Betterment Everyday™ Savings Terms and Conditions
Revised August 13, 2019
This document (the “Terms and Conditions”) provides you with important information about how Betterment Everyday Savings (“Savings” or the “Program”) works. Savings provides you with the opportunity to earn interest on cash you intend to purchase securities with through Betterment LLC (“Betterment”) and MTG LLC d/b/a Betterment Securities ("Betterment Securities"). Savings should not be viewed as a long-term investment option.
Please read the Terms and Conditions carefully. These Terms and Conditions supplement the terms and conditions contained in the Betterment Client Agreements and related documents which govern your Betterment Securities brokerage account.
By using the Program you acknowledge that you have received, carefully read, and agreed to be bound by these Terms and Conditions.
Savings is available only to clients of Betterment Securities who are also clients of Betterment, Betterment Securities’ affiliated, SEC-registered investment adviser.
On any given day, as instructed to do so by Betterment, Betterment Securities, acting as your agent, will deposit your funds into interest-bearing deposit accounts (“Deposit Accounts”) at one or more participating banks (each a “Deposit Bank”). The Deposit Banks are set out on a list of Deposit Banks into which your funds may be deposited (the “Deposit Bank List”), which is available at https://www.betterment.com/legal/everyday-savings-program-banks. The Deposit Bank List may change, as explained in Section 4 (“Selection of Deposit Banks”).
Each Deposit Account will be eligible for FDIC insurance up to the maximum applicable deposit insurance amount of $250,000 for each insurable capacity, including principal and accrued interest, when aggregated with all other deposits held in the same insurable capacity at each Deposit Bank, as described in Section 8 (“FDIC Insurance”). The Program is designed to offer up to $1 million in FDIC coverage to deposits held in each insurable capacity (the “Aggregate Maximum Coverage Limit”) because your funds will be deposited in Deposit Accounts at up to four Deposit Banks.
Betterment Securities will place up to $250,000 into Deposit Accounts at one or more Deposit Banks on the Deposit Bank List. If the funds that Betterment Securities, on your behalf, deposits through the Program exceeds the Aggregate Maximum Coverage Limit, the deposits in excess of the Aggregate Maximum Coverage Limit will be deposited in a designated bank but will not be FDIC insured.
You will not have a direct account relationship with a Deposit Bank, and you will not be able to deposit funds into or withdraw funds directly from the Deposit Account. All questions regarding the Deposit Accounts, including any notice of unauthorized activity and any complaints regarding Savings, should be directed to Betterment Securities (by emailing email@example.com) and not to the Deposit Banks.
Each Deposit Account constitutes a direct obligation of the Deposit Bank and is not directly or indirectly an obligation of Betterment Securities. You can obtain publicly available financial information concerning each Deposit Bank at fdic.gov or by contacting the FDIC Public Information Center by mail at L. William Seidman Center, Virginia Square, 3501 North Fairfax Drive, Arlington, VA 22226, or by phone at 703-562-2200. Betterment Securities is not responsible for the financial condition of the Deposit Banks, and does not guarantee in any way the financial condition of the Deposit Banks or the accuracy of any publicly available financial information concerning Deposit Banks.
2. Relationship to Transfer Sweep Program
Savings is offered as an investment option for you. Whether or not you elect to participate in Savings as an investment option has no effect on your participation in the Transfer Sweep Program, as that term is defined and described in your Betterment Client Agreements. Any funds in your Betterment Securities brokerage account that are not deposited into Deposit Banks through the Program will be swept as described in the Betterment Client Agreements, including the section setting forth the Transfer Sweep Program.
3. Deposit Bank List
Betterment Securities enters into agreements with Deposit Banks that agree to accept funds through the Program. Betterment Securities, or any of its affiliates, may be a customer of a Deposit Bank or have other financial interactions with a Deposit Bank.
The Deposit Bank List is available at https://www.betterment.com/legal/everyday-savings-program-banks. You should review the list carefully for information about which Deposit Banks are participating in the Program at any point in time. The Deposit Bank List is subject to change, and updates will be reflected on our website. Typically, you will be provided advance written notice of any changes to the Deposit Bank List in accordance with the terms governing the provision of notice in the Betterment Client Agreements. However, you acknowledge and agree that under certain limited circumstances, prior notification may not be possible.
