Betterment cash management account review 2024
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“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Published 8:00 a.m. UTC Feb. 14, 2024
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Betterment cash management account
Pros
- No monthly maintenance fees.
- Federal deposit insurance up to $2 million ($4 million for joint accounts).
- High yield of 5.00% to 5.50%.
Cons
- No ATM access.
- No debit cards.
About Betterment’s cash management account
- APY: 5.00% to 5.50% (variable).
- FDIC insurance: Up to $2 million for individual accounts and $4 million for joint accounts.
- Withdrawal limits: None.
- Minimum opening deposit: $10.
- Minimum account balance: $0.
Account details and annual percentage yields (APYs) are accurate as of February 8, 2024.
The Betterment Cash Reserve account is a cash management account — it’s designed as a place to store your cash while you’re deciding how to invest it. It’s not built as a savings account, but, in some cases, it might be better than one.
It currently offers up to 5.50% APY after meeting activity requirements for the first three months for new customers, then 5.00% annual percentage yield (APY), which is competitive even compared to the best high-yield savings accounts.
This account allows you to grow your funds without fees. You can do unlimited withdrawals (many traditional savings accounts limit you to six transactions per month) and you don’t have to worry about maintaining a certain account balance to keep the account open or to qualify for the yield.
Betterment is not a bank, but your deposits are protected for up to $2 million ($4 million for joint accounts) in federal deposit insurance thanks to its partner banks.
Other Betterment products
- Investing. You can choose between a slew of traditional investing products, such as 401(k)s and IRAs, but can also take a modern approach with crypto investing.
- Checking account. With this mobile-centric checking account (Betterment Checking), you will get a debit card that has no ATM or foreign transaction fees.
- Debit card rewards. You can earn automatic cash back at select retailers; the percentage reward depends on the retailer.
- Financial planning. If you want a more personal touch than robo investing allows for, you could opt to work with a Betterment financial advisor. The fee is 0.40% annually and, to qualify, you’ll need a minimum balance of at least $100,000.
How Betterment’s cash management account stacks up
Betterment Cash Reserve vs. Vanguard
The Vanguard Cash Plus Account is also a cash management account (not a savings account) and, like Betterment, it has no monthly fees and no minimum balance requirements. But its yield is slightly lower, at 4.70% APY, and it offers significantly less deposit insurance: $1.25 million for individual accounts and $2.5 million for joint accounts. In comparison, Betterment offers 5.00% to 5.50% APY and deposit insurance of up to $2 million for individuals and $4 million for joint accounts.
Also, Vanguard notes that only select clients will be eligible to open the account — not everyone will qualify.
Betterment Cash Reserve vs. Fidelity
Betterment blows Fidelity out of the water when it comes to yield. While the Betterment Cash Reserve account offers a 5.00% to 5.50% APY, the Fidelity Cash Management Account has only a 2.72% APY. Neither charges account maintenance fees, but Betterment is the clear winner when it comes to earning potential.
Where Fidelity really stands out is accessibility. You can access your Fidelity Cash Management funds through the use of a digital wallet or debit card. With Betterment, you have to transfer money out of your cash management account and into a checking or savings account to access it.
Betterment Cash Reserve vs. Wealthfront
The Wealthfront Cash Account is one of the best cash management accounts for its competitive rates, lack of fees and high deposit insurance.
It offers an impressive APY of 5.00% and even offers a referral bonus of a 0.50% APY boost for three months. Every time your referral link is used to open and fund an eligible account, you will earn another three months (for up to six months) of the bolstered yield.
Both Betterment and the Wealthfront Cash Account do not charge monthly account fees, but Wealthfront offers more deposit insurance: You can receive up to $8 million in coverage.
About Betterment
A relatively young company, Betterment isn’t a financial powerhouse like Charles Schwab, Fidelity or E*TRADE; it’s not at the top of the list in one of J.D. Power’s investor satisfaction studies. But, as a private company, it was valued at $1.3 billion in 2021.
The firm focuses on robo investing, in which you use a robo advisor created by experts to manage your investments. It is less pricey than working with a financial advisor directly. You can also open a checking or a cash management account to support your investing.
Frequently asked questions (FAQs)
Betterment is not directly insured by the Federal Deposit Insurance Corp. (FDIC). Rather, it partners with banks that are so it can offer deposit coverage up to $2 million ($4 million for joint accounts).
A Betterment Cash Reserve account is not a savings account. Instead, it is a high-yield cash management account that offers an APY of 5.00% to 5.50%. Being able to tap into such a high earnings rate can make it easier to grow your savings. You can even create multiple savings goals and leverage their automated tools to make progress.
You can earn a yield of 5.00% to 5.50% on any amount of savings held in the Betterment Cash Reserve account. However, that yield is variable and subject to change.
In order to keep your Betterment Cash Reserve account open, you don’t have to meet any minimum balance requirements. That means that, even if your account balance falls to $0, your account remains active. However, whenever you make a deposit into the account, you must deposit at least $10 (due to ACH transaction limitations).
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
