How We Increased FDIC Coverage for Cash Reserve to $2 million

Learn how Betterment increased the FDIC insurance coverage amount for all Cash Reserve accounts through our program banks.

cash safe sitting amidst bushes and flowers with dollar bill butterflies overhead

In light of recent events, the value of FDIC insurance has become even clearer. That’s why we’re increasing the FDIC insurance coverage amount for all Cash Reserve accounts. Here’s a little more on how this works:

Cash Reserve is our high-yield cash account, a refuge for savings during volatile markets. It includes features like:

  • NEW: Up to $2 million ($4 million in joint accounts) in FDIC insurance once funds are received by our program banks.  That’s 8X** what most banks offer.
  • A 4.20% APY (variable)* that helps customers earn more on their savings.
  • Easy money movement, including unlimited withdrawals and no transfer fees.

For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.

Increasing FDIC insurance: By spreading customer deposits across multiple program banks (as opposed to keeping everyone’s money at one institution), we’re able to stack the standard $250,000 of FDIC insurance per institution.

  • We originally used this approach to offer up to $1M ($2M in joint accounts) in FDIC insurance for money saved in Cash Reserve.
  • After the news about Silicon Valley Bank, we set to work to double the coverage amount of FDIC insurance through our program banks. We did that by writing code that automatically spreads each customer’s Cash Reserve savings across additional banks.
  • This works the same way it would if you manually opened accounts with different banks. We just do it for you seamlessly and automatically.
  • It’s important to note that we allow customers to exclude certain program banks from holding their Cash Reserve funds. But doing so may result in a customer having a lower FDIC insurance limit.

Why it matters: Our approach to investing is grounded in diversifying assets—efficiently putting money in hundreds or even thousands of stocks to mitigate risk and volatility. With these steps to increase FDIC insurance, we’re working to do the same with cash.

  • We designed Cash Reserve to diversify savings across multiple institutions—a strategy not unlike our investing philosophy.
  • Although we don’t hold any customer funds in either Silicon Valley Bank or Signature Bank, this approach could help mitigate loss and risk in the unlikely scenario that one of our program banks fails.
  • You can’t eliminate risk, but you can help reduce it by using technology and creative thinking.

Worried about volatile markets? Consider Cash Reserve.

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