Betterment Savings Account is among the Best Cash Management Accounts
This Betterment Savings Account Review will delve into every corner of the newly upgraded Betterment EveryDay. Betterment Everyday is on the road to making the firm a full service financial management platform.
The Betterment robo-advisor wants to be your one-stop-shop financial management portal!
What is Betterment Everyday?
Think of Betterment Everyday as the cash portal of your finances. You have investment accounts like your work 401(k) and IRAs and maybe you also have an investment account at Fidelity, Schwab or Betterment.
The Betterment savings and checking accounts are for your cash management.
You need cash available 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 downpayment.
Betterment EveryDay offers:
- One of the highest yields in the banking industry.
- FDIC-insurance up to $1,000,000.
- Faster withdrawals. You can transfer money between Savings and linked checking accounts within 1-2 business days.
Betterment EverydayTM Savings is now called Betterment EverydayTM Cash Reserve
This Betterment Everyday Review will introduce you to all the features of Betterment savings and Betterment checking. It will answer the questions:
- How often does Betterment pay interest?
- How long does it take to withdraw from Betterment?
- Is Betterment FDIC insured?
- And all of your Betterment high yield savings account concerns.
The Betterment Saving Account Keeps all of Your Money Earning
Betterment is one of the premier robo-advisors with over $16 billion of assets under management. Known for it’s smart and affordable investment management,the Betterment EveryDay cash management option is another plus for this already excellent robo-advisor.
Everyone who invests in the stock market wants a high return on their investments—but do we all expect high return on cash as well? You should! Betterment EveryDay Cash Reserve can increase returns on your short-term cash.
“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
By investing your short-term cash and emergency funds in your Betterment account, along with your investment funds, you’ll increase your total returns. Including cash in your Betterment returns can increase the total return on all of your money. By adding your short-term cash to your Betterment stock and bond investments, your overall portfolio volatility should decrease as well.
It’s important to keep a cash stash for emergencies and immediate financial expenses.
Most readers of Robo-Advisor Pros would likely agree that the best place for their money is not tucked under the mattress. Yet many people still find themselves with cash sitting unused in savings accounts or other low-interest accounts “just in case.”
Keeping your cash in unproductive accounts prevents a high return on cash and limits your potential financial growth. Nobody wants that!
Find out how Nobel Prize winner Richard Thaler Influenced Betterment.
Although it is a good idea to keep liquid assets, cash is a particularly difficult asset to grow because interest rates are low, and have been for quite some time. Betterment‘s EveryDay Cash Management suite of options can help you reach your financial goals by making the most of your cash.
Why You Need Betterment Everyday to Maximize All of Your Returns—Even Cash!
When you take a close look at your financial goals, where does cash factor in? Many people take great care to ensure that their investments are diversified to protect against sudden market drops or shifts, but cash is often neglected.
Betterment EveryDay seeks to remedy this oversight in many financial plans by introducing an option for more liquid investments to earn a decent yield.
Click here for immediate access to the Betterment Website.
Betterment EveryDay operates under the assumption that inflation rates will make cash virtually worthless if it is left in traditional savings accounts. Because inflation is slated to grow at approximately 2% each year, and the average brick and mortar bank pays less than 0.05% interest on savings accounts, it’s likely that you are actually losing money when you keep cash in savings accounts.
Online savings accounts can certainly earn you 2% or more in interest, but may limit monthly withdrawals.
Betterment EveryDay offers unlimited withdrawals with no minimum investment amount.
Still not convinced that returns on cash need to be maximized? Let’s look at some numbers:
Most financial experts recommend keeping at least 6 months of expenses in a savings account in case of emergencies or a job layoff. Assuming a mortgage payment of around $1,500 each month, a $2,500 monthly budget would not be too much of a stretch for a family of four.
$2,500 over 6 months comes out to a goal of $15,000 in savings for a 6-month emergency fund.
If you are not getting high returns on cash, this $15,000 is doing you little good for your financial future. Imagine the growth if you were able to maximize your returns on this cash?
With Betterment EveryDay’s higher interest rates, you might earn a $300.00 return on your $15,000 savings balance. In contrast, you’d earn a paltry $75.00 per year on a $15,000 savings account, earning 0.05% interest.
DIY Alternatives to Betterment Everyday
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.
