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Cash Reserve FAQ

We want to help you make the most of your everyday money. Learn about Cash Reserve.

Articles by Betterment Editors
By the Editorial Staff Betterment Resource Center Published Jul. 23, 2019 | Updated Jun. 02, 2020
Published Jul. 23, 2019 | Updated Jun. 02, 2020
18 min read

TABLE OF CONTENTS


What are Betterment cash management products?

Betterment provides you with cash management solutions that helps you spend and save confidently.

Cash Reserve: A High-Yield Cash Account

  • A high-yield cash account
  • Earn a variable rate of APY*
  • FDIC insurance covering up to $1,000,000 at our program banks
  • Access your cash in 1-2 business days
  • No limits on withdrawals
  • No minimum balance
  • No fees on your balance

Cash Reserve available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are facilitated by Betterment Securities.

Checking

  • ATM fees are reimbursed worldwide‡
  • No minimum balance
  • No overdraft fees
  • No maintenance fees
  • FDIC insurance on up to $250,000

Checking will be provided by Betterment Financial LLC, in partnership with nbkc bank.

What is Cash Reserve?

Cash Reserve is our newest way to help you save. As part of our cash management suite, Cash Reserve is a high-yield cash account that is available now, and you can use it alone or alongside other investment goals you already have with Betterment.

Benefits:

  • Earn a variable rate of APY*
  • FDIC insurance covering up to $1,000,000 at our program banks†
  • Access your cash in 1-2 business days
  • No limits on withdrawals
  • No minimum balance
  • No fees on your balance

Cash Reserve available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are facilitated by Betterment Securities.

How can I sign up?

Ready to save?

If you don’t have an account with Betterment yet, sign up now. If you already have a Betterment investing account, log in now.

Are there any fees?

Cash Reserve has no fees on your balance. Betterment LLC only receives compensation from our program banks, and we do not charge fees on your account balance.

Are there any minimum balance requirements?

There are no minimum balance requirements to use Cash Reserve or Checking. This means that the minimum balance is $0. You can have as little or as much cash in Cash Reserve and Checking as you want—we won’t judge.

One thing to note is that the smallest deposit amount you can make into Cash Reserve is $10. This is due to ACH transaction limitations.

Is Betterment a bank?

Neither Betterment nor its affiliates are banks.

Cash Reserve is offered by Betterment LLC, an SEC-registered investment adviser, and cash transfers to program banks are facilitated by Betterment Securities.

Checking accounts and the Betterment Visa Debit Card are provided by and issued by nbkc bank, Overland Park, Kansas, Member FDIC in partnership with Betterment Financial LLC.

What is the interest rate on my cash?

Your annual percentage yield, or APY, is variable and can change. As of , the APY we are offering for Cash Reserve is *. Interest will be paid into your account by the first business day of each month, unless that day is a bank holiday, then it will be paid by the following business day.

Cash Reserve available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are facilitated by Betterment Securities.

How does the interest rate compare to others’?

Generally, the program banks that participate in Betterment Cash Reserve pay interest rates that are tied to the federal funds rate, which is the rate at which banks can loan money to each other, and is set by the Federal Reserve. The interest rate you receive on Cash Reserve will typically change as a result of the Federal Reserve changing its target federal funds rate.

Since the launch of our high-yield cash account on July 23rd, 2019, the Federal Reserve has decreased the target federal fund rate 5 times. Once on July 31st, 2019 by 0.25%, a second time on September 18th, 2019 by 0.25%, a third time on October 30th, 2019 by 0.25%, a fourth time on March 3rd, 2020 by .50% and a fifth time on March 16th, 2020 by 1.00%.

The two most recent and largest drops were due to COVID-19 impacting the market.

When the federal funds target rate changes, the rate we can offer through Cash Reserve can also change.

Some banks may have APY’s that have not yet reflected the changes in interest rates. Ultimately, the prevailing interest rate environment impacts all banks, and we expect that rates at these banks will also lower as time goes on.

Why does the interest rate fluctuate?

No matter where you bank, the prevailing interest rate environment will have an impact on your interest rate.

The amount banks are willing to pay on deposits is heavily influenced by the Federal Reserve, which sets the rate at which banks can loan money to each other. This is known as the Federal Funds Rate. It’s the rising tide that raises all rates, and the receding tide that can also bring them all down.