You may exclude any Deposit Bank from the Program by making a request in writing to firstname.lastname@example.org. Any request to exclude a Deposit Bank will result in Betterment Securities withdrawing any current deposit of yours at that Deposit Bank. You may exclude a Deposit Bank for any reason, including but not limited to deposits you hold in the same capacity at that Deposit Bank outside the Program. If your funds are not able to be held in at least four Deposit Banks for any reason, including if you have removed one or more Deposit Banks, you will not be able to receive the Maximum Aggregate Coverage. If the aggregate amount of your deposits exceed the capacity of Deposit Banks to provide FDIC insurance, you will be notified, and any excess funds will be deposited in Deposit Banks but will not be covered by FDIC insurance. You further acknowledge and agree that there may be a delay of up to five (5) business days between when your request is received and a particular Deposit Bank is excluded. Your decision to exclude a Deposit Bank can be revoked at any time, provided that the Deposit Bank is still participating in the Program.
Deposit Banks may be added or removed from the Program based on various factors, including a determination by the Deposit Banks to leave the Program or a decision by Betterment Securities to add or remove Deposit Banks to or from the Program. If a Deposit Bank is removed from the Program, Betterment Securities will transfer your deposits from that Deposit Bank into one or more Deposit Bank(s).
4. Establishment of the Deposit Accounts
Betterment Securities, acting as your agent, will open one or more Demand Deposit Accounts (“DDAs”) at Deposit Banks. Upon notice to you, Betterment Securities will open one or more linked Money Market Demand Accounts (“MMDAs”) at Deposit Banks. Due to federal banking regulations, any Deposit Bank participating in the Program reserves the right to require seven (7) business days’ prior notice before permitting transfers or withdrawals from an MMDA. Betterment Securities intends to receive a representation from any Deposit Bank participating in the Program with an MMDA that it does not currently intend to exercise this right, but in the event that a Deposit Bank exercises its right to require seven (7) business day’s notice prior to a withdrawal from an MMDA, you may experience a delay in accessing your funds.
Deposit Accounts are non-transferable.
5. Your Relationship with Deposit Banks
Deposit Account ownership will be evidenced by a book entry on the account records of each Deposit Bank and by records maintained by Betterment Securities as your custodian. No evidence of ownership, such as a passbook or certificate, will be issued to you. Your Betterment Securities account statements will reflect the balances in your Deposit Accounts at the Deposit Banks. You should retain the Betterment Securities account statements for your records. You may, at any time, obtain information about your Deposit Accounts by contacting Betterment Securities.
Betterment Securities may, in its sole discretion terminate your use of the Deposit Accounts as an investment option. If Betterment Securities terminates your use of the Deposit Accounts as an investment option, you may establish a direct depository relationship with each Deposit Bank, subject to its rules with respect to maintaining deposit accounts.
Similarly, if you decide to terminate your participation in the Program, you may establish a direct relationship with each Deposit Bank by requesting to have your Deposit Accounts established in your name at each Deposit Bank, subject to each Deposit Bank’s rules with respect to establishing and maintaining deposits accounts.
6. Deposit and Withdrawal Procedures
The timing of deposits and withdrawals is typically as follows:
An instruction from Betterment to Betterment Securities prior to 10:00 pm Eastern time typically will be received by a Deposit Bank the next business day. Transfers from Betterment investing goals to Deposit Accounts typically will be received by a Deposit Bank two business days after the transfer is initiated. Withdrawal requests from Deposit Accounts completed in Betterment’s interface prior to 2:00 pm Eastern time typically will result in an ACH transfer to your linked checking account the next business day. Transfers of funds from Deposit Accounts to a Betterment investing goal typically will result in the placement of trades for investments the same business day as the transfer is initiated.
The foregoing times are not guaranteed and are subject to change at Betterment Securities’ discretion without prior notice. Betterment Securities may impose a longer waiting period on certain deposits or withdrawals in accordance with its risk management procedures.
There is no minimum deposit amount, although individual Deposit Banks may establish minimum amounts for deposits. There are no limits to the number of deposits or withdrawals you can make under the Program, but the maximum deposit limit per ACH transaction is $300,000. There is no maximum withdrawal amount.
You acknowledge and agree that until your funds are received and processed by Deposit Banks, your funds will not be FDIC insured.
7. Allocation of Deposits into and Withdrawals from Deposit Accounts
Pursuant to its authority under the Betterment LLC Advisory Agreement, Betterment will oversee and approve the methodology for allocating funds to Deposit Banks, which will take into account any decision by you to exclude one or more Deposit Banks. On any day in which a deposit or withdrawal is to be made, Betterment Securities will proceed to deposit and withdraw funds according to an allocation methodology that has been approved by Betterment.
