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Written by Ed Canty, CFP® on April 27, 2020
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Betterment Checking vs Cash Reserve: What Is The Difference?

Betterment Checking vs Cash Reserve

When it comes to checking accounts or savings accounts, there hasn’t been much innovation over the last 50 years. But now with platforms such as Betterment, managing your cash has never been easier. 

We all prefer the accounts that don't charge a monthly maintenance fee and are federally insured. The good news? Betterment has you covered with Betterment Checking and Cash Reserve. However, both have unique features you should know about before making a decision between the two. 

The Betterment Checking account is a no-minimum checking account that reimburses ATM transaction fees with no monthly service costs. It is ideal for your day to day personal transactions. 

On the other side, Betterment Cash Reserve is a no-minimum savings account with an annual yield higher than most traditional banks. 

Here we outline the differences between Betterment’s cash management accounts; Betterment Checking vs Cash Reserve. 

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Betterment Checking

Betterment is well known for its robo-advisor platform, which helps people invest in the stock market in a 100% passive manner. By building portfolios with algorithms instead of people, the savings are immense. The basic or Digital plan has an annual asset management fee of just 0.25% and no account minimums. 

But now, Betterment has ventured into other financial tools. The platform now offers a cash management suite that includes checking and savings accounts. This two-pronged approach makes managing your cash extremely easy and seamless. Now, you can save, manage and invest your money with them. 

With Betterment Checking accounts, there are no maintenance fees or overdraft fees. Betterment also reimburses you for all ATM withdrawal fees. 

Betterment Checking is only available to individuals and not to companies or small businesses.

While on the other hand, you can use a Cash Reserve Savings Account that offers interest rates higher than most traditional banks. 

Betterment Cash Reserve acts as a savings account that could be used for long term savings or an emergency fund. You can also open a cash reserve business account for your small business. The checking account is useful for day to day spending. 

What Is Betterment Checking?

The Betterment Checking Account helps you manage money, whether you are spending, investing or saving. Betterment checking offers full reimbursement of ATM withdrawals fees worldwide with no account maintenance or overdraft fees.

This account also offers Betterment Visa Debit Cards with smart-touch pay technology. The easy to access mobile app keeps you in control and provides FDIC insurance up to $250,000.

We find that the checking account works best as a packaged deal alongside the savings account and robo-advisor. However, you can use each tool individually if you wish!

Betterment Checking Summary

  • No maintenance fee or overdraft fees
  • No minimum balance requirements 
  • Reimbursed for all ATM fees
  • You cannot deposit cash through an ATM
  • No deposits via wire transfers and no bill-paying services, but you can set up automatic payments through the vendors.
  • No physical checks, cashier checks, or money orders are available
  • The daily withdrawal limit for ATMs is $500 and a $2000 daily debit limit

Features of Betterment Checking

At its core, Betterment Checking is designed for those who do all banking electronically. There are no paper checks or cash ATM deposits. If you are looking for these features, this is likely not the checking account for you. However, if you practice paperless banking, it is a great option with many benefits!

Betterment Checking Key Features

Everyday Betterment Checking provides you following benefits:

  • Reimbursement of worldwide ATM fees
  • No overdraft fees
  • FDIC insured up to $250,000
  • No account maintenance fees
  • No minimum account balance limitations
  • It comes with a smart touch visa debit card after the account opening

Smart Technology

The latest technology offered by Betterment will help you stay on top of  your finances. From cash management to two-way sweep, Betterment makes managing your cash seamless. It is easy to keep track of the flow of your money when you save, spend and invest in the same place. 

Track Financial Accounts

Getting updated details of your net worth is easy with Betterment Checking. Simply sync your outside bank accounts or any other investments. This way, you can track all of your expenses and look out for unnecessary spending. 

