Betterment HYSA Review 2024: Can A Robo-Advisor Keep My Money Safe?

The Betterment HYSA has a high APY and no fees, but it's not meant for long-term savings.

By Kate Daugherty

Edited by Ashley Donohoe

Updated Aug. 29, 2024

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Betterment

OUR VIEW

Betterment is often known best as one of the original robo-investing platforms, but it also offers other banking products that help its customers on their investing journeys. One of those products is the Cash Reserve account, an alternative to the high-yield savings account you may find at an online or brick-and-mortar bank.¹²

While you likely don’t want to give up your high-yield savings account just yet, we like the Betterment Cash Reserve account because it can be a good option for the extra cash you want to protect from market volatility. It offers a high APY, has no fees, and requires a low minimum opening balance. However, it is not meant for long-term use and has a few other drawbacks to consider.

In this Betterment HYSA review, learn more about the Cash Reserve account and how it can help you grow your savings balance.

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Pros

The Betterment Cash Reserve currently offers a 5.50% (as of April 2, 2024) APY.³

The Cash Reserve account allows unlimited withdrawals.

It offers up to $2 million (individual) or $4 million (joint) in Federal Deposit Insurance Corporation (FDIC) coverage through partner banks.

Cons

The APY is variable and can change at any time.

Betterment only accepts ACH deposits and withdrawals and incoming wire transfers.

The Cash Reserve account is only available to Betterment’s investing clients.

How we evaluate products

Betterment HYSA details

Annual percentage yield (APY)	Up to 5.50% (as of April 2, 2024)
Minimum deposit requirement	$10
Monthly maintenance fees	$0⁴
ATM access	No
FDIC-insured	Yes, you get up to $2 million for single account holders and $4 million for joint account holders through partner banks.

What is the Betterment Cash Reserve?

The more I learn about saving and investing, the more it makes sense to save for short-, medium-, and long-term goals. While there are different schools of thought, it helps me to see the exact amounts I’ve saved towards each goal, and I can choose where to direct funds from each paycheck.

If there’s an unexpected expense that my emergency fund can’t handle, I can take money from my vacation fund to help cover it and then work on replenishing the funds later.

That’s one reason the Cash Reserve account from Betterment can be helpful, primarily if you already use Betterment to invest.

It allows you to transfer money into Betterment, but instead of investing it right away, you can keep your money ‘on deck’ to invest when the time is right while still earning a higher APY than you’ll find with some other accounts.

The Betterment Cash Reserve allows you to break your short-term goals into specific savings buckets and intentionally direct your funds there, potentially helping you reach those goals faster. The platform’s automated features can offer advice, and you can also set up recurring deposits from an external account to help you stay on track.

However, the Cash Reserve account is not a traditional savings account. Instead, it's a cash management account that works within the Betterment investment platform and offers features similar to those of a high-yield savings account. And you must be a Betterment customer to use its Cash Reserve product.

It provides a 5.50% (as of April 2, 2024) APY, is FDIC-insured, and only requires an opening deposit of $10, making it an attractive spot to park some extra cash. It also doesn’t charge monthly maintenance fees or require a minimum monthly balance to earn the highest APY.

Unlike many traditional savings accounts, Betterment doesn’t limit the number of withdrawals you can make each month. This is helpful when you have unexpected expenses to cover.

Who is the Betterment HYSA best for?

The Betterment HYSA through Cash Reserve is best if you already use Betterment as your investing platform and have an established high-yield savings account for your emergency fund.

Although it offers many benefits similar to a competitive savings account, it's important to remember that Betterment’s primary focus is investing. The money you keep in the Cash Reserve is meant for use within a few months or for eventually investing in stocks, bonds, and other securities – not for money you want to keep readily available.

It's best to consider the Cash Reserve account as a bridge between your primary savings or checking account and your Betterment investment accounts. You can deposit extra cash into your Cash Reserve and hold it there until you decide where to invest it.

If you plan to use the cash within a year, keeping your funds out of the market and in the Cash Reserve is likely best. But if you plan to keep money in your Cash Reserve account longer, investing it may be more beneficial since you can likely earn higher returns over the same period and have some time to recover from any downturns.

Account benefits

The Betterment Cash Reserve account can be helpful if you already use Betterment as an investing platform. Some of its benefits include:

High APY

This account currently offers a 5.50% (as of April 2, 2024) APY on all balances. However, new Betterment customers may also qualify for an APY boost of 0.50% per month for the first three months after funding an account. After the first three months, the account will earn the current available APY.

Comparatively, the national average for savings accounts is currently 0.45% (as of 7/22/24), and some traditional banks offer only a 0.01% APY. Marcus by Goldman Sachs currently offers a 4.40% (as of 07/22/24) APY with its high-yield savings account, and SoFi offers 4.50% if you meet specific deposit requirements.

Betterment’s robo-advisor competitor Wealthfront provides a comparable cash account with similar features and a 5.00% APY.

No fees or minimums

Betterment's high-yield cash account doesn’t charge monthly maintenance fees, and much like its investment side, it doesn’t require a minimum balance. While you need $10 to open an account, you aren’t required to maintain a specific dollar amount afterward.

FDIC Insurance

Since Betterment isn’t a bank, it doesn’t hold the funds in Cash Reserve accounts. Instead, the money is distributed across as many as eight separate program banks.

Each bank is FDIC-insured for up to $250,000 per depositor, per bank. The combined total of funds covered by FDIC insurance through the Betterment program banks is up to $2 million per single account holder and up to $4 million for joint accounts.

However, you can’t choose which program banks hold your money or how much each bank holds. While you can opt out of keeping your cash at one of the specific banks, you’ll lower the amount of FDIC insurance you qualify for.

