Betterment Cash Reserve Review 2021

Best for Extra FDIC Insurance Coverage

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Betterment Cash ReserveBetterment is a lot more than a robo advisor. With feature-filled checking and savings products, it can handle most, or potentially all, of your money needs. Betterment Cash Reserve is a savings product with very high levels of FDIC insurance coverage and an above-average interest rate. Follow this review to decide if Betterment Cash Reserve makes sense for your money.

The Betterment Cash Reserve account is a competitive savings product from Betterment. This unique savings product works in conjunction with partner banks, which gives you more FDIC protection than with the typical high yield cash account. The interest rate is much higher than the typical brick-and-mortar bank but falls short of leading online banks.

Commissions & Fees - 10
Customer Service - 7
Ease of Use - 8
Locations - 0
Savings Options - 8
Rates - 5

7

The Betterment Cash Reserve account works in conjunction with partner banks, giving you more FDIC protection than with a typical savings product. Its interest rate is higher than traditional banks but it's rate falls short of other online banks.

What Is Betterment Cash Reserve?

Betterment Cash Reserve is a savings product with some unique features that make it great for people who have existing accounts at Betterment and want to get the maximum possible FDIC insurance coverage for their cash.

Betterment Cash Reserve is an online savings product. That means you can't go to a bank to deposit cash or ask questions. But you can easily and quickly transfer money between your Betterment accounts, including Cash Reserve, with one login.

Instead of holding your cash at Betterment, funds deposited into this account are held by one or more partner banks. This allows you to get up to $1 million in FDIC coverage with one account owner or $2 million in coverage for joint accounts.

As of(September 13th, 2021), the current interest rate for this account is 0.10%. That's about five times the national average and 40 times what you would get with the biggest traditional banks in the United States.  But it's still quite a bit lower than the top-tier interest rates available with online savings products today, which can be well over 1%. However, interest rates for banks change often, so be sure to check the website for the latest rate.

Betterment Cash Reserve Features

TypeBank
AccountsSavings, Checking, Money Market, CDs
AccessWeb Based, iPhone App, Android App, Blackberry App
Amount of Branches0
ATM Reimbursement
Online Deposits
FDIC Insurance
Customer ServiceBetterment support is available by phone and online

Like most savings products, Betterment Cash Reserve is just a place to store your cash and earn interest. Here are some unique features of this account that make it stand out from the crowd:

  • No fees: There are no fees for any regular activity. Partner banks compensate betterment, so it doesn't need to charge customers to make money.
  • High FDIC insurance coverage limits: Because multiple partner banks hold balances, FDIC coverage is up to $1 million for solo accounts and $2 million for joint accounts.
  • No maximum withdrawal limit: This is technically not a savings account by Federal Reserve standards. That means you can withdraw more than six times per month with no penalties or fees.
  • Spending/saving analysis: Integrated tools in the Betterment app help you find ways to improve your savings habits and meet target balances. This works best when you also have Betterment checking and investment accounts.
  • Quick transfer times: This account features instant internal transfers between Betterment accounts and one- to two-day transfers to external accounts with no limit on how much you can move at a time.

How Does Betterment Cash Reserve Work?

In most ways, Betterment Cash Reserve works like any other online savings product. Here is how some of the features work to manage your money.

Savings Spread Across Multiple Banks

The most complex feature is all handled behind the scenes, so you don't have to worry. If you dislike any bank on the list, you can call Betterment customer service and opt-out of that specific depository institution.

The partner banks as of May 18, 2020, are:

  • The Bancorp Bank
  • Barclays Bank Delaware
  • Citibank
  • Cross River Bank
  • HSBC Bank USA
  • State Street Bank and Trust Company
  • and Wells Fargo Bank.

These banks use demand deposit accounts and money market accounts to hold the funds in your name. But you never have to interact with the partner banks directly. On the surface, it's all Betterment.

Enhanced FDIC Coverage

Each bank account is FDIC insured up to $250,000 per depositor. That means you usually get $250,000 in FDIC coverage for an account on your own or $500,000 for joint accounts.

But Betterment holds your funds at up to four partner banks at a time. And this means you can get four times the FDIC insurance coverage. If Betterment goes out of business, you are guaranteed by the U.S. government to get your money back up to $1 million for your own account or $2 million for joint accounts.

Managing Your Account

Accounts are managed with the Betterment mobile app and website. Both are easy to use and navigate. The apps offer excellent integration of Betterment investment, checking, and Cash Reserve accounts.

Betterment Cash Reserve vs. Competitors

HighlightsWealthfront Cash

LendingClub BankBetterment Cash Reserve
Rating7.5/107/107/10
AccountsSavings, Checking, Money Market, CDsSavings, Checking, Money Market, CDsSavings, Checking, Money Market, CDs
Online Deposits
Physical Branches
FDIC Insurance
ATM Reimbursement

Betterment Cash Reserve Pros & Cons

Pros



High FDIC coverage
— Up to $1 million of FDIC coverage for single accounts and $2 million for joint accounts.

Above-average interest rates
— Earn interest rates well above the national average and up to 40 times higher than traditional nationwide banks.

No limit to monthly withdrawals
— Withdraw as many times as you want each month. No limit like with regular savings accounts.

Integration with other Betterment accounts
— Instant transfers to other Betterment accounts. Manage everything with one login.








Cons



Not the best interest rate around
— While rates are well above the national average, they are well below what you can get with other online savings accounts.

No cash deposits or withdrawals
— As an online account, you can't deposit cash. You can withdraw cash only if you also have a Betterment checking account with a debit card.

No in-person customer service
— Another downside of online banking is that you can't go in for help. Betterment support is available by phone and online.









Summary

Betterment Cash Reserve is high-quality savings product from a big name in robo advising. It's best for its high FDIC insurance protection and above-average interest rate. However, they do not have the best interest rate around.

If you already have accounts at Betterment, adding a savings product could make sense. And it's also a good choice if you have a high net worth and want to keep a lot of cash protected with FDIC insurance.

For alternatives with higher interest rates, check out our full list of the best online savings accounts here.

Eric Rosenberg

Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time. He has in-depth experience writing about banking, credit cards, investing and other financial topics and is an avid travel hacker. When away from the keyboard, Eric enjoys exploring the world, flying small airplanes, discovering new craft beers and spending time with his wife and little girls.

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2 Comments

  1. You claim: “Not the best interest rate around” variaible 4% APY. which online savings account is greater? The online links show banks ranging from 1-2%APY. could you provide some examples?

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