Betterment Checking and Cash Reserve Replaces Betterment Everyday – Earn a Higher Yield on Your Money
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This Betterment savings (Cash Reserve) and checking account review delves into every corner of the newly upgraded Betterment Cash Reserve money management features. Betterment is on the road to making the firm a full service financial management platform. (prevoiusly named Betterment Smart Saver)
Betterment Checking and Cash Reserve Review
- Ease of Use
- Savers seeking high yield cash account.
- Individuals who want no-fee ATM transactions.
- Betterment customers.
- Part of the top-rated Betterment robo-advisor.
- $1,000,000 insured cash-reserve account.
- Unlimited, no-fee transactions.
- No bank branches.
- Betterment checking only offers individual, not joint accounts.
Betterment is one of the premier robo-advisors with over $22 billion of assets under management. Known for its smart and affordable investment management, the Betterment Cash Reserve savings and checking accounts are another plus for this already excellent robo-advisor.
“Not sure how much extra cash you have? We’ve got you covered. We can analyze expenses, estimate spending needs, and help you figure out just how much extra cash you might be holding in your checking account.” ~Betterment website
What is Betterment Checking and Cash Reserve?
Think of Betterment Checking and Cash Reserve as the cash management arm of your finances. Betterment’s checking account is free.
While Betterment’s Cash Reserve Account is like a souped up savings account with higher returns than average, akin to a top notch money market.
Here’s why you need the checking and cash reserve savings accounts.
You need cash to pay for regular expenses, emergencies, and to have on hand for expected expenses that will crop up during the next few years. Cash is important to pay for an upcoming vacation, an unexpected car repair, and for a home down payment.
The Betterment checking and cash reserve accounts are for your cash management:
- Checking account – For your day-too-day financial transactions.
- Cash reserve account (savings account) – A high yield cash account that offers high returns for the ready cash that you’ll need in the short and intermediate term.
Betterment Checking and Cash Reserve Features
Betterment checking is a checking account with debit card. The checking account is provided in partnership with nbkc bank.
- Debit card
- ATM fees reimbursed – worldwide
- No minimum balance required
- No maintenance fees
- FDIC insurance up to $250,000 account balance
- Awesome mobile app with check deposit
- Betterment Cash Reserve
The Betterment Cash Reserve account offers high yield cash management, with zero fees.
The interest rate will change according to current market rates and is 5 times the national average ( according to Betterment).
Your cash reserve funds are held in program banks that are associated with Betterment.
Cash Reserve Features:
- High yield (interest rate) cash account (adjusts depending upon market interest rates)
- Access to cash within 1-2 business days
- No limit on withdrawals
- No minimum balance required
- No fees
- FDIC insurance covering up to $1,000,000 through the Betterment’s program banks.
- Joint accounts available
Betterment Cash Reserve Current Interest Rate
Betterment cash reserve currently pays 0.40% APY (annual percentage yield) on your cash balance. This is 5 times the national average, according to Betterment.
Maximize Returns With Cash Analysis
Cash analysis is another way to improve the returns on your cash. This tool computes how much extra cash you have in your checking account that you won’t need. Betterment does this by organizing and predicting your expenses. Then, if there is excess cash, it can be transferred into Betterment Cash Reserve to earn higher interest payments.
If there’s not enough cash to meet expected needs, the analysis will let you know. It’s kind of like having your own Betterment emergency fund management tool!
Improve Long Term Returns With Two-Way Sweep
Two way sweep keeps your cash working and earning, ultimately improving your long term returns.
After linking your external checking account or your Betterment Checking account. Two-Way Sweep will move any extra money that you won’t be needing, as determined by the Cash Analysis, into your Cash Reserve savings account.
Here’s how two-way sweep works:
- Betterment analyzes the cash in your checking account daily to determine the appropriate amount for your needs.
- Next, cash is automatically transferred between your checking and cash reserve account.
This ensures that you don’t have extra money in your checking account, not earning any interest.
Don’t worry, when your checking account balance runs low, you can easily move cash back into your checking account.
