YouHodler Review: Crypto Loans and Interest-Earning Accounts

YouHodler is a cryptocurrency exchange and lender that pays good interest rates on crypto deposits. The service is not available in the U.S., and YouHodler could be more transparent about its risks, rates, and fees. Customers can use crypto as collateral on short-term loans, and use borrowed funds for advanced trading. Read our YouHodler review to find out if you could benefit.

This cryptocurrency lender is a good fit for: Non-U.S. customers who want to earn interest on cryptocurrencies.

Top perks

Earn interest on your crypto

If you are holding cryptocurrency for the long term, it makes sense to look for ways to earn interest on your assets. YouHodler plays around 5% interest on alt coins and around 12% on stablecoins, depending on the currency. Interest compounds weekly, and is paid in the same currency -- you can't deposit Bitcoin and earn interest in dollars. You can withdraw your funds any time.

These rates compare well with other crypto lenders on the market, but it is important to shop around and weigh up your options. For example, you can earn money on some cryptocurrencies by staking them (tying them up to basically make the network more stable), or providing liquidity (committing your coins on a trading platform to make trading more fluid). Each option has its pros and cons.

Borrow against your crypto

If you have cryptocurrency and need cash, YouHodler lets you use your crypto as collateral. It offers high loan-to-value ratios (LTVs). LTV is the percentage of collateral available to borrow. (For example, if someone had $1,000 worth of cryptocurrency and the LTV was 90%, they'd be able to borrow $900.)

Since this is a secured loan, there's no need for a credit check, and it's usually approved instantly. However, think carefully before you take out any loan -- you save on interest if you wait until you can pay the costs up front.

Advanced trading tools

YouHodler lets customers buy crypto on leverage and use other advanced trading tools. For example, you can bet on the price of a cryptocurrency going up or down (going "long" or "short"). You can also turbocharge your investments by using borrowed money, which we cover in more detail below.

Strict know your customer (KYC) and anti money laundering (AML) processes

This can be a pro or a con, depending on your point of view. If you want totrade cryptocurrency anonymously, YouHodler is not for you. On the other hand, if you want reassurance that you're investing with a company that wants to avoid laundered money, this is an area YouHodler takes seriously.

Good customer service

YouHodler scores 4.4 out of 5 on TrustPilot. Reviewers praise their quick customer service and high interest rates. One warning note: Some customers gave YouHodler poor reviews, mainly for its withdrawal options. Before you move large amounts of money to any cryptocurrency exchange, make sure you are confident about how to take it out again.

What could be improved

Not available in the U.S.

YouHodler is not available to U.S. residents. This could be because the U.S. has strict rules about leveraged trading options. If you use YouHodler's services from the U.S., China, or other banned countries, your account may be frozen, and you could lose any returns you made on your investments.

Customers need to prove their physical addresses to withdraw money from the exchange, so it wouldn't be a great idea to use the platform from a banned country. There are several excellent cryptocurrency exchanges worth checking out that are licensed to operate in the U.S. and pay good interest rates on cryptocurrencies.

Minimum investment

The minimum amount you can deposit is $5. But to earn interest on your funds, you must meet a minimum of $100 or more, depending on the cryptocurrency. And that's a minimum for each coin -- it's not enough to have a total of $100. For example, if you own Bitcoin (BTC), Ripple (XRP), and Ethereum (ETH), you'd need to deposit at least $100 worth of each to earn interest on them.

While $100 is not necessarily huge, some interest-paying cryptocurrency exchanges don't have any account minimums. And if you have several different coins, that minimum starts to add up. Account maximums also apply.

Lack of transparency

Whether you're a borrower or a saver, transparency matters. If you're receiving high interest rates, it is important to ask where the money comes from. In YouHodler's case, the information is hard to find. It's likely that the interest customers receive comes from the interest customers pay on loans. But that isn't clearly stated on the website, and some decentralized finance (DeFi) lenders make high-risk loans in order to finance high returns.

In addition, all lenders in the U.S. are required to disclose the APR on a personal loan -- which is the total annual cost of lending, including interest and fees. This helps borrowers compare apples with apples and make informed decisions about where to borrow. YouHodler gives the total cost of the loan, but not the APR.

High APRs on loans

We calculated YouHodler's APRs based on the total loan costs. They are high in comparison to several top personal loans that don't require collateral. Indeed, they are comparable to the APRs on many good credit cards. If you need to borrow money, shop around to find the best terms for your situation.

While borrowers can extend their loan terms with YouHodler, the longest initial loan term available is six months. Non-crypto lenders may offer longer loan periods which give you more flexibility in repayment.

If you want to earn interest with an exchange licensed in the U.S.: Gemini has high compliance standards and pays competitive interest rates on crypto and stablecoins. There's no minimum balance requirement, and you get some free withdrawals each month.

YouHodler has a mobile app and web interface. You can exchange cryptocurrencies on the site, earn interest, and borrow money.

To get started, deposit a minimum of $100 into a custodial wallet and complete its know your customer (KYC) procedures. To deposit fiat (traditional) money, users must provide a photo ID and proof of address.

As a saver or trader

YouHodler lets non-U.S. customers earn passive income on their crypto holdings. Savers can earn some of the highest rates in the industry on both crypto and stablecoins. Interest compounds weekly. The idea is that YouHodler rewards you for HODLing (crypto slang for Holding On for Dear Life).

