Cash Reserve Has A Variable APY: What That Means For You

Interest rates change over time, but at Betterment, we are always working hard to give you competitive rates so you can make the most of your money.

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Note: mention of Cash Reserve is inclusive of money held in cash goals.


Our objectives are aligned with yours: we want to grow your money.

Cash Reserve is an account that is different from the savings accounts that you might find at traditional banks. We’re not tied to one specific bank, so we have the opportunity to obtain attractive rates in the marketplace. We use our size and scale to access a network of program banks, and then we use our technology and efficiency to pass rates on directly on to you.

Is that rate guaranteed? No, it’s variable, and that’s by design. The Federal Funds Rate influences interest rates across all banks. As rates change, so will the Cash Reserve rate.

You can feel confident that Betterment is always working to offer you competitive interest rates, no matter what the current rate environment may be. See what the current variable interest rate is for Cash Reserve.

How does Betterment provide competitive rates?

Similar to how we select the ETFs in each asset class for your portfolio, we work with a number of program banks to provide you competitive rates.

Often, these rates are more competitive than what you could get as an individual depositor. When you deposit with Betterment, you become part of a larger community of savers. Banks can more efficiently support our customer base as a group, rather than as individuals.

What causes interest rates to change?

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.

What will future rates look like?

If the Federal Reserve lowers its target range, the interest rate on Cash Reserve will generally change by a similar amount. You can expect this to impact rates at other banks as well.

We Do What We Believe Is Best For You

As your advisor and as a smart money manager, it’s in our DNA to do what we believe is best for you. We’ve spent the past decade working to optimize your investments and provide you with advice that helps you reach your long-term financial goals, and we are excited to partner with you to make the most of your money with our newest cash management solution—Cash Reserve.