Betterment sends an alert before any cash sweep, so that you can cancel the transaction, if you’d like.
Betterment also offers the BlackRock Target Income Portfolios, for conservative investors seeking cash flow.
You can withdraw funds from your Betterment cash account within one to two days in most cases.
You can open an individual account at Betterment Checking. You can open both an individual or joint account at Betterment Cash Reserve. Although cash analysis and two-way sweep are only available on Betterment Cash Reserve individual accounts.
Yes, all money within the cash reserve is covered up to $1,000,000 in FDIC insurance, and up to $2,000,000 for joint accounts, once deposited in Betterment’s affiliated program banks.
Money held in checking is insured up to $250,000.
Two-factor authentication adds to the apps security.
Interest is accrued on cash reserve accounts daily and is paid at least monthly.
Betterment Checking and Cash Reserve vs Wealthfront Spend
Both Betterment and Wealthfront are among our favorite robo-advisors. The cash management features are excellent additions to their platforms.
|Services||Checking and high yield savings.||High yield savings account. Checking coming soon.|
|Minimums||No minimum.||No minimum.|
|Best for:||Betterment customers||Wealthfront customers|
Betterment currently offers checking while Wealthfront’s checking features are coming soon. So, we recommend Betterment over Wealthfront for cash management solutions. Although if you’re already a Wealthfront customer, you might want to wait for their new checking account.
DIY Alternatives to Betterment Checking and Cash Reserve
Since cash seems so easy to handle, many investors are content with either leaving it in a savings account or trying a do-it-yourself option for earning high returns on cash. Unfortunately, not all DIY options are that much better than savings accounts.
High yield bank money market – Money market accounts do typically pay greater returns than savings accounts, but aren’t overly impressive: a quick search on Google makes it clear that money markets at traditional banks aren’t going to wow anyone with their interest payouts anytime soon.
While bank money market accounts are FDIC insured, they also come with one big limitation: account holders can only withdraw money up to 6 times per month. While Betterment checking and savings allows unlimited withdrawals.
Certificates of deposit – These are another option for investors to earn high returns on cash, but they too come with some limitations. These funds tie up cash investments for a year or so, depending upon the terms of the CD. This makes them less liquid than investors might like.
Money market mutual funds – These are available through some, but not all investment brokerage firms. While typically paying more than a savings account, it’s unlikely that their returns will beat the Betterment interest rate.
Betterment Checking and Cash Reserve Pros and Cons
- Superb interest rates – Betterment Cash Reserve rates compare favorably with the highest returns available online.
- All ATM fees reimbursed – worldwide.
- FDIC insured, just like a typical bank.
- A Visa debit card is available.
- Unlimited withdrawals are unlike comparable high yield bank accounts which typically limit withdrawals to six per month.
- No fees or minimum balance requirements.
- The opportunity for investing and cash management services within one platform.
- Cash analysis and two-way sweep replace the need to constantly monitor your account.
Betterment Cash Management Cons
- No bank branches. (Although that’s common with other online banks.)
- Betterment checking only offers individual accounts, not joint.
- Phone support only available on week-days.
- Withdrawing cash takes a day or two.
- Like all high yielding cash accounts, the interest rate fluctuates, based upon market interest rates.
Betterment Checking and Savings Wrap Up
Betterment is one of our favorite robo-advisors with low fees, excellent investment choices and financial advisor access. The addition of high yield savings and checking products is icing on top of an already delicious robo-advisor cake!
Although high yield cash returns are historically low today, this won’t always be the case. Betterment’s lack of fees, higher yields, and two-way sweep make the cash management solutions simplify your complete money management.
It’s just so much easier to keep investing, saving, and spending all under one roof.
Large investors, with one million or more in savings, are well served to keep their cash insured with Betterment.
If you’re seeking a high yield cash account, checking with refundable ATM fees and no limit on transactions, then Betterment is worth a look.
We continue to rank Betterment as one of our favorite robo-advisors and the cash management solutions only add to their benefits.
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- Find out how Nobel Prize winner Richard Thaler Influenced Betterment.
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.