Betterment Cash Reserve is best for:
- Integration with Betterment investing
- Those who keep a lot of cash on hand
- Those who hate fees
Betterment Cash Reserve at a Glance
|Ease of Access|
- asy to access through desktop and mobile apps. No branch access.
- Cash Reserve accounts FDIC-insured up to $1 million.
- Competitive APY, though not necessarily the highest around.
- Phone and email support seven days a week until mid-late evening EST.
The Betterment Cash Reserve account is similar to an online savings account. However, it calls it “cash reserve” because it can be used in tandem with a Betterment investment account.
In other words, you can use it as a place to stash some cash you aren’t ready to invest yet. But thanks to its strong APY and FDIC insurance, you can also use Cash Reserve for your emergency fund.
Betterment is using this account as a way to round out its banking and investing products, and it does a good job of it. While you might be able to find higher annual percentage yield (APY) elsewhere, it’s still much better than traditional banks.
How Does The Betterment Cash Reserve Account Work?
The way the Cash Reserve account works is straightforward. Once you link an outside bank account to Betterment, you can easily move money into Cash Reserve. From there, you can transfer the money to other Betterment accounts, or just let it earn some interest for you.
The only thing about the Cash Reserve account that isn’t so straightforward is where Betterment keeps your money. Because Betterment is not a bank itself, it uses partner banks to hold funds in customers’ Cash Reserve accounts.
As of this writing, those partner banks are:
- Program Bank
- The Bancorp Bank
- Barclays Bank Delaware
- Citibank, N.A.
- Cross River Bank
- HSBC Bank USA, N.A.
- State Street Bank and Trust Company
- Wells Fargo Bank, N.A.
This list is current as of May 4, 2020. Betterment doesn’t deposit funds in your name into accounts with these banks. Instead, it uses money market accounts and demand deposits to hold funds in your name. Thus, you are still a customer of Betterment, and not its partner banks.
One of the biggest benefits of Betterment Cash Reserve is the high-yield savings feature. These interest rates tend to change frequently, mostly because they are usually tied to the federal funds rate.
These rates peaked in July 2019 but have been near-zero thanks in large part to the coronavirus pandemic. Because of that, online savings accounts have had also had low interest rates (though still higher than the fed funds rate).
All that being said, while Betterment doesn’t necessarily have the best interest rates in the industry for its Cash Reserve accounts, they are still good. Because all online banks are at the mercy of the fed and of the economy as a whole, they can only offer so much.
Betterment offers some of the best FDIC insurance around for its Cash Reserve accounts. But where accounts at other institutions usually offer $250,000 or $500,000 of insurance, Betterment covers you up to $1 million in cash. That’s due to the nature of partnering with several other banks and spreading your money between them. This is of course a big benefit and means you can use this account for big savings goals or even to help fund your real estate investments.
How Do You Access Your Betterment Cash Reserve Account?
It’s easy to access your Cash Reserve account just like you would any other account at Betterment. There is both a desktop site and a mobile apps on both iOS and Android. The apps are easy to use and provide a uniform experience with the desktop site.
Read more: Betterment App Review: Best App for Mobile Investing?
The Betterment Cash Reserve account does what it promises and does it well. It may not be packed with features, but then, it’s just one piece of what Betterment has to offer.
For its part, Betterment Cash Reserve has a competitive APY and one of the highest amounts of FDIC insurance we’ve seen. You can’t transfer cash into your account and there is no branch access, but it’s easy to move your money into an investment account at Betterment.
Overall, Betterment Cash Reserve is a solid option, both as a complement to a Betterment investment account or as a standalone savings account.
To learn more about Betterment, read our full Betterment review.