The Federal Reserve sets a target range for the Federal Funds Rate, rather than aiming for a specific number. Because of this, the Federal Funds Rate can change by a small amount from day to day. However, larger changes to the Federal Funds Rate can occur when the Federal Reserve changes its target range or when the Federal Reserve changes policies. The interest rate you receive on Cash Reserve typically will change as a result of these more significant shifts in the Federal Funds Rate.

Is Cash Reserve covered by FDIC insurance?

Yes. Any cash in Cash Reserve is covered up to $1,000,000† in FDIC insurance once deposited into our program banks. Read more about special considerations here.

Can I opt out of holding my cash in a specific bank?

Yes, you may opt out of holding cash at a specific bank. To opt out of a specific bank, please email us.

If you already have cash at one of our program banks, you can still choose to opt out of that specific bank. Regardless of the number of program banks participating, the total amount of FDIC insurance available to you through Cash Reserve will be lower by $250,000 for each bank you opt out from.

If you have non-Betterment funds deposited at a program bank already and elect not to opt out, all funds that you hold in that specific program bank (in the “individual” account ownership category) will be totaled for purposes of determining FDIC insurance. This means that some of your funds at that specific program bank may be left uninsured, if the total amount deposited at that bank between individually owned accounts you open separately and your Cash Reserve exceeds $250,000.

Any cash in Cash Reserve is FDIC insured up to $1,000,000† once deposited into our program banks. If you have not opted out of any of our program banks and you have less than $1,000,000 invested in Cash Reserve, we will not allow your balance to exceed $250,000 in any one program bank. This ensures that you are eligible for the maximum possible amount of FDIC insurance at each program bank.

Will I receive any tax forms due to my earned interest?

Yes, we will provide you with a 1099-INT tax form by January 31st of each year if you earned $10 or more in interest during the previous calendar year. You’ll be able to download it directly within your account, and we’ll email you to let you know when it’s available.

Can I open a joint account?

Joint Cash Reserve accounts are available.

If you don’t have an account with Betterment yet, sign up now. If you already have a Betterment investing account, log in now.

The sign up flow will prompt you to determine whether you will be the only person using Cash Reserve, or whether you would like a joint account.

Please note that Cash Analysis and Two-Way Sweep are currently only available on individual Cash Reserve accounts.

Is a joint Cash Reserve account covered by FDIC insurance?

Yes. A joint Cash Reserve account offers up to $2,000,000† in FDIC insurance once funds are deposited into our program banks.

This is separate from any cash held in an individual Cash Reserve account, which is covered up to $1,000,000 in FDIC insurance once deposited into our program banks. Read more about special considerations here.

Can I opt out of holding my cash in a specific bank with a joint cash reserve account?

Yes, you may opt out of holding cash at a specific bank. To opt out of a specific bank, please email us, and specify whether you are opting out in an individual Cash Reserve account, joint Cash Reserve account, or both.

If you already have cash at one of our program banks, you can still choose to opt out of that specific bank. Regardless of the number of program banks participating, the total amount of FDIC insurance available to you through a joint Cash Reserve account will be lower by $500,000 for each bank you opt out from.

If you have non-Betterment funds deposited at a program bank already and elect not to opt out, all funds that you hold in that specific program bank will be totaled for purposes of determining FDIC insurance. This means that some of your funds at that specific program bank may be left uninsured, if the total amount deposited at that bank exceeds $500,000 in the same ownership type.

Any cash in a joint Cash Reserve account is FDIC insured up to $2,000,000† once deposited into our program banks. If you have not opted out of any of our program banks and you have less than $2,000,000 invested in Cash Reserve, we will not allow your balance to exceed $500,000 in any one program bank. This ensures that you are eligible for the maximum possible amount of FDIC insurance at each program bank.

Who can I open a joint account with?

A joint Cash Reserve account can be created with any other Betterment customer, as permitted under your state’s laws. If you want to create a joint Cash Reserve account with someone who is not a Betterment customer, they must first open an individual Betterment account (but there is no obligation that the individual account be funded if they only wish to use the joint Cash Reserve account).

How is it different than just having a beneficiary?

