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Updated on Monday, January 11, 2021
Best known for its robo-advisor platform, Betterment also offers a cash management account with checking and savings functionality. Betterment Checking and Betterment Cash Reserve make for a competitive cash management platform with easy access to your money and tight integration with Betterment’s robo-advisor.
What is Betterment Checking and Cash Reserve?
Betterment Checking and Betterment Cash Reserve is a cash management suite (formerly known as Betterment Everyday) comprising of a checking account and a savings account. Betterment’s two-pronged approach makes it similar to cash management accounts from fintech peers like SoFi, Wealthfront and Aspiration.
Although Betterment Checking and Cash Reserve is positioned as a package deal to help you manage the spending and savings aspects of your financial life, you don’t need to keep both accounts — they are separate offerings. When you open a Betterment Checking account, the firm automatically opens a Betterment Cash Reserve savings account for you. However, you can close the savings account if you’d like to. Conversely, you can close your Betterment Checking account and only keep the Betterment Cash Reserve savings account.
What is Betterment Checking?
Betterment Checking works much like a conventional checking account with a bank or credit union. It comes with a Visa debit card for purchases and ATM cash withdrawals — although it does not offer paper checks. The account does not pay any interest. Betterment Checking officially launched to the public in April 2020.
Deposits made in Betterment Checking are held in accounts with nbkc bank, which provides Federal Deposit Insurance Corporation (FDIC) insurance up to the legal limit. Note that if you already have funds in FDIC-insured deposit accounts at nbkc bank, the amount of FDIC insurance coverage for deposits in Betterment Checking may be reduced.
To fund your account, you have a few options: You may link an external bank account, make ACH transfers or set up direct deposits. In addition, you can transfer funds to and from your Betterment investing goals and Betterment Cash Reserve accounts by adding Betterment Checking as a funding account. You are only able to open one Betterment Checking account; joint accounts are not yet available.
When it comes to fees, Betterment Checking is a great option:
- There are no maintenance fees.
- The account charges no overdraft fees.
- There are no minimum balance requirements.
- All ATM fees are reimbursed, for both domestic and international withdrawals.
- Visa foreign transaction fees are reimbursed.
Unfortunately, Betterment Checking lacks a few common checking account features:
- You cannot currently deposit checks in the account via a mobile app (the company said this is coming soon).
- There is no way to deposit cash directly into the account.
- There are no deposits via wire transfer.
- The account offers no bill pay services.
- It’s not compatible with Apple Pay, Google Pay, Samsung Pay or Zelle.
- Physical checks are not available.
- No cashier’s checks or money orders are available.
As is the case with other cash management accounts, there are limits on how much you can withdraw or spend per day. For the Betterment Checking account, the limits are:
- $500 daily ATM withdrawal limit
- $2,000 daily debit card transaction limit
- Transfers to and from your external linked bank accounts are limited:
- Withdrawals are capped at $2,000 per transaction.
- Deposits are capped at $10,000 per transaction.
What is Betterment Cash Reserve?
Betterment Cash Reserve is the company’s high-yield savings account, or high-yield cash account. The account currently offers a competitive APY of 0.40%.
Betterment partners with a network of banks to hold the funds you deposit in Betterment Cash Reserve — not only one bank, as with Betterment Checking. Balances are held in accounts with multiple partner banks, which together provide FDIC insurance on up to $1 million in deposits. The partner banks for Betterment Cash Reserve include:
- The Bancorp Bank
- Barclays Bank Delaware
- Citibank, N.A.
- ConnectOne Bank
- East West Bank
- Georgia Banking Company
- HSBC Bank USA, N.A.
- Seaside National Bank & Trust
- State Street Bank and Trust Company
- Valley National Bank
- Wells Fargo Bank, N.A.
Betterment Cash Reserve charges no maintenance fees and requires no minimum balance. The account allows joint accounts; however, you can only link one checking account. You may deposit funds in Betterment Cash Reserve via ad-hoc ACH transfers, scheduled automatic deposits or the Two-Way Sweep tool.
