The Jiko app was just publicly released (Android | Apple). The Jiko network keeps you invested in US Treasury Bills without sacrificing access to your funds. As soon as you add funds to your Jiko, the network invests the balance in T-Bills. Whenever you need your money, it’s available on demand.
Jiko is SIPC insured, and the purchase itself is US treasury notes which are highly secure. Overall it seems like a neat and easy way to buy treasury notes without tying up the funds.
Also interesting is that somehow Jiko has been paying out an average of 3.40% since August according to an email they sent out. Not clear how they keep up that rate given that treasury rates are significantly lower than that. Were those rates to hold, it would be a really interesting option as an alternative to high-yield savings accounts. Let us know your own thoughts on Jiko in the comments below.
Thanks to reader Ryan Goldstein for tipping us off about this and sending in the details.
SIPC, not what you put…
Chuck
Fixed, thx
I received notice they are moving their debit card from Discover to Visa. I wonder if this will eliminate cashback for debit.
Any updates on this account? How is it doing with increasing interest rates?
I received an email today announcing a new “Virtual Debit Card for Online & Phone transactions”, which earns 1%.
Specifically, they indicate that you can earn 1% back on IRS payments, linking to this article: https://medium.com/jiko/rewards-for-paying-taxes-23b0556a6f5a
Important to note, they also link to this document – https://jiko.io/docs/limitations.pdf – which specifies a per transaction and daily limit of $505 for the virtual debit card.
I know this comment is old, but it’s still before US tax day, so it might be useful for some.
Jiko has two settings. One is the general virtual debit card, which has a limit of $505 per day and per transaction. There’s a second setting for tax payments specifically, which has a limit of $20 000 per day and per transaction. It also specifies to contact support if you need to make a larger payment. Both get 1% back on purchases.
This has been eliminated and the cap is $505/day.
This doesn’t smell right. Their response to Ryan Goldstein indicates they are essentially operating an ultra-short duration treasury fund with a debit card attached. I went to their website, there is no information available–just put in your email to get information later. It appears they charge a $99/year membership fee. On a $10,000 average balance, this will amount to 1%/year. It puzzles me why they don’t have disclosures that regular mutual funds would have.
It is clear that they count capital gains in the 3.4% return, which means you are highly unlikely to get anything close to that now since treasury rates are unlikely to go much lower than they are (almost zero).
Some banks can offer rates greater than the short term rate on their deposits because they are confident they won’t have to raise rates in lock step with market rates. This allows them to treat the deposit as having a component of long term funding.
I asked them for more specifics on the rate, and here’s their response:
We’d like to start by clarifying one thing: The 3.40% isn’t an estimate. It’s the rate that the combined Jiko accounts have generated since August on an annualized basis.
(It’s also important to understand that it’s not an estimate of what your account will generate going forward. We can’t estimate that, unfortunately. Instead, your account’s performance will be a function of interest rate changes and other market movements.)
What it does show is that money invested in a Jiko can yield more than a buy and hold approach on T-Bills. Why? Jiko accounts are invested in the latest issuance of the 52-week T-Bill and “roll” their position monthly. That means selling the old bond when it still has 11 months left to maturity in order to purchase the newest 52-week T-Bill issued by the US Treasury.
Like all investment strategies, this approach comes with certain risks (please refer to our risk disclosures in the app for more information).
Finally, please note that we’ve been carefully releasing our beta over the last few months. Your Jiko and the app will continue to be refined as we add features and work with our early users to make it better over time.
If you have any additional questions (or even just thoughts on what we can do better!), we’d love to hear them.
Thanks for being a Jiko member!
Do they have any kind of referral system?
I don’t think so
Or you can just get 3.33% from Heritage Bank by making 10x .50 Amazon gift card balance reloads for yourself each month.
The comments are really misinformed. You guys should steer clear if you don’t understand this product.
Note that this tracks t-bills, so there is certainly a potential for loss of principal if there is a sharp spike in rates.
its impossible to offer this rate simply based on the yield of T bills. that, combined with the total non-transparency of where the 3.4% rate actually comes from and how long it will be sustained, means you would be smart to approach this with extreme caution. my opinion: this is probably a venture capital-backed teaser rate to lure customers in; it will then drop to more of a market rate in the near future. otherwise this simply isnt sustainable in the long term. its a new shiny object, “look! we offer this higher rate because we do something unique by investing in treasuries…but dont go look up what short duration treasuries actually yield”
In my opinion, this was possible due to capital gains to treasury securities in August And September when the fed rates were lowered. More like a one time thing and difficult to continue
that’s why i said “simply based on yield”. if they are treating this like a bond trading account, then i guess they will start paying a negative yield when rates rise and bond prices fall due to capital losses. this just seems like a very strange non-transparent product