raisin and access offers with its partner banks, you must:
- Be at least 18 years old
- Live in the United States
- Have a valid Social Security Number (SSN)
You must provide your date of birth, SSN, address and phone number. You also get to choose a joint or individual account.
2. Linking Your External Bank Account
The last step to complete your Raisin signup is to link an external bank account.
Much like other standalone high-interest savings options, including Marcus by Goldman Sachs, you can only fund your Raisin accounts from an existing bank via ACH transfer.
Raisin says these transfers take up to three business days. In my case, I deposited $500 into Western Alliance Bank and $500 into OceanFirst Bank from my Capital One 360 account. My ACH transfer was completed in less than two business days.
3. Choosing More Offers
As of this writing, Raisin features a remarkable 26 partner banks offering at least 5% APY on high-yield savings through its platform.
Assuming you want to spread your money among multiple partner banks, make sure that your deposit amount reflects only the amount you want in a specific partner bank — not the total amount you want to deposit through Raisin.
4. Transferring Back to Your External Bank
One surprise I found while reviewing Raisin: You can’t simply transfer money from one partner bank to another inside of Raisin’s platform.
Perhaps it’s because Raisin pools your money into a single custodial account with other customers (more on that later). In any event, if you want to move your money from one of the partner banks into which you’ve deposited, it’s a one-way street. You can only withdraw to an external bank account.
Withdrawals also take up to three business days according to Raisin. That’s in line with expectations for normal ACH transfers.
If I wanted to, I could withdraw money from Western Alliance Bank to another bank account. Then transfer the money back into Raisin to take advantage of OptimumBank’s 5.26% APY.
Why Are the Interest Rates So Good?
I’ve spent years researching more than 100 savings accounts. I update and maintain an article on the best high-yield online savings accounts.
As of this writing, nine of the banks on that list offer between 4.15% and 4.80% APY. Another five offer 5% to 5.20% APY.
I take into account things beyond interest rates when making my list. I consider fees, for example. And whether a bank seems to be intentionally delaying withdrawals and deposits in order to earn extra interest.
So there are other U.S. banks that offer better than 5% interest that I don’t consider good options. But there aren’t many.
Raisin makes my list of the best high-yield savings accounts by providing 21 different banks with higher than 5.05% APY.
How is Raisin able to make such competitive offers? It may seem “too good to be true,” especially when the banks themselves often offer lower rates to their own direct customers.
You won’t see giants like Discover, Capital One, Marcus or Apple on Raisin’s platform. Because they work with small and regional banks, they’re able to negotiate great rates.
In turn, a bank that’s local to Texas and doesn’t have the marketing budget to spend on national advertisements can rely on Raisin to acquire new nationwide customers for them.
Those banks also don’t have to worry about customer service. When you’re depositing with Raisin, you don’t have a direct relationship with any of the partner banks.
Is My Money Safe and FDIC Insured When I Deposit and Withdraw?
Normally, you open a savings account with a specific bank, deposit money into your account and get paid interest. It’s simple and uncomplicated.
But Raisin is a fintech company and not a bank. Is your money safe when you deposit with Raisin before it reaches the partner bank with which you want to do business?
We’ll get into the way your money moves within Raisin. But know that your money is FDIC insured from the moment you initiate a deposit from an external bank until the moment you withdraw from Raisin back to an external bank.
That’s assuming you stay within normal FDIC limits ($250,000 for an individual account with a single partner bank).
How Does Your Money Move From Your External Account To Raisin’s Partner Bank(s) and Back?
So if you’re not forming a direct relationship with the banks that are paying you interest on your savings, is your money safe? And how does that even work?
- When you deposit “with” Raisin, you’re actually depositing with a service bank (for high-yield savings) or a custodial bank (for CDs and money market accounts).
- So if you deposit with Optimum Bank via Raisin, your money goes straight to Raisin’s service bank — Central Bank of Kansas City.
- Raisin’s service bank funds transfer agreement says: “The [service bank] is designed so that your deposits will receive deposit insurance by the FDIC or share insurance by the NCUA, as applicable, up to the maximum amount permitted by law: (i) while we hold your funds in connection with a withdrawal and (ii) when your funds are held at any Product Bank.”
- In other words, when you make a deposit, your money goes into a bank that Raisin works with to provide FDIC or NCUA insurance at all times. There’s no such thing as a “Raisin account,” since Raisin itself is not a bank. As an entity, Raisin itself never holds your money.
- The service bank completes the ACH transfer to the product bank (for example: Optimum Bank).
- At the service bank and at the product bank, your money gets pooled into a custodial account with other customers. In other words, if 100 customers each deposit $1,000 into Optimum Bank via Raisin, all their money goes into a single account with a $100,000 balance.
- When you initiate a withdrawal, the process reverses.
What Happens to Your Money if the Partner Bank Fails or if Raisin Shuts Down for Any Reason?
If you deposit money into Optimum Bank through Raisin and Optimum Bank fails, you are still covered by FDIC insurance. It’s the same as it would be if you opened an account with Optimum Bank directly.
If Raisin goes bankrupt, shuts down or otherwise vanishes from the internet, you’re still covered. The partner bank still has records of your account. Raisin shares customer positions and balances with partner banks daily.
This all may sound complicated if not outright sketchy. But it’s no different than banking services from other popular fintech companies. And it’s also no different than banking through money expert Clark Howard’s favorite discount brokers.