Betterment’s Two-Way Sweep automatically analyzes your spending patterns in your linked checking account. It then anticipates your cash needs and moves funds between your checking account and Betterment Cash Reserve account — or vice versa — to maximize the interest you can earn.
Two-Way Sweep aims to keep your checking account balance stashed with enough funds for around 21 to 35 days worth of expected cash expenses. The rest of your funds are then swept into the Betterment Cash Reserve account, where they earn interest.
Betterment Cash Reserve has no limits on how many times you can move money into or out of your account — providing essentially unlimited withdrawals. This is a core feature of many cash management products and is one thing that differentiates them from ordinary savings accounts. At traditional banks and credit unions, savings accounts are subject to the Federal Reserve’s Regulation D, which mandates certain types of telephone and electronic withdrawals, including transfers from savings accounts up to 6 per statement cycle.
Betterment vs. cash management competitors
Betterment holds up well when compared to competing cash management accounts. Note that none of these accounts charge monthly or annual maintenance fees.
Betterment vs. Aspiration Spend & Save
- Aspiration Spend & Save heavily emphasizes social responsibility, promising that its deposits do not fund fossil fuel projects. The company gives 10% of its earnings to charity.
- Betterment Checking offers unlimited ATM refunds worldwide, while Aspiration Spend & Save limits you to five free ATM withdrawals per month.
- Aspiration Spend & Save offers cashback rewards on purchases. Betterment does not have a rewards program.
- For both accounts, the checking side yields no interest, while the savings side pays an APY on deposits.
Aspiration Spend & Save is a better choice for people who prioritize socially responsible banking and prefer earning cashback rewards to getting their ATM fees refunded.
Betterment vs. Wealthfront
- Wealthfront offers a single Cash Account that both earns interest at APY and includes checking-like debit card access and mobile check deposit capabilities.
- Betterment’s ATM access extends further than Wealthfront’s. Betterment automatically reimburses ATM and foreign fees and doesn’t charge a fee itself. Meanwhile, Wealthfront offers free access to 19,000 ATMs, but charges a $2.50 fee if you stray from its network, on top of the ATM owner’s surcharge.
- Wealthfront makes your paycheck available to you up to two days earlier than most banks when you receive it via direct deposit, an increasingly common fintech feature that Betterment lacks.
- Wealthfront partners with several banks to FDIC insurance on Cash Account deposits. Green Dot Bank, Member FDIC, provides the banking services like the Wealthfront Visa debit card.
Wealthfront is a good option for those who want to keep their banking and investing in one place, without the added step of managing separate checking and savings accounts like with Betterment. Wealthfront bests Betterment in other areas like early paychecks and mobile deposit, although Betterment is a good choice for those who need quick and free worldwide ATM access.
Betterment vs. SoFi Money
- SoFi Money does not offer separate accounts for checking and savings. Instead, it’s all lumped together in one fund, where it earns the same APY and the same amount of partner-bank FDIC insurance.
- The SoFi Money account comes with access to SoFi member benefits, like career coaching and financial advising.
- SoFi Money also offers unlimited ATM fee refunds.
SoFi Money is better for people who want their checking and savings balances all in one pot, and want to earn competitive interest on the funds they use for everyday spending.
Amount Minimum to Open Account
Is Betterment Checking and Cash Reserve right for you?
Betterment Checking and Cash Reserve provides a competitive APY for your savings, with the added benefit of much greater liquidity. Betterment Cash Reserve outshines Betterment Checking, although it’s worth keeping in mind that the company has only just launched the checking product. Betterment tells us it intends to improve its checking features over time.
When comparing Betterment’s cash management platform to similar services offered by other fintech companies, Betterment doesn’t fall behind — but it doesn’t stand out, either. There’s a theme among nearly all of Betterment’s key features: “good, not great.” Explore the other cash management options available to you. If you’re already banking with a similar service, it’s probably not worth the switch.