Betterment Checking and Cash Reserve: Online Cash Management Account Review

Aug 17, 2021

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Betterment Cash Reserve
NerdWallet rating 

at Betterment

Like most cash management account providers, Betterment is not a bank. It’s an online financial service provider that helps customers invest their money. Betterment sweeps customers’ funds into accounts at program banks, where it benefits from FDIC insurance. Betterment has two complementary accounts, formerly known as Betterment Everyday: Betterment Cash Reserve and Betterment Checking.

Betterment Cash Reserve offers a solid annual percentage yield with no fees and no minimum balance requirement.

Betterment Checking has a debit card available and reimburses ATM fees worldwide. This account also has no monthly fees or minimum balance requirement.

Where Betterment shines

Where Betterment falls short

  • Solid 1.60% APY** on Betterment Cash Reserve

  • No monthly fees or minimum balance

  • ATM fees reimbursed worldwide on Checking

  • FDIC insured through third-party bank

  • Offers debit cards for Betterment Checking account

  • No interest on Checking

  • No branches

  • No check deposit or writing

  • Limited live phone support hours and no chat support

See more from Betterment

Betterment says: "Betterment Cash Reserve ("Cash Reserve") is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients' funds are deposited into one or more banks ("Program Banks") where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.

Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC's Form ADV Part II."

Betterment says: ""The annual percentage yield ("APY") on the deposit balances in Betterment Cash Reserve ("Cash Reserve") is 1.60% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the "Program Banks") and is current as of May 11, 2022. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.""

Betterment says: "For Cash Reserve ("CR"), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance."

» See how Betterment compares on NerdWallet's full list of Best Cash Management Accounts.

Checking and savings features

5.0/5.0

Upsides:

Good APY for Cash Reserve. The APY on Betterment Cash Reserve is currently an above-average 1.60%**. While not a bank account itself, this account has a rate that’s higher than most traditional brick-and-mortar bank accounts. However, it lags behind the best rates of some online banks.

**Betterment says: "The annual percentage yield ("APY") on the deposit balances in Betterment Cash Reserve ("Cash Reserve") is 1.60% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the "Program Banks") and is current as of August 01, 2022. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts."

No monthly fees or minimum balance. Both the Betterment Cash Reserve and Betterment Checking products have no monthly fees or minimum balances.

Customers can withdraw cash, and ATM fees are reimbursed. Betterment reimburses all ATM fees incurred worldwide on its Betterment Checking account.

Debit cards are available. Customers can use a Betterment Visa debit card to access their funds in Betterment Checking.

» What is a cash management account? Check out NerdWallet’s guide to this financial product

Downsides:

No check deposits or check writing. With Betterment Cash Reserve, the only way to deposit and withdraw funds is through online transfer to or from a linked checking account. Betterment Checking plans to make mobile check deposits and check writing available in the future.

Things to consider:

APY can fluctuate without notice. As with other cash management products, the program banks that Betterment partners with are subject to the changing federal funds rate, which is the set rate at which banks loan money to one another. This means that the APY Betterment offers customers moves up and down in conjunction with the rates of its program banks. Essentially, as with savings accounts at regular banks, the APY you open your account with is not guaranteed.

» Looking for more information about Betterment? Check out NerdWallet’s review of its investment services

Customer experience

4.0/5.0

Upsides:

High-quality website. The Betterment website is well-designed, and information on its different products is easy to find. There is also a robust Frequently Asked Questions section on the site that provides additional information on how Betterment’s products work.

High app store ratings. The Betterment mobile app is highly rated in both the Apple App Store and the Google Play store.

Twitter support available. Betterment provides Twitter support to its customers on its @BettermentHelp channel.

Downsides:

Betterment Cash Reserve
NerdWallet rating 

at Betterment

No branches. Betterment is an online-only service provider, so customers can receive help only through remote means of communication like phone, mail, email and Twitter support.

Limited live phone support hours and no chat support. Phone support and email is available Monday through Friday, 9 a.m. to 6 p.m. ET, but only email is available on weekends. The site has no online chat support.

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