8. FDIC Insurance
The Deposit Accounts (including principal and accrued interest) are insured by the FDIC, an independent agency of the U.S. Government, up to $250,000 for all deposits held in the same insurable capacity. In the event a Deposit Bank fails, the Deposit Accounts are insured, up to $250,000, for principal and interest accrued to the date the Bank is closed.
For more information about FDIC insurance coverage, you should review carefully the information available on the FDIC's web site at https://www.fdic.gov/deposit/index.html. You may also call the FDIC at 877-275-3342 or write to the following address: Deposit Insurance Outreach, Division of Depositor and Consumer Protection, 550 17th Street NW, Washington, DC 20429.
You understand and acknowledge that FDIC insurance applies on a per-bank basis. You, and not Betterment Securities or any of its affiliates, are responsible for monitoring the total amount of deposits that you have at each Deposit Bank to determine the extent of FDIC deposit insurance available to you. Any deposits (including certificates of deposit) that you maintain with a Deposit Bank, directly or through an intermediary, including through multiple accounts held at Betterment Securities or another broker-dealer in the same insurable capacity, will be aggregated with your funds in your Deposit Accounts at each Deposit Bank for the purpose of determining your FDIC insurance coverage.
In the unlikely event of a bank failure, and FDIC deposit insurance payments become necessary, there is no specific time period during which the FDIC must make insurance payments available, and you may not earn interest on your deposits from the time a Deposit Bank is closed. You understand and acknowledge that you may be required to provide certain documentation to the FDIC before insurance payments are made.
9. SIPC Coverage
Deposit Accounts are not protected by SIPC. Please see your Betterment Client Agreements for additional information about SIPC coverage and how it applies to your Betterment Securities brokerage account.
The interest rate at each Deposit Bank will be determined by the amount each Deposit Bank has agreed to pay with respect to the Deposit Accounts, less fees to Betterment Securities and other parties. The interest you receive on your Deposit Account balances on any given day may vary between Deposit Banks.
Interest rates paid on the Deposit Accounts may change daily.
Interest will be compounded monthly and posted monthly to each Deposit Bank account. Posted interest may be rounded to the nearest cent. Interest will accrue on Deposit Account balances from the day funds are received and accepted by the Deposit Bank through the business day preceding the date of withdrawal from the Deposit Bank.
The interest rate you earn on your Deposit Account balances may be higher or lower than the interest rates available to depositors making deposits directly with Deposit Banks, through other types of accounts at Betterment Securities, with other depository institutions in comparable accounts, or with alternative short-term investment options. The interest rate offered on the Deposit Accounts may not be the highest interest rate available or at an interest rate that is comparable to money market funds.
The fees paid by each Deposit Bank may vary, but the total fee received annually by Betterment Securities will be, on average, 0.25% of the total balances in the Deposit Accounts in the Program. Betterment Securities may reduce or waive its fee at any time in its sole discretion. In addition to Betterment Securities, other service providers will receive fees from each Deposit Bank.
12. Information and Statements
Transactions made through the Program will be displayed on your periodic Betterment Securities brokerage account statement. You will not receive trade confirmations. For each statement period, your statement will contain:
- All deposits to and withdrawals from your Betterment Securities brokerage account to/from Deposit Banks;
- The opening and closing balances of the Deposit Accounts at each Program Bank;
- The interest earned on your funds in Deposit Accounts; and
- The interest rate applicable to your Deposit Accounts at the end of the statement period.
You understand and agree that you will not receive a separate statement from the Deposit Bank(s). Your Betterment Client Agreements set forth additional information and terms regarding your receipt of periodic statements, including your obligation to notify Betterment Securities of any errors contained in your periodic statements.
13. Tax information
For most clients, interest earned on Deposit Account balances will be taxed as ordinary income in the year it is received. Betterment Securities will issue you a Form 1099-INT. Betterment Securities is not a tax advisor, and you should consult with a tax advisor to determine the tax consequences of earning interest through the Program.
Betterment Securities may modify these Terms and Conditions at any time upon prior written notice to you, which may be electronic, by means of a letter, an entry on your Betterment Securities brokerage account statement, an insert to your Betterment Securities brokerage account statement, or by other means. The current Terms and Conditions will be available on the website, at https://www.betterment.com/legal/everyday-savings.