At the same time, YouHodler recommends placing 10% to 20% of your investments into its high-risk MultiHODL tool. You use this tool to borrow money and bet on whether the value of specific cryptocurrencies will increase or decrease. And you can leverage your investments by up to 30 times, increasing your potential profit -- and your risk levels.

YouHodler suggests several ways to mitigate the risk involved, but clients should be aware that these are trading tools aimed at professional investors.

As a borrower

Borrowers can put down crypto as collateral to get loans in dollars, euros, pounds, Swiss francs, Bitcoin, or stablecoins. The money can be deposited to a bank account, withdrawn to a credit card, or used on the exchange to buy crypto. Bear in mind that there may be a withdrawal fee (covered below).

YouHodler offers three standard loans, each with a different term and loan-to-value ratio (LTV). It also sets a "price down limit," which is how far the value of the crypto collateral can fall before YouHodler will sell the collateral and close the loan. As you can see in the table below, there isn't a lot of leeway on a 30-day loan with a 90% LTV. However, YouHodler gives borrowers the chance to add more collateral if needed.

Here's how the three loan types work out on a $5,000 loan that uses Bitcoin as collateral:

Some additional features to watch out for:

• Borrowers can set a close price -- the point at which they want to take profit -- from the outset. If the value of their crypto collateral reaches this price, YouHodler automatically sells the collateral, repays the loan, and deposits the remaining funds in the user's account.
• Loans can be repaid using a credit card, crypto or fiat money stored on the platform, or by bank transfer. Borrowers can also repay a loan by selling the crypto collateral.
• Borrowers can extend a loan term by paying the existing interest charges and a 1% service fee.
• The "Close Now" function lets borrowers pay the loan back early using their collateral. This also comes with a 1% fee.

Turbocharge and borrowing to buy crypto

YouHodler actively encourages users to borrow using their crypto as collateral and buy more crypto. It's tempting. But borrowing to buy any risky investment is not a great idea, because if it loses value, you could lose your money.

Let's say you put down 0.2 BTC on the 30-day loan at 90% LTV. You get 0.18 BTC, giving you 0.38 BTC in total. The price of Bitcoin falls by 5%, triggering the price down limit. Your original Bitcoin gets sold to cover your debt, and you're left with 0.18 BTC. You just lost 10% of your original Bitcoin.

YouHodler's Turbocharge function creates a chain of loans. It automatically uses the traditional currency you borrow to buy more crypto, and uses that crypto as collateral against another loan. You can turbocharge your loan between three and 10 times. You don't receive any of this cash, because each additional loan is used to multiply the crypto you own. If the value goes up, you win. If it goes down, you could lose your original collateral and any fees, and you're left with any remaining funds from your final loan.

What's most worrying about YouHodler is that it presents risky investment strategies without a lot of information about the dangers involved, or education to help users manage those risks. The company name suggests this is a safe place to hold your crypto, but the Turbocharge and MultiHODL functions encourage you to take risks with it.

The exchange fees on YouHodler are in line with other cryptocurrency exchanges. However, pay attention to the costs to deposit and withdraw your money. Work out how much interest you need to earn to cover, say, a $70 withdrawal fee before you deposit your cash.

Please be aware that the information on YouHodler's website is not always consistent. We've used the rates from its wallet which don't always match the figures on its fees page.

Please be aware that the information on YouHodler's website is not always consistent. These numbers come from the transaction pages of a Youhodler.com wallet.

Deposit

Please be aware that the information on YouHodler's website is not always consistent. These numbers come from the transaction pages of a Youhodler.com wallet.

Withdrawal

Exchange fees

Fees to convert fiat to crypto or trade cryptocurrency vary depending on the transaction. For example, there's a $1 fee to convert $100 to Bitcoin (1%). There's a 0.000040 BTC fee to convert 0.02 BTC into Ethereum (0.2%).

Rates are comparable with other exchanges. However, the trade may take between five and 30 minutes to process, and the rate may change during that time.

If you use the MultiHodl feature, you pay an origination fee, hourly fees, and a 10% profit share if you make money.

With 24 cryptocurrencies and 8 stablecoins, YouHodler has a reasonable selection of interest-earning cryptocurrencies. Some, such as Cardano (ADA), Tezos (XTZ), and Monero (XMR) can act as collateral, but do not earn interest. This is a little disappointing, since Cardano and Tezos can be staked on other exchanges to earn rewards.

It also offers non-fungible tokens (NFTs), which are digital collectibles -- you can trade them or use them as collateral on a loan.

Here are the currencies that can earn interest with YouHodler:

YouHodler has all the user-level security systems you'd expect, including two-factor authentication (TFA). Customers with more than $10,000 in their accounts can disable all withdrawal options for extra security.

YouHodler stores its customers' assets in a mix of hot and cold wallets. It doesn't say what percentage is kept offline in cold storage, but it does have a deal with digital asset security experts Ledger Vault. This means private keys are secured, encrypted, and not handled by YouHodler staff.

The Ledger Vault protection also includes $150 million in pooled insurance against crime, which means customers would be covered in the case of fraud or theft. However, as with many crypto exchanges, the insurance would not cover customer funds in the event of exchange failure. Money in a savings account is protected against bank failure by FDIC insurance, but this does not apply to crypto platforms.

Finally, YouHodler says it is part of several organizations such as the Blockchain Association that offer dispute resolution. If a client feels let down by YouHodler, there may be some recourse.

• You're a non-U.S. customer who wants to earn interest on your crypto.
• You are comfortable with higher-risk trading tools.
• You want to use your crypto as loan collateral.