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Robo-advisor Betterment has become the latest online brokerage to offer customers a savings account — and the company is also preparing to launch a checking account soon. Betterment Everyday Cash Reserve, formerly known as Betterment Everyday Savings, is an online savings account that earns a promotional rate of 1.78% APY for customers who also sign up for a waitlist for Betterment Everyday Checking, which the company plans to launch by the end of 2019. If you sign up for the savings account only, you receive an APY of 1.83%.
What is the Betterment Everyday Cash Reserve Account?
Similar to competitor Wealthfront’s Cash Account, the Betterment Everyday Cash Reserve account divides the customer’s money between FDIC-insured accounts at several program banks, which allows Betterment to claim the account protects up to $1 million in FDIC insurance. Currently the program banks are:
- Barclays Bank Delaware
- Georgia Banking Company
- Seaside National Bank & Trust
- Valley National Bank
If you don’t want your funds deposited at a particular program bank, you can inform Betterment who will shift those funds to an account at another program bank. However since each account can only insure up to $250,000 according to FDIC limits, any account with a program bank that exceeds that amount will not be protected.
Betterment Everyday Cash Reserve fees and minimums
Opening the account requires a minimum $10 deposit, but you don’t have to maintain a minimum balance after opening the account. There are no monthly fees associated with Betterment’s Everyday Savings Account.
After signing up and opening the account, you can transfer money in and out of the account via ACH. The minimum amount you can transfer is $10, while the largest amount you can transfer in one day is $300,000. How quickly your money will move to and from the account depends on the time of the transfer and whether it is a withdrawal or a deposit.
- Deposits: If you initiate a deposit before 10 pm ET then your money should appear in the account in one business day. Deposits initiated after 10 pm ET will take two business days.
- Withdrawals: If you initiate the withdrawal before 2pm ET, then the money should show up in your linked checking account in one business day. Any withdrawals initiated after 2 pm ET will take two business days to show up in your linked account.
One feature that sets the Everyday Savings Account apart from most traditional savings account is its lack of withdrawal limits. You can make six, seven or 700 withdrawals a month if you wish without paying any penalties or having Betterment shut down your account.
You can also transfer funds between the Everyday Savings Account and your investment accounts with Betterment. The process takes an estimated two business days.
Currently, the account is only for single, personal account holders — you can’t sign up for a joint account or as a business or trust.
Betterment Everyday Cash Reserve two-way sweep
One unique asset of this account worth calling out is its two-way sweep. When you open an Everyday Savings Account and link it to a checking account, you can take advantage of Betterment’s cash analysis algorithm to allow the company to automatically transfer money between accounts based on the balance of each account.
Betterment will analyze the activity of your linked checking account to estimate your aggregate cash needs for both 21 days and 35 days. If Betterment sees you have less money than you need to cover your expenses for 21 days, it will initiate a transfer from your Everyday Savings Account to the checking account. Likewise, if your linked checking account contains enough money to cover more than 35 days worth of expenses, it will transfer the “extra” money to the Everyday Savings Account, where it can potentially earn more interest than it would in the checking account.
Please note this feature is entirely optional and can be turned off in your account settings. If you’re uncomfortable with the idea of an algorithm shuffling your money between accounts, you may want to turn this feature off.
How the Betterment Everyday Cash Reserve Account compares
|Savings Account||FitnessBank||2.20% APY (with 12,500+ steps)|
|Everyday Cash Reserve||Betterment||1.78% APY|
|Cash Account||Wealthfront||1.78% APY|
|Ultimate Savings||Northpointe Bank||1.85% APY|
|High Yield Online Savings Account||Vio Bank||1.95% APY|
The promotional 1.78% APY offered by this account blows almost every other nationally available savings account out of the water. The only account that bests this rate is newcomer FitnessBank Fitness Savings Account. Provided you can keep up a daily average of 12,500 steps, FitnessBank will pay an APY of 2.20%. However more sedentary savers may gravitate toward the Betterment account, which offers an APY rate that should still get hearts pumping despite the lack of forced exercise.