Betterment Savings 4.50% APY

Update 6/7/23: Current rate is 4.50% APY

Update 1/7/20: Rate is now 1.83%. The rate is now flat, it’s not a promotional or waitlist rate – everyone gets the same rate. That rate will fluctuate, tied to the Federal Funds Rate which fluctuates daily.

Update 9/21/19: Rate reduced to 2.21%.

Update 8/4/19: Rate reduced due to fed rate decrease. Currently, the rate is 2.44%, that will vary over time with the fed rate, as discussed below.

[Update: Edited and reposted to clarify that the 2.68% savings account is already live and valid. Also added a few important clarifications to the end of this post.]

Original Post:

Betterment will soon release a checking account which you can join via waitlist. The checking account advertises no fees: get ATM fees reimbursed worldwide, with no account fees, overdraft fees, or minimum balances.

They also offer a savings account with a regular competitive interest rate of 2.43%.

The Offer

Direct Link to offer

• As a launch promotion, Betterment is offering a promotional interest rate of 2.68% through December 31, 2019 on the savings account for those who join the waitlist on the checking account.

Savings account can be opened already now, and there is no obligation to actually signup for the checking account, you just need to join the waitlist to be eligible for the rate boost.

The Fine Print

• 2.69% APY is a promotional offer for individuals who sign up for the Betterment Everyday Checking waitlist and applies to cash deposited into Savings for the duration of 2019.
• APY is 2.43% as of 07-10-2019 without the promotional offer.
• APY is a variable rate and may change at any time.
• No minimum balance is required.
• There is a minimum deposit of $10.
• Betterment LLC clients may choose to participate in Betterment Everyday Savings (“Savings”), through which clients’ funds are deposited into one or more banks (“Program Banks”) where the funds earn a variable interest rate and are eligible for FDIC insurance. FDIC insurance is not available until deposits are received by the Program Banks. There are currently at least four Program Banks, which allows funds deposited into Savings to be eligible for up to $1,000,000.00 of FDIC insurance (up to $250,000 at each program bank). Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Savings, to ensure FDIC limits are not exceeded, which could result in some funds being uninsured. The FDIC calculates the limits based on all the accounts held at a bank, not just cash in Savings. If you elect to exclude one or more Program Banks the amount of FDIC insurance available to you through Savings may be lower. For more information on FDIC insurance please visit www.FDIC.gov. The deposits in Savings are not covered by SIPC. See Program Terms and Conditions for additional information.
• Checking accounts and the Betterment Visa Debit Card (collectively “Betterment Everyday Checking” or “Checking”) provided by and issued by nbkc bank, Overland Park, Kansas, Member FDIC. Funds deposited into Checking will be eligible for up to $250,000 of FDIC insurance. Betterment Everyday Checking made available through Betterment Financial LLC.
• Betterment Financial LLC does not charge foreign transaction fees for the use of the Betterment Visa Debit Card outside of the United States. However, Visa charges a foreign transaction fee of 1%. Betterment Financial LLC does not reimburse this 1% transaction fee on foreign ATM transactions or on any other foreign transactions or purchases.

Our Verdict

You’ll get more than 5 months of a 2.68% rate which is nice. The regular rate of 2.43% is also very competitive; see Best Savings Rates here. Especially makes sense for those who use Betterment investing.

We’re seeing more and more of these investment firms opening various kinds of checking or savings or combo accounts. I’ll just add a warning that technically the funds in these kinds of accounts may not be fully secure in between the time of deposit until it hits the FDIC insured bank account. Regular banks are a little more secure, I’d try using those all else being equal.

A few updates/clarifications, based on the Betterment CEO’s Reddit post:

• All accounts get the 2.68% rate, but they are subject to Betterment’s .25% asset fee. The promotion for joining the waitlist is basically to waive that fee, thus giving you the full 2.68% rate. (This is good news since it should mean that if you are eligible for free asset management from referral or some other promo, the higher rate can potentially be valid for the long term.)
• Betterment will almost certainly have other promotions and offers, even beyond 2019, which will allow us to earn the higher rate. For example, it’s possible they’ll make and offer that if you open the Betterment checking account, they’ll waive the asset fee and you’ll be able to get the higher rate for the long term.
• The interest rate on the savings account is based on the Fed Funds Effective rate which is currently 2.43%. Currently, Betterment is offering FFE+25bps for a total of 2.68%. That amount will fluctuate over time. (The 2.69% number is apparently based on a rate of 2.44% from a few days ago.)

So it seems the 2.69% rate is actually not fixed through 2019, rather dependent on the FFE rate + .25%. As of the time of this posting, that rate is 2.68%. It’s not so good that the rate is variable, but overall that may actually be a good thing as the fact that it’s based on the FFE should mean the account will be a solid rate long term.

Update 1/7/20: The rate is now flat, it’s not a promotional or waitlist rate – everyone gets the same rate. That rate will fluctuate, tied to the Federal Funds Rate which fluctuates daily.

Thanks to all those who sent this in