Varo Bank Savings Review (2026)
Quick take: Varo Bank advertises up to 3.75% APY on savings (checked September 25, 2026), but only on the first $5,000, and only if you meet two conditions monthly: $1,000+ in qualifying direct deposits and a positive month-end balance in all Varo accounts. Above $5K (or without DD) you earn 1.00%. Powerful for small balances with regular deposits; less so otherwise.
| Tier | APY | Source, as of |
|---|---|---|
| Base rate (all balances, no qualifying activity) | 1.00% | varomoney.com, APY the bank states is accurate as of 7/1/2026 (page checked 9/25/2026) |
| Qualifying month: first $5,000 | 3.75% | varomoney.com, same |
| Qualifying month: balance above $5,000 | 1.00% | varomoney.com, same |
To qualify for 3.75% next month: direct deposits totaling $1,000+ and a positive month-end balance in all Varo accounts. The earlier 5.00% / 2.50% structure described on this page is no longer offered. Rates change weekly. Other rate figures further down this page are as of June 27, 2026.
Savings account vs MYGA, after tax
What $100,000 earns in 5 years: savings account vs MYGA, after tax
Rates used: Savings account 4.00%, the top online savings rate we tracked (bank sites, September 24, 2026); savings rates can change any day; change it to the rate you are offered. MYGA 5.95%, the best A-rated rate we track as of October 13, 2026: Delaware Life Pinnacle Plus 5-year (AM Best A-, negative outlook, 7/31/2026), $100,000 and up, effective October 6, 2026 (Delaware Life rate sheet).
| Savings account, interest taxed every year | $116,604 |
|---|---|
| MYGA, tax-deferred, before tax | $133,507 |
| MYGA after paying tax on all the interest at withdrawal | $126,136 |
| Tax deferral alone adds about | $674 |
| MYGA ahead of the savings account, after tax | $9,531 |
Assumes 22% federal and 0% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge. In an IRA both grow tax-deferred, so the edge there is the rate alone. Bank and credit union deposits are FDIC or NCUA insured up to the limits; a MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.
The account at a glance
Brand: Varo Bank, N.A.
Parent company: Varo Money, Inc.
FDIC certificate: Cert #59324
FDIC coverage: $250,000 per depositor per ownership category
APY (checked September 25, 2026): 1.00% / 3.75% (conditional) (variable)
Minimum to open: $0
Monthly fees: $0
ATM access: 55,000+ Allpoint ATMs
Rate history 2020-2026
The single most important fact about a HYSA: the rate is variable. Here is how this account's APY moved through the last Fed cycle.
| Year | Approx APY |
|---|---|
| 2020 | 0.50% |
| 2021 | 0.40% |
| 2022 | 3.00% |
| 2023 | 5.00% |
| 2024 | 5.00% |
| 2025 | 5.00% |
| 2026 (June) | 5.00% cond. |
| 2026 (Sept. 25) | 3.75% cond. |
Source: archived rate disclosures and publicly reported HYSA tracking. Exact dates of rate changes vary; figures shown are year-end snapshots. The takeaway: this account dropped 80%+ of its yield from 2019 to 2021 when the Fed cut, then recovered as the Fed hiked 2022-2023. A future Fed-cut cycle will repeat the pattern.
Rates expire like milk.
The best MYGA, CD and savings rates change every few weeks. Get a short email when a rate on this page changes.
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What we like
- Headline 3.75% APY on the first $5,000 at the qualifying tier
- Varo Bank received the first new US national bank charter granted to a fintech in 2020
- FDIC-insured at the bank level (Cert #59324)
- No monthly fees, no minimum, no overdraft fees
- Strong mobile-first UX, integrated with Varo Spending (checking)
What we don't
- Conditional structure: 3.75% only on the first $5,000, and only with $1K+ monthly direct deposit. Balances above $5K, or months without DD: 1.00%
- Tier ceiling limits how much money can earn the top rate: a $5K cap means $250/yr max benefit at the top tier
- Younger bank: operational history shorter than Marcus/Ally/Discover
- Variable rate AND conditional structure: both can change
- Limited product lineup (no CDs, no mortgage, no investing)
Who this is best for
Smaller-balance savers ($1K-$5K) who route paychecks via direct deposit and want a true fintech banking experience. Not the right home for $50K+ of cash.
When a MYGA beats this HYSA
HYSAs are the right home for emergency fund + 1-12 months of cash. For money you genuinely won't need for 3+ years, a MYGA (Multi-Year Guaranteed Annuity) typically wins on three fronts at once: higher rate, contractually locked, and tax-deferred.
