Skip to content
Backend Benchmarking
  • Home
  • Robo Report
  • Robo Ranking
  • In the Media
  • Team
  • Investor Inquiries
  • Contact Us
  • Blog
Analyzing the digital advice industry for individual investors and financial professionals

Categories

  • Company Update
  • Industry
  • Interview
  • News
  • Performance
  • Ranking
  • Robo Guide

High-Yield Cash. Are You Missing Out?

Posted on September 27, 2019October 25, 2019 by David Truesdell

As the digital advice industry has grown, acquiring more customers and assets, providers have expanded their role from automated investment managers to digital bankers. A major component of this shift has been the offering of high-yield cash accounts. Betterment, Wealthfront, Ally, Personal Capital, Wealthsimple and SoFi offer these accounts, which have APYs of at least 1.80% and carry FDIC insurance. Personal Capital and SoFi accounts are FDIC insured up to $1.5M—six times the coverage of a savings account opened at a traditional bank. Wealthfront and Betterment offer $1M of FDIC insurance. Robos partner with numerous banks, take in users’ deposits, and spread those deposits across partner banks. This process allows high-yield cash accounts to provide insurance beyond the standard $250K.

High-yield cash accounts are accessible to non-investment account clients and are easy to open. Personal Capital, Ally, and SoFi Money all have a $0 account minimum. Wealthfront and Betterment require a $1 and $10 minimum, respectively. None of the aforementioned providers charges a management fee. After they deposit customers’ cash into accounts at partner banks, robos keep a small portion of the interest that the bank pays them for the deposits; the customers will not see a management fee deducted from their account balance as they would in an investment account. Customers are free to withdraw cash or move it to another account on the robo platform free of cost. This provides greater liquidity than does a certificate of deposit at a local bank. 

Betterment offers an industry-leading 2.16% APY. There are strings attached, however. To earn this rate, a customer must open a Betterment checking account and debit card, as well as a brokerage account. The latter need not be funded. Further, only money deposited in 2019 will earn that rate. Without fulfilling these requirements, customers can earn a 1.90% APY. Otherwise, Wealthfront offers the highest APY at 2.07%. Personal Capital, SoFi Money, Wealthsimple and Ally Financial offer APYs between 1.66% and 1.90% APY. All these offerings are as of September 27. 2019 and are steeply above the national average of 0.09%, making them attractive locations for extra cash. 

Rates are subject to change, however. All rates in the economy are impacted by the Federal Funds Rate. All high-yield cash account providers lowered rates after the Federal Reserve lowered its benchmark rate in July and September. Future cuts would further low the rates available on cash accounts. 

High-yield cash accounts will most likely continue to become more popular with consumers. First, these accounts offer superior returns on excess cash compared to traditional bank accounts and carry no risk. Second, they allow for the easy transfer of money into investment or retirement accounts on the same platform. Some providers are building the capability to handle direct deposits. Third, some providers (such as Betterment and SoFi) are integrating the accounts with checking services so that users can have a debit card linked to their accounts. Providers will try to attract customers and bring more assets onto their platforms by keeping rates as high as possible, which bodes well for the consumer. 

Posted in IndustryTagged Ally Financial, Betterment, Cash account, FinTech, New Feature, Personal Capital, Robo Banking, SoFi, Wealthfront, Wealthsimple

Subscribe for free to the most comprehensive report on the digital advice industry

The latest news, performance, and rankings

Related Posts

Related posts:

Best Robo Advisor Technology Spending Accounts And Debit Cards Robo News: July 2019

Subscribe To The Robo Report™

Follow Us

Featured Stories

  • Top Performing Robo Advisors: Q3 2019 
  • Best Robo Advisors for Retirement Account Performance: 3Q 2019 
  • The Robo Ranking™: Best Overall Robo 

Tags

Betterment (25) Backend Benchmarking (21) Wealthfront (19) Performance (18) Digital Advice (18) Financial Planning (15) Fees (15) FinTech (13) Vanguard (13) SoFi (12) Robo Advisor (11) Cash account (10) Fidelity Go (10) Wealthsimple (10) Personal Capital (9) Schwab (9) Robo Ranking (9) Robo Advice (8) Ally Financial (8) Minimum (8) Morgan Stanley (7) WealthTech (7) News (6) Funding (6) SigFig (6) Tax Loss Harvesting (6) Personal Advisor Services (6) TD Ameritrade (6) IRA (6) The Robo Report (6) ETF (6) New Feature (5) SRI (5) E*Trade (5) CFP (5) TIAA (5) Wealth Management (4) Ellevest (4) Robo Report (4) Normalized Benchmark (4) Acquisition (4) Merrill Edge (4) AUM (4) Axos Invest (4) Fundraising (3)

The Robo Report (TM)Follow

The Robo Report (TM) is an ongoing study that monitors the most well-known robo advisors. Subscribe at https://t.co/FjiCryRMBs for our free quarterly report!

The Robo Report (TM)
TheRoboReportThe Robo Report (TM)@TheRoboReport·
6 Dec

We ranked the Best Robo Advisor Technology. Wealthfront, Betterment, and Personal Capital lead the pack. Click below to see what each robo has to offer.

https://www.backendbenchmarking.com/blog/2019/12/best-robo-advisor-technology/

Reply on Twitter 1203044078054780929Retweet on Twitter 12030440780547809292Like on Twitter 12030440780547809291Twitter 1203044078054780929
TheRoboReportThe Robo Report (TM)@TheRoboReport·
27 Nov

Robo advisors and other fintech companies have begun to offer debit cards with unique perks and without some of the capabilities of traditional cards. Click below to read about how they compare.

http://ow.ly/RTBo50xm6Fx

Reply on Twitter 1199699773923704832Retweet on Twitter 11996997739237048321Like on Twitter 11996997739237048322Twitter 1199699773923704832
TheRoboReportThe Robo Report (TM)@TheRoboReport·
21 Nov

Considering a robo advisor? Click below to see if they fit your needs and can help you achieve your goals.

https://www.backendbenchmarking.com/blog/2019/11/should-i-use-a-robo-advisor/

Reply on Twitter 1197554436731740161Retweet on Twitter 11975544367317401611Like on Twitter 1197554436731740161Twitter 1197554436731740161
Load More...

Contact Us

Backend Benchmarking
1973 Washington Valley Road
Martinsville, NJ 08836

(732) 893-8290
info@backendb.com

Navigation

  • Home
  • Robo Report
  • Robo Ranking
  • In the Media
  • Team
  • Investor Inquiries
  • Contact Us
  • Blog
  • Privacy Policy






BackendB.com, LLC is a registered investment advisor and the current ADV can be found on the SEC website here.

© BackendB.com, LLC 2019

Request your FREE Robo Report™

We value your privacy and will never sell your personal information.