Betterment, the online investing adviser, debuted a high-yield savings account in July.
Betterment joined fellow robo-adviser Wealthfront in the high-yield savings space, which debuted its Cash Account earlier this year.
It’s difficult, if not impossible, to declare an outright winner between the two banking apps’ high-yield accounts.
Both Betterment’s and Wealthfront’s high-yield accounts are fee-free, allow unlimited transfers, and offer insurance coverage on up to $1 million.
As the Fed has cut interest rates since the accounts were launched, the APY for both accounts has steadily fallen. However, there are benefits to opening a high-yield savings account when interest rates are low.
See Business Insider’s picks for the best high-yield savings account »
Note that this post was originally published in the summer of 2019. Since then, the Fed cut the benchmark rate multiple times, and both accounts changed their interest rates accordingly. As of 1/14/20, the interest rate on Betterment’s Everyday Cash Reserve account is 1.83%. The interest rate on Wealthfront’s Cash account is 1.78%. They are still two of the highest interest rates available on comparable accounts.
Betterment and Wealthfront are online investing advisers at their core, but they’re making a clear play for ordinary savers.
Betterment joined fellow robo-adviser Wealthfront this summer in the high-yield savings space — a niche more commonly occupied by online banks and large financial institutions — with the debut of its Everyday Cash Reserve account. The account initially offered an eye-popping annual percentage yield (APY) of up to 2.69%, besting Wealthfront’s 2.57% APY.
But since the Federal Reserve announced its continuing cuts to the interest rate benchmark starting over the summer, Betterment’s Everyday Cash Reserve account and Wealthfront’s Cash Account have both lowered their rates, which are still well above the industry norm — the average general savings account earns 0.09%.
You can open a Betterment Everyday Cash Reserve account with as little as $10.
While technically a cash account, Wealthfront’s account has the same features as a high-yield savings account. Wealthfront debuted its Cash Account earlier this year with a 2.24% APY and had been steadily increasing it until the Fed announced its first rate cut.
It’s difficult, if not impossible, to declare an outright winner between the two robo-advisers’ high-yield accounts. Both Betterment and Wealthfront still offer some of the highest rates on the market right now, plus their accounts are fee-free, allow unlimited transfers, and are FDIC-insured up to $1 million.
High-yield savings accounts are a great place to store money for emergencies and short-term goals — including money you’re shoring up to invest — because there’s zero risk of losing it, it’s easily accessible, and it grows while it’s sitting there. Still, the current interest rate probably shouldn’t be the sole factor in deciding which account to open, as interest rates are subject to change at any time at the behest of the Federal Reserve.
But regardless of how the rate shifts over time, you’ve already made progress toward automatically …read more
Source:: Business Insider