Take a high-yield bank money market, for example. Money markets are some of the most common ways that investors try to make greater returns on their cash. While money market accounts do typically pay greater returns than savings accounts, they are not 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.
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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 Everyday Savings allows unlimited withdrawals.
Certificates of deposit are another option investors use 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 are another option. 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 EveryDay Features
Betterment EveryDay is a compelling solution to the low cash interest rates available today.
Here’s a breakdown of the Betterment EveryDay Savings and Checking features:
Betterment Everyday Cash Reserve (formerly Betterment savings):
- High yield savings account with variable interest rates (based on market interest rates). Betterment interest rate 1.78% maximum at present.
- Insured (up to $1,000,000) by Federal Deposit Insurance Corporation savings account
- No fees or minimum balance required
- Unlimited withdrawals – no cap like most savings accounts
- Faster withdrawals and transfers between Betterment EveryDay Cash Reserve and linked checking accounts – between 1 and 2 days.
Betterment Checking Account (coming soon):
Sign up to get on the waiting list. By signing up for the Betterment checking waitlist, you’re also eligible for a higher yield on your Betterment Cash Reserve funds.
- ATM fees reimbursed worldwide
- No account or overdraft fees
- No minimum balance requirement
- FDIC-insured up to $250,000
Betterment Cash Analysis
Cash analysis is another way to maximize 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!
After linking your external checking account or your Betterment Everyday Checking account to Betterment Everyday Cash Reserve. Two-Way Sweep will move any extra money that you won’t be needing, as determined by the Cash Analysis, into your Betterment EveryDay Cash Reserve.
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 will continue to offer the BlackRock Target Income Portfolios, for conservative investors seeking cash flow.
Read the compete Betterment Review.
As of October 7, 2019 the yield is 2.04% on EveryDay cash reserve accounts. With the launch of Checking, Betterment may offer a promotional rate, promised to last through 2019. These numbers may not blow investors away, but they are higher than the expected inflation rate and much higher than many savings account interest rates.
How Long Does it Take to Withdraw from Betterment?
You can withdraw funds from your Betterment cash account within one to two days in most cases.
What Type of Accounts are Available at Betterment Everyday?
You can open both an individual or joint account. Although cash analysis and two-way sweep are only available on Betterment Cash Reserve individual accounts.
Is Betterment Everyday Safe?
Wondering if Betterment Everyday is FDIC insured, the answer is “yes”! In fact because Betterment keeps your deposits at more than one bank, Betterment Savings offers up to $1,000,000 of FDIC insurance and up to $2,000,000 for joint accounts.
Betterment checking will offer FDIC insurance up to $250,000.
Click here and go directly to the website to learn more about Betterment Everyday!
Betterment Returns – Can I Expect a High Return on Cash with Betterment EveryDay Cash Reserve?
Like any financial service, EveryDay has its pros and cons. The Cash Reserve account could just as easily be called Betterment Money Market, as it’s comparable with many online bank’s high yield money market accounts. While the service offers a higher expected yield than many banks offer, this rate will change in the future, as interest rates go up and down. At present, the EveryDay Cash Reserve interest rate is among the highest available. Further, it’s unlikely that your Betterment EveryDay account returns will decline to the averages, due to their committment to higher returns.
But, the future investment returns aren’t guaranteed. Although, this is the case with all savings-type accounts except certificates of deposit.
In addition to the high yields and no fee debit card available with checking, the benefits of Betterment EveryDay, including no minimum balances, unlimited withdrawals, and no withdrawal penalties, make these cash management offerings an enticing addition to any Betterment customer’s portfolio.
Betterment Everyday Cash Management Pros and Cons
Betterment Everyday Pros
- Superb interest rates – Betterment Everyday Cash Researve rates compare favorably with the highest returns available online.
- All ATM fees reimbursed – worldwide (with the upcoming Betterment Everyday checking account).
- FDIC insured, just like a typical bank.
- Debit cards are available (with the upcoming Betterment Everyday checking account).
- Unlimited Betterment 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.
Betterment Everyday Cons
- No bank branches. (Although that’s common with other online banks.)
- 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 isn’t available yet.
Click here and go directly to the Betterment Website to learn more and open an account.
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Disclosure; I have an account with 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.
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