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Betterment, the largest independent digital advisor, is launching an FDIC-insured savings and checking account platform that pays a higher interest rate on savings than almost every other digital and brick-and-mortar bank in the country, provided depositors also sign up for the checking account waitlist.
Those customers will earn a 2.69% APY on their Betterment Everyday Savings account for the duration of this year, which is higher than Wealthfront's 2.57%. Depositors who don't sign up for the checking account waitlist will earn 2.43%. Both rates are variable and "may change at any time," according to the Betterment press release.
Any consumer can sign up for Betterment Everyday Savings and join the waitlist for Betterment Everyday Checking, starting Tuesday. The savings acçount is operational as of Tuesday and the checking account, which will be linked to a Visa debit card and reimburse account holders for ATM fees worldwide, will begin to roll out in September.
The savings account replaces the firm's lower yielding Smart Saver low-risk bond portfolio, which had a 2% APY and was not FDIC-insured. Betterment Everyday Savings requires a minimum $10 deposit but no minimum balance.
"It was pretty clear that the thing to do next was a high-yield cash product," Betterment Chief Technology Officer Mike Reust tells ThinkAdvisor, noting that the new higher rate savings account is a response to customers' "needs and desires to offer all the financial products one can ever want."
The new banking services, in turn, will help broaden Betterment's customer base. "A larger number of younger customers are getting into banking before they get into investing," says Reust.
He explained that Betterment is able to offer such a high interest rate on its savings account because the account uses a network of banks, rather than a single institution. The partners at launch are Barclays, Citibank, Georgia Banking Co., Seaside National Bank & Trust and Valley National Bank.
