Less than a year after launching its not-quite-a-savings-account Smart Saver product, popular robo-advisor Betterment is taking big steps towards becoming a real bank by introducing two new services: true savings accounts, and free checking accounts.
The former is replacing Betterment’s Smart Saver program, which was basically just a rebranded investing account that only invested in bonds. The new Betterment Everyday Savings account is more of a vanilla savings product, albeit with very high yields. You can withdraw from it at any time, and unlike Smart Saver, you’ll be able to get your money in 1-2 business days, and your cash will be FDIC insured up to $1,000,000.
All Smart Saver accounts will be automatically converted into Everyday Savings accounts within 30 days, but you can initiate the switch early by logging into your account. Just note that when the transition occurs, Betterment will be selling all of your Smart Saver holdings, which could result in tax implications. Betterment claims that 99% of account holders will owe less than $100 as a result of the change, with an overall average tax bill of around $4.
The current APY (the annualized returns minus Betterment’s .25% management fee) is currently set at 2.42%, which is much higher than the vast majority of savings accounts, and in fact is higher than the current 2% APY on Betterment Smart Saver accounts. That said, if you sign up for the waitlist for Betterment’s new checking product (more on that below), you’ll get access to a promotional 2.68% rate through the end of 2019. That’s currently the highest savings rate on the market, according to Bankrate, and it’s especially impressive considering that there are no minimum balance requirements.
Later this year, Betterment will also start offering FDIC-insured (up to $250,000) checking accounts for the first time. It doesn’t appear as though these accounts will accrue any interest, but they also won’t be charged a management fee.
Similar to other online-first and online-only banks, the Betterment Everyday Checking product will include free withdrawals from any ATM worldwide, no account fees, no overdraft fees, and no minimum balance requirements. You’ll also get a very pretty looking Visa debit card.
There’s no official launch date yet for Betterment Everyday Checking, but there’s no downside to signing up for the waitlist to access that higher savings rate for 2019.