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.
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
|Accounts||Savings, Checking, Money Market, CDs|
|Access||Web Based, iPhone App, Android App, Blackberry App|
|Amount of Branches||0|
|Customer Service||Betterment 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
- 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
|Accounts||Savings, Checking, Money Market, CDs||Savings, Checking, Money Market, CDs||Savings, Checking, Money Market, CDs|
Betterment Cash Reserve Pros & Cons
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.
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.
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.