Two customers with a joint Cash Reserve account have equal ownership of the assets in the account. Each owner can transfer, deposit, and withdraw money. Upon the death of one of the joint Cash Reserve account owners, the entire interest in the account is transferred to the surviving account owner.

On the other hand, a beneficiary does not have access, control, or ownership over the account while the account owner is alive. Upon the death of both of the joint account holders, the assets are transferred to the beneficiary.

Please note that after the death of one of the joint Cash Reserve account owners, FDIC insurance will decrease after a six month grace period to the amount covered by an individual Cash Reserve account, up to $1,000,000† once deposited into our program banks.

Need help adding beneficiaries?

Who will be the primary account holder?

The account holder who opened the joint account is designated as the primary account holder. To see who the primary account holder is, log in and navigate to Settings > Accounts.

We aren’t able to transfer primary ownership of a joint account once it’s been created. However, remember that a joint account is legally owned by both parties associated with the account. The IRS requires only the primary account holder be listed on tax statements.

The primary account holder, which is the person who originally created the account, will receive the 1099-INT form associated with the joint account. Integrations with tax preparation software will only work with the primary account holder’s Betterment account.

Since Betterment is not a tax advisor, we highly recommend consulting with a tax professional for further questions regarding how to file your taxes in a joint Cash Reserve account.

Do both joint account owners need to approve actions in the account?

Most actions do not require consent from both account owners. These include closing the account, deposits, withdrawals, most types of transfers, changes to the linked checking account, and beneficiary changes.

Is there a limit to how much I can deposit into my joint Cash Reserve account?

There is no overall limit to how much you can deposit in a joint Cash Reserve account. However, please note that the largest deposit you can make per day via ACH is $300,000.

Can I link more than one checking account?

You can link up to three external bank accounts as a funding source for your individual or joint Cash Reserve accounts. However, we recommend that you link checking accounts as funding sources rather than savings accounts, because savings accounts typically limit the number of monthly withdrawals you can make.

No matter how many external bank accounts you have linked, you’ll always be able to fund your goals with Checking.

Can I transfer between my individual Cash Reserve and joint Cash Reserve accounts?

You can transfer between an investment goal and your joint Cash Reserve, or vice versa, up to 5 times per day. These transactions generally take 1-2 business days to complete.

Within accounts held at Betterment, we only allow transfers involving joint investing accounts if you are listed as married to the account owner. Confirm spouse details or read more about taxpayer relationships. If you are not married, email support@betterment.com and we can help you with a manual transfer.

Note that bank holidays do not count as business days. You can see a list of bank holidays here.

Transaction Timeline Table

Can I transfer between my joint Cash Reserve account and investing goals?

At this time, you can only transfer money between a joint Cash Reserve account and joint investing goals. To facilitate this kind of transfer, please contact our customer support team.

If you would like to move funds between these accounts without contacting customer support, you will need to withdraw the funds from the individual account to one of your linked external checking accounts or Checking, and then deposit those funds into the individual Cash Reserve account.

We’re continuously monitoring customer requests for this and plan to offer a self-service feature for transfers in the future.

How can I close my joint account?

Either joint account holder can close the joint account.

Log in and navigate to Settings > Accounts. Click the three dots towards the right of the account you are looking to close, and select “Close Account”. There are no trading fees or penalties for closing accounts.

Who is eligible to use Cash Reserve?

You must reside in the U.S. full-time to use Betterment’s services. You must also be 18 years old, as we are not able to provide services to minors.

Am I required to use both Checking and Cash Reserve?

No. We know that everyone’s needs are different, and we want to provide you with the flexibility to make your own decision on which of our cash management and investing products serve you best.

Will you run a credit check?

No. Credit checks are not required in order to use our cash management products.

However, we will collect your personal information upon signup. We are mandated to collect your personal information by our regulators and the IRS, so there is no way around this requirement.

Can I open an account for a company or LLC?

Company and LLC accounts are not available through Cash Reserve or Checking at the present time. We’ll be sure to monitor customer requests for company and LLC accounts, as we may be able to offer them in the future.

Can I open an account for my trust?

Accounts for trusts are not available through Cash Reserve or Checking at the present time. We’ll be sure to monitor customer requests for accounts for trusts, as it’s something we may be able to offer in the future.