“I have no problem with [not having a direct relationship with your bank],” Clark says. “If you do CDs placed through Schwab, Fidelity or Vanguard, you don’t have any relationship with the banks.”
Is Raisin the Best High-Yield Savings Option for You?
There are some drawbacks to doing business with Raisin. It’s not a traditional banking experience.
But if you want to squeeze out an extra 0.25% to 1% APY a year over what I consider to be the other best high-yield savings account options, it’s a legitimate choice.
You aren’t in a direct relationship with the bank or banks that pay you interest if you’re a Raisin customer. So you will only log into Raisin. You won’t log in via the bank’s own website or app, and you won’t have access to that bank’s customer service department.
I’ll look at Raisin’s customer service in the next section. But you also won’t have access to bill pay. You won’t have an account number or a checking account.
If you want to withdraw your money, you’ll have to wait the stated three business days for an ACH transfer into an external bank account that you control.
Here’s what Raisin offers you:
- Maximize the interest you earn.
- Pay $0 in fees of any kind.
Just as an example, an extra 0.50% APY on $100,000 represents $500 a year. You’ll have to decide for yourself whether the nontraditional experience is worth the extra yield.
In Clark’s opinion, it may come down to how adept you are at navigating potential customer service friction points.
“I love taking chances with places like that if you’re getting a better deal,” Clark says. “But there are a lot of people who when they run into a roadblock just don’t know what to do.
“And some of these consumer complaints, people just don’t know how to deal with customer no service at all.”
Raisin vs. IntraFi Network: Similarities?
Earlier in 2023, a series of high-profile bank failures made headlines.
Clark spent a lot of time explaining FDIC insurance. Bank failures are only dangerous if you have more than $250,000 on deposit in a single FDIC-insured account.
Some individuals need more FDIC insurance than that. Clark’s long-time recommendation is called IntraFi Network Deposits. Formerly called CDARS, it allows you to get millions of dollars of FDIC insurance through one user account.
In that case, you’re sacrificing the best interest rates for the peace of mind that huge cash balances are safe and FDIC-protected.
Raisin offers a similar service. But whereas IntraFi Network has a proven track record, Raisin is new.
“The thing with Raisin is that you’re relying upon them to do what they say they’re going to do to place the money with FDIC-insured or NCUA-insured institutions. And that they have their customer service act together,” Clark says.
“So that’s what makes them different [than IntraFi] is that they’re about the best rate. But you’re trusting them to do what they say they’re going to do.”
Negative Trustpilot Reviews Center Around Customer Service
Clark pointed out that Raisin’s Trustpilot reviews aren’t the best.
As of this writing, Raisin gets an average Trustpilot score of 3.8 out of 5.
The positive reviews mostly focus on the great interest rates. And the negative reviews are sour on Raisin’s customer service or the time it takes waiting for ACH deposits and withdrawals to complete.
“When I read the complaints about Raisin, people are so [mad],” Clark says. “It’s unreal.”
Keep in mind the Trustpilot reviews include a relatively small sample size of 71 all-time ratings. Raisin also holds an A- rating from the Better Business Bureau.
Some of the specific complaints mention extended wait times on the phone and a lack of proactive followup by Raisin’s customer service team.
Raisin’s customer service phone number is 844-994-3276. They’re available Monday to Friday from 9 a.m. to 4 p.m. ET. You can also email Raisin at [email protected].
Raisin offers a chatbot on its website. It seems mostly like an automated, interactive FAQ. But during business hours, I was able to get to a prompt that said “share a few details and I’ll have a member of the team respond.”
Raisin Review: Pros
During my Raisin review, these are the strongest advantages that I found:
- Superior interest rates. The sheer volume of high-yield savings account options that Raisin offers at or near the very top of the market is impressive.
- Simplification. You can manage one login and password and get access to a dashboard with many different banks and deposit amounts. That includes high-yield savings, CDs and money markets. That’s easier than managing different logins across different banks. You also get a single 1099-INT at the end of the year for your taxes.
- Additional FDIC insurance. At a typical bank, you’re getting $250,000 in FDIC coverage. You can access nearly unlimited FDIC insurance with Raisin by spreading your money across different partner banks.
Raisin Review: Cons
During my Raisin review, these are the biggest weaknesses that I found:
- Unclear quality of customer service. Raisin is new. As with most new fintech companies, their customer service doesn’t have a solid reputation just yet. If you run into a snag, you may need some level of determination and consumer IQ to navigate to a solution.
- Deposits and withdrawals take time. You’re relying on ACH. So you can expect it will take two or three business days to make transfers. Also, you can’t transfer from one Raisin partner bank to another. You can only deposit via an external bank.
- No direct relationship with banks. This is an atypical banking experience. Your money is safe and FDIC-insured. But you aren’t a customer of the bank paying you interest in a normal sense. You’re relying on Raisin for customer service.
- Limited options. You can’t open a business account with Raisin. You also can’t connect your savings within Raisin to a third-party money or budgeting app.
Final Thoughts
I’ve had a good experience doing business with Raisin. I didn’t experience any issues with my deposit. I’m earning monthly interest as expected. I like that I can get better interest rates with Raisin than I can through my other favorite high-yield savings account options.
However, as you can tell from my Raisin review, whether it’s right for you requires a value judgment. Is squeezing out a decent but modest amount of extra interest worth it to you? Or are the potential customer service hassles and other limitations not enough to offset the extra interest?
Let us know by joining the conversation in our Clark.com Community!
