Financial experts commonly recommend that you save three to six months’ worth of living expenses in an emergency fund. If you’re working toward that goal, putting your money into a high-yield savings account can be a smart idea. You’ll keep your money safe, while allowing it to grow at a higher rate than you’d otherwise get.
Wealthfront’s Cash Account is an excellent option for your savings. Offering an APY (annual percentage yield) that’s three times higher than the national average (as of March 25, 2020), you could more in interest by simply transferring your money.
However, a Wealthfront Cash Account probably shouldn’t replace all of your traditional banking accounts. There are some distinct drawbacks, which means you’ll likely need to at least keep a separate checking account open. Here’s what you need to know about the Cash Account and how it works.
- Wealthfront Cash Account basics
- What we like about the Wealthfront Cash Account
- What the Wealthfront Cash Account could improve
- How to open a Wealthfront Cash Account
- How to withdraw money from a Wealthfront Cash Account
- Other Wealthfront Cash Account fees
- Wealthfront Cash Account customer service
- Common questions about the Wealthfront Cash Account
Wealthfront Cash Account basics
|APY||0.26% (as of Mar. 25, 2020)|
|Minimum balance for APY||$1|
|Minimum deposit to open account||$1|
|Monthly maintenance fees||None|
|Transactions per month||No limit|
|FDIC insured||Yes, up to $1 million|
What we like about the Wealthfront Cash Account
If you’re considering opening up a Wealthfront Cash Account, there are some significant benefits to keep in mind:
- The account offers a much higher APY: When you open an account, you’ll earn 0.26% interest as of Mar. 25, 2020. That’s nearly three times greater than the national average.
- There’s a low account minimum: Some companies require you to have hundreds or even thousands saved before you can open an account. With Wealthfront’s Cash Account, you can get started with as little as $1.
- There are no fees: There are no management, maintenance, or advisory fees to worry about.
- You can complete unlimited transfers at no cost: You can deposit and withdraw money as often as you want; there’s no limit to how many transfers you can complete, and there’s no cost to move your money.
- Your balance is insured by the Federal Deposit Insurance Corporation (FDIC) up to $1 million: With a Wealthfront Cash Account, you get up to $1 million in FDIC insurance. Traditional banks usually only offer $250,000 of FDIC insurance, so Wealthfront accounts have four times the typical amount.
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What the Wealthfront Cash Account could improve
While a Wealthfront Cash Account can be a smart savings vehicle for your money, there are some drawbacks you should consider before opening an account:
- You can’t write checks: A Wealthfront Cash Account can’t replace a traditional checking account. You can’t write checks from your Cash Account, so you’d have to transfer money from your Cash Account to your outside checking account if you need to write a check.
- You can’t use your account to pay your bills: If you want to pay your credit card bill, mortgage, rent, or utility bills, you can’t do so from your Cash Account. Instead, you’d have to transfer money to an outside checking or savings account first. According to Wealthfront, it takes one to three business days to transfer money to an outside account.
- There’s no ATM access: Wealthfront Cash Accounts don’t currently include a debit card or ATM access, so you can’t withdraw cash from an ATM. Wealthfront recently announced they plan to add debit cards and direct deposit to their Cash Accounts later in 2020.
- Transferring money between Wealthfront accounts is limited: As of March 2020, you can only transfer money between your Cash Account and a taxable investment account at Wealthfront, such as the individual or joint investment account. You can't, however, transfer money between your Cash Account and a non-taxable account at Wealthfront, such as an IRA or 529 College Savings plan.
How to open a Wealthfront Cash Account
To open a Wealthfront account, you need to be at least 18 years old, have a valid U.S. Social Security number, have a permanent U.S. residential address, and currently reside in the United States. You also must have a working U.S. phone number capable of accepting text messages.
If you meet those criteria, opening a Wealthfront Cash Account is simple. The whole process takes just a few minutes to complete:
- From Wealthfront’s home page, click on “Start saving.”
- Select “Open an account”, then choose “High-interest cash savings” as your primary reason for opening an account.
- Next, the site will prompt you to enter your name, email address, and a password.
- Choose your bank or brokerage account to fund your new Wealthfront Cash Account. Major banks like Chase, Wells Fargo, Capital One, and Bank of America are all supported. If your bank isn’t listed, you can still use it to fund your new account by manually entering your information.
- Enter the amount of money you’d like to transfer from your bank or brokerage account to your Wealthfront Cash Account.
- You’ll receive a confirmation email. Click on the link in the email and Wealthfront will complete the transfer, usually within one business day.
How to withdraw money from a Wealthfront Cash Account
If you want to withdraw money from your Wealthfront Cash Account, simply log in and select “Transfer Funds” at the top left of your screen. The site will prompt you to enter how much you want to withdraw and where you want to send it. Withdrawals typically take one to three business days to complete.
Other Wealthfront Cash Account fees
|Stop payment fee||N/A|
Wealthfront Cash Account customer service
If you need help opening an account or with account management, Wealthfront only offers customer support online and over the phone; there are no branches for you to visit in person like you can with most major banks.
You can submit questions through Wealthfront’s secure form. If you want to call customer service, you can see the contact number by logging into your account.
Common questions about the Wealthfront Cash Account
Is a Wealthfront savings account safe and legitimate?
A Wealthfront Cash Account is a safe and legitimate way to grow your savings. The account isn’t subject to market fluctuations, so you don’t have to worry about losing money. And your money is protected by up to $1 million of FDIC insurance.
Is Wealthfront a bank?
No, Wealthfront isn’t a bank. When you open a Wealthfront Cash Account, the company sends your funds to different institutions that accept those deposits. Your cash balance is swept to one or more banks and is eligible for FDIC insurance.
Is Wealthfront free?
Your Wealthfront Cash Account doesn’t have any fees and is free to use. Instead, the company makes money by receiving a portion of the interest earned on the money in your Cash Account.
Is Wealthfront a money market account?
A Wealthfront Cash Account isn’t a money market account. You don’t have the ability to write checks, nor do you have access to a debit card.
Can the interest rate on a Wealthfront Cash Account change?
As of Mar. 25, 2020, the APY on Wealthfront’s Cash Account is 0.26%. However, Cash Account interest rates are variable and can change over time, coinciding with movements in market interest rates.
If you have money stashed away for a short-term goal or in an emergency fund, taking advantage of a high-yield savings account makes a lot of sense. By transferring your money into a Wealthfront Cash Account, you can earn more in interest than you would with a traditional savings account, helping you achieve your goals faster.
Disclaimer: All rates and fees are accurate as of Mar. 25, 2020.