How can I fund my Cash Reserve account?

You can link up to three external bank accounts as a funding source for your individual or joint Cash Reserve accounts.

Because savings accounts typically limit the amount of monthly withdrawals you can make, Betterment recommends your funding source to be a checking account.

For security reasons, we allow you to use up to three different external bank accounts to deposit and withdraw from your investing accounts and Cash Reserve every 90 days. External bank accounts associated with active auto-deposits, auto-withdrawals, or Two-Way Sweep also count toward this limit.

No matter how many external bank accounts you have linked, you’ll always be able to fund your goals with Checking.

Finally, you can facilitate a wire transfer into Cash Reserve by following the steps outlined below.

You are not able to set up multiple auto-deposits into Cash Reserve or any single investment goal. However, you can set up auto-deposits from one linked funding source and then separately make manual one-time deposits from another linked funding source.

Electronically

There are two ways to fund your Cash Reserve electronically:

  1. By linking an external bank account.
  2. Through a wire transfer.

Linking a bank account electronically creates a secure, read-only connection with your financial institution through our data partner, Quovo. Betterment will never rent or sell your information to anyone. See our privacy policy for more information.

To add a bank account electronically, log in on a web browser and select “Settings” from the menu and then select “Funding Accounts.” You will then see the option to add the bank accounts you want to fund with.

If you’ve already synced your bank account electronically in the past for tracking purposes, you’ll be able to choose that account and instantly link it for funding purposes. If not, you will be able to search for your bank by name. If the option to link your bank account electronically is available, you can create an instant link by providing your username and password for that institution.

Your external bank might require you to complete two-step verification, which is an additional layer of security, before we can gain access to the account. If so, you will be prompted with verification questions or a code, which are generated after you provide your login credentials. This code is typically provided to you by your other bank via email, text, or telephone call.

To wire funds into Betterment Cash Reserve, click here and select Cash Reserve. From there, Betterment will generate instructions for you with the additional option to email you the instructions once you click “Email me instructions” at the bottom of the page.

Please note, we do not charge a fee for incoming wire transfers, but your bank may charge you a fee for sending one. Check with your bank to learn more about their fees for wire transfers.

Manually

If you are not presented with the option to link electronically, or you choose not to, you can manually link your bank account with your account and routing number.

To add your bank account manually, log in on a web browser and select “Settings” from the menu and then select “Funding Accounts.” You will then see the option to add the bank accounts you want to fund with. Select the “add by account and routing number” option rather than by searching for your bank’s name.

Linking manually involves us sending two micro-deposits (each under $1.00) to your bank, which you must then verify inside of your Betterment account. Due to standard ACH timelines, this process generally takes 1-2 business days.

Making Changes To Your Funding Accounts

Because an electronic ACH transfer is the primary way to move money to and from Betterment, you will not be able to delete all of your linked bank accounts unless you add at least one new bank account to replace them with.

On a web browser: Select “Settings” from the menu and then select “Funding Accounts.” You’ll then be able to add or change your funding accounts.

On the mobile app: After logging in, tap the three bars on the top left. Select “Settings” and then select “Funding Accounts.” You’ll then be able to add or change your funding accounts.

Is there a limit to withdrawals?

Unlike transfers from a savings account at a typical bank, Cash Reserve has no transfer limits on how many times you can move money from your account.

How long do deposits take?

Deposits into Cash Reserve from your linked checking account generally take 1 to 2 business days to complete, depending on when you put in your request.

  • If the deposit request is placed before 10 PM ET, it will generally appear in Cash Reserve in 1 business day.
  • If the deposit request is placed after 10 PM ET, it will generally appear in Cash Reserve in 2 business days.

Transactions can be subject to processing delays in certain circumstances.

Note that bank holidays do not count as business days. You can see a list of bank holidays here.

The smallest deposit amount you can make is $10. The largest deposit you can make per day via ACH is $300,000.

Transaction Timeline Table

How long do withdrawals take?

Unlike withdrawals from a savings account at a typical bank, Cash Reserve has no withdrawal limits on how many times you can move money from your account.

When you withdraw from Cash Reserve, the cash will be transferred to your linked checking account generally within 1 to 2 business days, depending on when you put in your request.

