[Negative Changes] Yotta Savings Review: Get Steady Interest + Lottery Chances At Big Win

Update 3/12/24: More negative changes are coming. This works out to be an effective rate of ~2.2% (with the bigger prizes included) not worth considering at all anymore and hasn’t been for some time.

Update 12/1/22: More changes are coming December 12, 2022. According to the F.A.Q this will work out to be 2.7% APY. Not competitive with current rates.

Update 9/27/22: Somebody has won the grand prize so winning rates have been improved. APY when you include all prizes is 2.22%.

Update 8/12/22: With interest rates increasing Yotta has made the decision to negative devalue the lottery program by:

• Completely eliminated the prize for matching 3 number
• Completely eliminated the prize for matching 4 numbers
• Completely eliminated the prize for matching 5 numbers
• Slashed by 50% the prize for matching the Yotta Ball
• Slashed by 33% the prize for matching one number and the Yotta Ball
• Slashed by 66% the prize for matching two numbers and the Yotta Ball
• Slashed by 80% the prize for matching three numbers and the Yotta Ball

Negative changes don’t really make any sense considering the current rate environment. They are increasing the second prize and reverting to all the old program once this prize is hit.

Hat tip to reader S

Update 2/8/22: The Swagbucks/MyPoints offer for Yotta has doubled to 2000 SB/3000 MP; requires $10+ deposit. Hat tip to RobertL

Update 1/18/22: Reader Davis notes: Yotta now has crypto buckets that give tickets for every $10 instead of every $25 for an implied average APY of 4%. Money is converted to USDC. https://www.withyotta.com/crypto-buckets

Update 9/21/21: Yotta is now on Swagbucks/MyPoints for 1000 SB/1500 MP for depositing $10+. Hat tip to Davis

Update 4/29/21: They’ve now reduced the tickets for balances above $10,000. Hat tip to readers Dan and Jeremy

Update 3/21/21: They changed the odds now, but overall it’s about the same APY. Hat tip to reader Mark

Update 12/4/20: They’ve now decreased the number of tickets you get to 1 per $150 in deposits versus the prior 1 per $25 in deposits, so it’s 1/6 as valuable now. This change is only for balances above $25,000; your first $25,000 in balances will continue to get 1 ticket per $25 deposited (even if your overall balance is higher than $25,000). This change will take effect for weekly drawings starting Monday, December 14, 2020. Those who have less than $25,000 in total deposits are not affected at all by the change. (ht to readers Jonathan, Billy, Noah)

Update 9/19/20: Yotta has sent out an e-mail stating the number of balls that the Yotta ball will be drawn from increases from 25 to 63. If prizes stay the same value then the expected APY will be reduced from 2.55% to 1.62%. We don’t know for sure how bad this reduction will be as they haven’t released the new prize list yet, but not a good sign. Hat tip to Mark

Original post 7/10/20:

Reader Jon reached out with a unique savings account called Yotta Savings, discussed on Y Combinator. They offer an FDIC-insured savings account which has a current earn of .2%; not exciting on its face. But they also offer lottery wins to earn much more based on how much you save which offer prize amounts as varying amounts – as low as $.10 and up to $10M.

For each $25 of savings you get a chance at winning big or little amounts from the lottery. Even if you don’t win any of the big prizes, the small prizes – on average – will significantly increase your actual return.

There’s an estimate that currently – during the launch phase – you should get around 3% APY return on your deposits after combining the regular .2% interest rate with the lottery earn. This is just an average; you may earn more or less. (Update: some in the comments have higher estimates of more like 4% or 5%. I haven’t crunched the number myself.)

The psychology behind Yotta is that people prefer having a chance at a big win, while keeping their base funds secure, rather than having steady smaller wins. They note similar programs in the UK which are wildly successful.

From a tax perspective, they say that lottery earnings under $600 do not get reported, and over $600 will get a 1099MISC. The actual .2% interest would be reported separately on a form 1099INT, presumably. (Update: the founder added on the Y Combinator thread that the .2% interest will count toward the 1099MISC $600 threshold. Doesn’t make any sense to me, but who knows.)

My guess is that this will be interesting to do for the time being while the lottery rewards are being subsidized by investors since you’ll hopefully end up with a return of ~3% which is better than almost any bank offers right now. In the long run it likely won’t be all that worthwhile as the rates will likely drop to be even with traditional high interest banks, according to what they are hoping/planing as of now. Maybe some will find it worthwhile in the long term as well.

I found it interesting from a quick look, and figured I’d put out this short review and let readers explore further for themselves whether its worth doing.

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