3-year horizon math at $250,000
Assumptions: 32% federal + 9.3% CA bracket (combined 41.3% marginal on ordinary income). Varo Bank, N.A. HYSA at 1.00% / 3.75% (conditional) (variable, assumed held flat, which is generous). 3-yr MYGA at 5.40% guaranteed (top-of-market 2026, A-rated carrier).
| Vehicle | Gross yield | After-tax yield (annual) | Ending value (3 yr) |
|---|---|---|---|
| Varo Bank, N.A. HYSA | 1.00% / 3.75% (conditional) | ~2.49% | ~$269,164 |
| 3-yr MYGA @ 5.40% | 5.40% | Deferred (compounds gross) | $292,706 (at maturity) |
| MYGA advantage | +115 bps | +gross compounding | +$23,542 / +8.7% |
The MYGA dollar gain at maturity is taxable when withdrawn, but at withdrawal you can spread the tax across multiple years (laddered or annuitized) or push it into a lower bracket in retirement. The HYSA tax is paid every year, no deferral.
5-year horizon math at $250,000
5-yr MYGA at 5.65% guaranteed vs. Varo Bank, N.A. HYSA at 1.00% / 3.75% (conditional) (held flat, an aggressive assumption given 5 Fed cycles in past 20 years averaged 200+ bps moves).
| Vehicle | Ending value (5 yr) | Net gain |
|---|---|---|
| Varo Bank, N.A. HYSA (after annual tax) | ~$282,706 | +$32,706 |
| 5-yr MYGA @ 5.65% (gross) | $329,090 | +$79,090 |
| MYGA advantage at maturity | +$46,384 | +18.5% |
Why the gap widens at 5 years: Tax-deferred compounding. The HYSA pays tax on every year's interest; the MYGA compounds gross interest on interest for the full term. Combined with the rate advantage, the gap is meaningful at any balance above ~$50K.
When the HYSA wins
The HYSA wins when you actually need liquidity. If there's a 30%+ chance you'll touch the money in the next 3 years, the MYGA surrender charges (typically 7-9% in years 1-3, decreasing to 0%) eat the rate advantage. Keep your emergency fund + 12 months of expected outflows in the HYSA. Then evaluate the MYGA for the surplus.
Complexity Score: A+
Every Goldstein review assigns a complexity score, because complexity is where savers and buyers get burned. HYSAs are the simplest financial product on the market: deposit money, earn variable interest, withdraw anytime. No surrender charges, no riders, no benefit-base separation, no caps or participation rates. Grade: A+ (Simple).
Note: simple does not mean optimal. A 4.25% HYSA taxed annually at 41% can return less, after-tax, than a 5.40% MYGA taxed only at withdrawal. Simplicity is a feature, not a financial result.
Related research
- Best HYSA Rates 2026: top 10 mainstream HYSAs ranked by APY
- HYSA vs MYGA Comparison, the comprehensive side-by-side, with $250K math
- HYSA vs CD Comparison: liquidity vs locked rate
- CD Reviews: bank CD reviews across major issuers
- CD vs MYGA, the bank-vs-insurance trade-off, with after-tax math
- The 5-Year MYGA: why a locked 5-year rate beats chasing HYSA yields
My take
Varo Bank, N.A. runs a solid HYSA. The trade-offs are the same as every HYSA on the market: rate is variable (Fed-driven), interest is taxed annually at ordinary rates, no contractual minimum rate floor. For emergency fund and 1-12 month cash, this account does its job. For 3+ year money, the math typically favors a 3-5 year MYGA, locked and tax-deferred, from an A-rated carrier (A-rated 5-year MYGAs paid about 5.50% to 6.05% on October 14, 2026, per public carrier rate sheets): somewhere in the 8-19% net advantage range at typical balances. Get the math run before you commit either way.
About Hans Goldstein: Independent retirement income specialist. CA Life License #4273294. NPN #20602398. Reviews 30+ annuity carriers and the leading bank HYSAs. Hans does not earn commission on HYSAs or CDs. These reviews are written for the same risk-averse savers who often end up as MYGA buyers when they need 3+ year money. Phone: 213-414-2808. Email: hans@hansgoldstein.com.
Frequently asked questions
Run the MYGA vs HYSA math for your situation
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HYSAs are the right home for 1-12 months of cash. For 3+ year money, a MYGA typically pays 50-120 bps more and defers tax, a combo that quietly adds 15-25% to your effective yield in a high bracket. Worth 15 minutes to run your real numbers.
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Disclosure
This review is based on the carrier's public product materials and rates as of the date shown above. HYSA APYs are variable and change frequently. Confirm current values directly with the bank before opening an account. FDIC insurance covers up to $250,000 per depositor, per insured bank, per ownership category. MYGA rates referenced are illustrative top-of-market quotes as of 2026 and depend on state, carrier appointment, and product approval; not all MYGAs are available in every state. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers across the annuity market; Hans is not a banking representative and does not earn compensation on HYSA or CD products. Tax discussion reflects federal law as of 2026 and is subject to change. State tax treatment varies. Always read the actual bank disclosure and consult a licensed advisor or CPA before reallocating retirement-bound funds.