Wealthfront Cash Account looks like a checking account on the surface, but it has a few unique features that set it apart from a traditional bank account. It offers a competitive interest rate and very high levels of FDIC insurance. Read more to decide if it could be a good fit for your emergency fund or other cash savings.
Pros & Cons
What Is the Wealthfront Cash Account?
Wealthfront is best known for its robo-advisor service which lets you invest in a variety of portfolios starting with just $500. Wealthfront Cash is a checking account offered by the company. It also offers a borrowing account, but it's not tied to Wealthfront Cash.
Wealthfront Cash is a hybrid checking account. As of this writing, the account offers an impressive 4.05% APY. This is well ahead of the 0.07% average savings account APY and the pitiful 0.01% you get at the big traditional banks. If you're looking for somewhere to park your emergency fund or some idle cash, it could be exactly what you're looking for.
This account offers its checking account through partnerships with several banks. Because the cash is swept to multiple different accounts, it offers up to $2 million FDIC insurance coverage, which is much higher than a typical savings account. And with no fees and its high-interest rate, it's definitely worth considering.
You can use Wealthfront Cash like a traditional checking account. You can set up a direct deposit and even get your paycheck two days early than at other banks. You can also use it to pay your bills and set up automatic payments.
The account also comes up with a debit card so you can make purchases and take out cash from more than 19,000 fee-free ATMs nationwide. And you can even deposit checks via the mobile app. You can even have Wealthfront organize your money into different savings buckets like an emergency fund, home down payment, vacation fund, etc.
And if you use a Wealthfront Cash account to invest in a Wealthfront Investment account, your money will be invested within minutes. You don't have to wait days for your money to clear. Your money can start working for you almost immediately.
Wealthfront Cash Features
|Accounts||Savings, Checking, Money Market, CDs|
|Access||Web Based, iPhone App, Android App, Blackberry App|
|Amount of Branches||0|
|Customer Service||Phone: M–F 7A–5P PT; Email|
How Does Wealthfront Cash Work?
For practical purposes, Wealthfront Cash works like a regular savings account.
- You can deposit and withdraw funds at any time using the Wealthfront website or mobile app.
- Wealthfront suggests using this account for cash needs like an emergency fund or down payment.
- Anything with a time horizon of five years or less should not be invested in the markets, according to Wealthfront.
Once linked to an account at any other bank, you can transfer funds with a few clicks. Transfers take one to three days to complete, as with any ACH. Unlike a traditional savings account, this account does not have a limit of six withdrawals per month.
Once you deposit funds, Wealthfront will sweep your cash into one or more of the program banks. Those banks TriState Capital Bank, Citibank, Wells Fargo, and others. You can find a complete list of partner banks on their website. You never work with those banks directly. Wealthfront Cash takes care of everything. If you don't like one of those banks, you can opt-out of any specific bank in your Cash account.
Wealthfront earns a fee from the program banks, but you still get a very competitive rate. There are a few banks with better savings account rates, but many have limits or strings attached.
Wealthfront Self-Driving Money™
And now with Self-Driving Money™, you can get your paycheck two days early with a direct deposit and completely automate your savings plan. With Self-Driving Money™, you pick a checking account for Wealthfront to monitor.
You can set up features like the maximum amount of cash you need, have any extra moved to another account (like a retirement account), and even have your bills automatically paid every month when they are due. Best of all, Wealthfront will look for ways to invest any free money into your investment account so you can invest without even needing to think about it.
In addition to the above features, Self-Driving Money™ will also monitor your cash flow to make sure bills are paid and your savings are routed to the right investment accounts. You can even have Wealthfront automatically organize your money into different savings buckets like an emergency fund, vacation fund, and more.
When you make a deposit, the account sweeps your funds into linked accounts at participating program banks. Those accounts offer you the FDIC insurance you’re used to seeing at a traditional bank.
Each of Wealthfront's partner banks gives you up to $250,000 in FDIC coverage ($500,000 for joint accounts). Wealthfront never puts more than $250,000 into any one bank unless you go over the $2 million mark (or opt-out of one or more of the partner banks).
That means you get $250,000 coverage eight times over, or $2 million total. Before the sweep, funds are protected by the SIPC under its rules.
Alternatives to Wealthfront Cash Account
Wealthfront Cash is one of the best cash management accounts on the market right now due to its high interest rate and lack of fees. The fact you get a debit card and unlimited external transfers also makes it easier to spend and move your money.
However, there are competitors to Wealthfront that might be superior depending on the features and perks you're looking for.
|Accounts||Savings, Checking, Money Market, CDs||Savings, Checking, Money Market, CDs||Savings, Checking, Money Market, CDs|
Betterment is one of Wealthfront's main competitors, and it's another leading robo-advisor that also has excellent ESG portfolios and low fees. The Betterment Cash Reserve account currently pays less interest than Wealthfront Cash. However, Betterment also has a fee-free checking account that lets you earn cash-back rewards.
As for CIT Bank, it offers two excellent high-yield savings accounts and a range of other products, including CDs and a competitive money market account. If you're looking for flexible accounts to hold your extra cash or emergency fund, CIT Bank has a range of products that are worth considering.
Final Thoughts on Wealthfront Cash
Wealthfront Cash is a unique checking account that gives you added FDIC insurance protection, no fees, and a competitive interest rate, plus the benefits of Self-Driving Money™.
While you can find slightly better rates out there with various mobile banks, this account could be an excellent fit for someone looking for a new banking experience. Whether you have long-term savings goals or just want better interest rates, Wealthfront Cash may be a good fit.
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