  • If the withdrawal request is placed before 1 PM ET, it will generally appear in your checking account in 1 business day.
  • If the withdrawal request is placed after 1 PM ET, it will generally appear in your checking account in 2 business days.

Transactions can be subject to processing delays in certain circumstances.

While 1-2 business days is generally the expected withdrawal timeline from Cash Reserve, withdrawing funds soon after a deposit can trigger a temporary hold on your withdrawal. This hold should last no longer than 4 business days. If further action is required on your part, we will let you know.

Note that bank holidays do not count as business days. You can see a list of bank holidays here.

Transaction Timeline Table

Can I transfer money to and from my investing goals?

You can transfer between an investment goal and your individual Cash Reserve, or vice versa, up to 5 times per day. These transactions generally take 1-2 business days to complete.

Within accounts held at Betterment, we only allow transfers involving individual or joint investing accounts if you are listed as married to the account owner. Confirm spouse details or read more about taxpayer relationships. If you are not married, email support@betterment.com and we can help you with a manual transfer.

Note that bank holidays do not count as business days. You can see a list of bank holidays here.

Transaction Timeline Table

What is the account number and routing number?

Cash Reserve is not like a savings account that you can obtain at a traditional bank in that it will not have its own routing and account number. Additionally, we are not offering direct deposits between your paycheck and Cash Reserve at this time.

However, you are still able to wire or transfer funds directly from another linked bank account, or  link a bank account within your Betterment account in order to initiate a transfer into Cash Reserve. Read more about how to facilitate electronic transfers within your Cash Reserve account.

If you need your Cash Reserve account number, it’s the same as your “Personal Account number,” which you can find herejust note that you will not be able to use this number to conduct any transfers, including wire transfers.

Can someone wire funds to my Cash Reserve account?

We allow our customers to generate wire transfer instructions directly from within their Betterment account.

To wire funds into Betterment Cash Reserve, click here and select Cash Reserve. From there, we’ll generate instructions for you and if you’d like, we can even email you the instructions once you click “Email me instructions” at the bottom of the page.

Please note, we do not charge a fee for incoming wire transfers, but your bank may charge you a fee for sending one. Check with your bank to learn more about their fees for wire transfers.

Can I access Cash Reserve with a debit card?

We’ll provide a Betterment Visa Debit Card to you if you open Checking when it becomes available later this year. Be sure to join the waitlist to secure your spot and receive updates.

The debit card will allow you to access funds in Checking. You will not be able to access your Cash Reserve with the debit card.

Cash Reserve available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are facilitated by Betterment Securities. Checking will be provided by Betterment Financial LLC, in partnership with nbkc bank. 

Can I use Two-Way Sweep?

You’ll be able to deposit into Cash Reserve by making a one-time deposit, by setting up auto-deposits, or by using Two-Way Sweep. Two-Way Sweep is a way to effortlessly manage your cash by moving it to and from your checking account and Cash Reserve when you need it.

What happened to Smart Saver?

Smart Saver was a low-risk investment account that was designed to earn a higher yield than a typical savings account through the use of short-term treasury bonds. We’ve replaced this offering with Cash Reserve.

If you had “free time” on your Smart Saver account, that free time won’t correspond to Cash Reserve. We know that it might not seem ideal to you to lose the free time, but our hope is that our new cash management tools will fit your needs by helping you spend and save with confidence.

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Cash Reserve

*The annual percentage yield (“APY”) on the deposit balances in Cash Reserve (“Cash Reserve”) is 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 . This APY is variable and subject to change daily. See Current APY. 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 Checking. Cash Reserve and Checking are separate offerings and are not linked accounts.

See Betterment’s Form ADV Part II and Terms and Conditions for additional information, including details of the deposit allocation methodology.

†Cash Reserve (“Cash Reserve”) is offered by Betterment LLC. Clients of Betterment LLC may 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.

Checking

Checking accounts and the Betterment Visa Debit Card provided by and issued by nbkc bank, Overland Park, Kansas, Member FDIC. Funds deposited into Checking will be eligible for up to $250,000 of FDIC insurance. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted. Checking accounts do not earn APY (annual percentage yield). Cash Reserve and Checking are separate offerings and are not linked accounts.

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