Right now, the money in your savings account is almost certainly not earning you anything. According to the Federal Deposit Insurance Corporation (FDIC (1)), the national average savings rate is 0.38%, meaning $10,000 left in a savings account for a year would yield about $38, about a cup of coffee per month.
So a 6% headline would quickly grab everyone’s attention, and that’s exactly what X Money offers.
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X owner Elon Musk had promised a payments app – X Money – since he renamed Twitter, and it went live to more paying subscribers in late June (2).
X Money leads the way with two big numbers: a 6% interest yield on your cash and federal insurance of up to $10 million, which is about 40 times the amount of a regular account.
At the moment it is not clear whether X represents a threat to your bank or whether it is just another place to put your money.
What you actually get with X Money
On June 25, X began rolling out
X says it offers 6% on your balance with no minimum spend, 3% cashback on spending, no foreign transaction fees, and free ATM withdrawals. Also included is a metal Visa debit card that uses your @ handle. You can give money to other people
The card runs on Visa, which was signed as X’s first partner in January 2025 (5). But the more important detail is hardly noticeable: X is not a bank and does not have a banking license. Your money is with Cross River Bank, a New Jersey-based lender that has long operated fintech apps (6). So you get the X branding and polished card while Cross River takes care of the regulated banking side.
Where the $10 million really comes from
The FDIC’s standard coverage is $250,000 per person per bank. So if you open a simple X-Money account, that’s exactly what you’ll get – a quarter of a million, just like everywhere else, and not $10 million (7).
The larger number comes from the so-called X Cash Sweep program and is only available to Premium+ subscribers. Instead of keeping all your cash at Cross River, the program distributes it across a network of partner banks and keeps each portion under the $250,000 limit, keeping each piece fully insured.
The story continues
Stack enough banks together and total coverage can rise to around $10 million. According to a video posted by Benji Taylor, design lead at X and xAI, deposits are made at Cross River “and at other FDIC-insured institutions (8).”
This type of sweep setup isn’t new – wealthy people have been using it for years. What is important, however, is what this insurance actually covers. It protects your money if one of the banks fails. It doesn’t protect you if X Money itself gets into trouble. A bank failure and an app failure are not the same thing, and only one of them falls under FDIC coverage.
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Why the 6% is the part to keep an eye on
The 6% interest rate return is the loudest promise here. According to Fortune (9), even the best high-yield savings accounts in the country are currently around 4.5% to 5%, and many people are stuck with that 0.38% average. The Fed’s key interest rate is only around 3.5% to 3.75% (10). So the obvious question is how X can pay 6% when the banks behind it can’t certainly make that much themselves.
US Senator Elizabeth Warren asked Musk the same question in a letter dated April 14th. As the ranking member of the Senate Banking Committee, she wanted to know how X Money would “generate sufficient revenue to pay that return.”
She also pointed out Cross River’s fraudulent record with FDIC enforcement actions and urged X to tell customers in plain language that the insurance will not bail them out if X Money itself fails (11).
For now, treat 6% like a promotion that you can’t necessarily rely on forever.
Should your bank actually be worried?
Not tomorrow and not everywhere. X Money operates in 41 states and Washington, DC, where X has licenses to transfer money—and it’s still protected behind a paid subscription. Two of the country’s largest markets, New York and Massachusetts, are excluded for now because X has not yet cleared their regulators (12).
The big banks, which pay next to nothing, probably aren’t worried. The apps in the middle (Venmo, Cash App, SoFi) have more reason to pay attention. They have spent years and a lot of money building their user base one at a time. X starts with millions of people already opening the app every day, and Musk has been saying for years that he wants X to replace your bank (13).
The real question is whether people want their timeline and their paycheck in the same app. WeChat made this work in China (14), but Americans already have Venmo, Zelle, Apple Pay, and a bank down the street.
What this means for your money
If the 6% APR is tempting, you might want to slow down and look at a few things first.
It only helps if you actually have cash left over, and X can lower the interest rate once the promotion has served its purpose. So don’t base your finances on it.
The $10 million insurance title is only available to Premium+ users under the Sweep program. For a regular account, the coverage is only $250,000. This cover applies in the event that a partner bank fails and not if X itself gets into difficulties.
The debit card with your handle on it is a nice touch. The bigger question is whether you want Elon Musk to manage your feed, your friendships, and your checking account in the same app.
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Article Sources
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Federal Deposit Insurance Corporation (1), (7); Bloomberg (2); X(3), (4), (8); PYMNTS.com (5), (6); assets (9); Federal Reserve (10); U.S. Senate Committee on Banking, Housing and Urban Affairs (11); The Payers (12); The Edge (13); WeChat payment (14)
This article originally appeared on Moneywise.com with the title: Elon Musk’s X Money Promises 6% APY and $10 Million in FDIC Coverage – Elizabeth Warren Has Questions
This article is for informational purposes only and should not be construed as advice. The provision is made without any guarantee.
https://finance.yahoo.com/markets/currencies/articles/elon-musks-x-money-promises-180000390.html