Convenience

Keeping your funds in the Cash Reserve account can help you grow your savings and avoid impulse spending. While you can access your money by transferring it to an external account or the Betterment Checking account, neither option is instant, so you have a little time to think before spending.

If you want to invest, you are already on the Betterment platform and can choose various investment options, including stocks, bonds, and ETFs. However, remember that any money you move out of the Cash Reserve account and into investments isn’t covered by FDIC insurance, and all investments carry a degree of risk.

Why you might want a different account

Despite its benefits, the Betterment Cash Reserve account isn’t suitable for everyone. Some of its drawbacks include:

No cash or check deposits

The Cash Reserve account (and the rest of the Betterment platform) doesn’t accept cash or personal check deposits. You must link an external bank account to the Betterment platform for ACH payments or set up a wire transfer to complete a deposit. However, you can’t use a wire transfer to make a withdrawal.

Transfers from the Cash Reserve account to an external checking account can take up to two business days. Betterment allows you to link up to three external checking or savings accounts, and moving funds into the Cash Reserve account can take between one and three days or possibly longer if there are processing delays.

No ATM or debit card

The Cash Reserve account doesn't include a debit card or ATM access. If you want to spend cash you have on the Betterment platform, you’ll need to open a Betterment Checking account, which offers a debit card, Apple Pay, Google Pay, and even paper checks. (Note that you’ll only be able to access your checking balance with these methods and not your Cash Reserve.)

Checking also includes access to ATMs and cash-back rewards on brands like Costco and Adidas, and Betterment will reimburse ATM and foreign transaction fees.

Meant for short-term goals

If you’re working on building up your savings account over time, the Betterment Cash Reserve account may not be the best place to park your savings. But if you already have three to six months of your monthly expenses saved in a high-yield savings account, using the Cash Reserve for any extra funds can be a good idea.

While it can help you save for goals you want to meet within the next 12 months, the account isn’t designed for goals longer than that. If you’re saving for a downpayment on a house or have another big goal with a long time horizon, using the investing side of Betterment might get you a better return, though you should consider the risk.

Lack of in-person customer service options

Betterment is a robo-advisor, which means it doesn’t have physical branches. While it does have a customer service line, the hours are limited to Monday through Friday, 9 AM to 8 PM Eastern time. However, Betterment does offer a 24/7 virtual chat feature.

You can also ask a financial advisor questions about your portfolio, including your Cash Reserve account, for a fee and if you meet the minimum account balance requirements.

Alternatives to Betterment HYSA

If the Cash Reserve account doesn’t sound quite right for you, don’t worry. Some alternatives can help you earn a higher APY than a traditional savings account and still provide a safe place for extra cash.

Wealthfront Cash account

Wealthfront Cash is similar to the Betterment Cash Reserve account. It offers a 5.00% APY, has no account fees, and only requires $1 to start saving. However, unlike the Betterment account, Wealthfront’s Cash account is automatically connected to a debit card and allows you to pay bills and send or deposit checks directly from the account.⁵⁶

When you’re ready to invest the money in your Wealthfront Cash account, you can move it to the investing side in a few minutes. Wealthfront also allows free wire transfers to other institutions, although the receiving bank might still charge you a fee.

Like Betterment, Wealthfront is a robo-advisor, so it focuses on investments, not banking. However, it offers more flexibility and direct access to your funds than the Betterment Cash Reserve account. It also has higher levels of FDIC coverage through partner banks: $8 million for individual accounts and $16 million for joint accounts.

Visit Wealthfront | Read our full Wealthfront Cash account review

SoFi

SoFi is a personal finance company that offers checking and high-yield savings accounts and other banking products, including credit cards, loans, and investments. It offers a 4.50% APY with its high-yield savings account if you have qualifying deposits, and it doesn’t charge monthly maintenance or overdraft fees. SoFi’s checking account earns a 0.50% (as of 07/22/24) APY, which is rare among checking accounts.⁷⁸⁹¹⁰

SoFi offers up to $2 million in FDIC insurance through partner banks. It also has a roundup feature that allows you to round up purchases to the nearest whole dollar amount and save the difference.¹¹

Although you’ll give up some APY by using SoFi, your money is more easily accessible than with Betterment.

Visit SoFi | Read our full SoFi review

FAQ

Is my money safe with Betterment?

Betterment’s Cash Reserve and Checking accounts are protected by FDIC insurance through the robo-advisor’s program banks at up to $250,000 per depositor, per bank. Betterment is also a member of the Securities Investors Protection Corporation (SIPC), which protects security accounts of member organizations up to $500,000 for missing assets (including up to $250,000 in cash) if Betterment fails.

Is Betterment legitimate?

Yes, Betterment is legitimate, but it’s not a bank. It’s an online-only investment advisory company that offers some banking services. Betterment is regulated by the SEC and a member of FINRA, the Financial Industry Regulatory Authority.

Is the Betterment Cash Reserve a good option?

The Betterment Cash Reserve can be a good option if you already use the robo-advisory investing platform and need a place to securely deposit funds you intend to use to purchase securities like stocks and bonds. The Cash Reserve account earns 5.00% APY and is FDIC-insured through the program banks that hold the funds.

Bottom line

If you’re a current investor on the Betterment platform and want a place to safely store cash and get an above-average APY, the robo-advisor’s Cash Reserve account might be a good fit. However, you probably shouldn’t use it as your only savings account or as a place to store money for long-term goals. Plus, you should keep the limited transaction options in mind.

Before signing up for any high-yield savings account, thoroughly research your options and read the account disclosures and fee schedules to ensure you know what you’re getting into. Pay attention to any special requirements you may need to meet to get the highest APY offered. Finally, plan to regularly monitor your account to ensure you’re making progress toward goals.