Pros of Betterment Checking

  • No monthly maintenance fees or overdraft fees
  • Reimbursed for ATM withdrawal fees
  • FDIC insurance of up to $250,000 per person
  • No account minimum
  • User-friendly app and website
  • One-tap-payment option with a contactless card

Betterment Checking Cons

  • No physical checks
  • Betterment checking does not pay interest
  • Daily Debit card transaction limit $2,000
  • Daily ATM withdrawal limit $500
  • No bill-pay features
  • No international money transfer services

Sign up for Betterment Checking here!

What Is Betterment Cash Reserve?

Betterment Cash Reserve acts as a savings account for individuals. It can also be used in businesses, but primarily for individuals seeking higher interest rates than most traditional savings accounts. 

To use Cash Reserve, you simply need to make the minimum opening deposit which is just $10. When you create an account on Betterment, you can opt to use the Cash Reserve feature. Many users take advantage of the Cash Reserve feature to plan for emergencies or urgent cash needs. You do not need to be a Betterment investor in order to use the Cash Reserve or Checking features. 

If you are using Betterment Cash Reserve, you can use it alone or along with the Betterment Checking account and investing account. It will offer you benefits such as interest rates higher than most banks, access to your cash in 1-2 business days and no minimum balance or withdrawal limitations. 

Betterment Cash Reserve is also eligible for FDIC insurance up to $1 million USD. Cash Reserve funds are held at Betterment member banks, which pass on FDIC insurance up to $250,000 per member bank. Currently there are 4 member banks, however it is not guaranteed your funds will be allocated to each member bank in proportion to FDIC insurance coverage.

How Does Betterment Cash Reserve Work?

If you are using Betterment Cash Reserve, it is easy to get started. You just need a couple of minutes to set-up your account for Cash Reserve. It’s vital to have your social security number, personal information, and driver’s license at hand.

The process is simple. Just open a Betterment account and sign up for a Cash Reserve Account. Enter your details like email address, name, social etc. and pick a password. Fill in the completed form and submit all the required information. 

After this, you have to connect your existing bank account to deposit at least $10 to your new Cash Reserve Account. Now you are all set-up to go with a Cash Reserve. 

Features of Cash Reserve

Betterment Cash Reserve

A Betterment Cash Reserve provides you with the following benefits:

  • FDIC insured eligible up to $1 million dollars*
  • No fee on balance
  • No minimum account balance limitations
  • Unlimited withdrawals 
  • Higher than average APY
RateAs Of

Sign up for Betterment Cash Reserve here!

How To Use Cash Reserve

The Cash Reserve account is best utilized for an emergency or rainy day fund. However, it could also be used if you are saving up for a major purchase like a car or your first home. The key benefit here is that the interest you will earn is significantly higher than most traditional banks will pay.

Save For Unexpected Expenses

An emergency fund will help you to support your personal life or your business in rough times. Some expenses are sudden and entirely out of your control. Experts recommend having a liquid emergency fund that will cover 6 months of living or operating expenses. 

By stashing away cash for emergencies, you are protecting yourself from needing to take on debt when you are in a pinch financially. 

Save For Growth Opportunities

During times of uncertainty, a lot of people hold cash on the sidelines.

If you are a business owner, you might be building up a cash reserve for a future acquisition or growth opportunity. Or, as an individual, you may be easing into an investment over time. Rather than dumping all of your money into the stock market at once, which is not recommended, easing in is a better approach.

A strategy known as dollar cost averaging is exactly that. Say you had $10,000 to invest. You would likely be better off investing $500 to $1,000 a month over the course of a year or so to pay the market average. In the meantime, you should have your uninvested cash in a high yield savings account like Betterment Cash Reserve. This ensures you are earning the maximum interest on your uninvested cash!

Pros of Cash Reserve

  • High-interest rates compared to most traditional banks
  • FDIC insured up to $1M*
  • No monthly fees
  • No withdrawals limits
  • $10 minimum deposit and no minimum balance

Cons of Cash Reserve

  • Takes a few days to transfer from Cash Reserve to your bank account

Conclusion: Betterment Checking vs Cash Reserve

Betterment helps individuals make most of their money. Their robo-advisor has become wildly successful. However, the financial needs of their customers go above and beyond just investing. As a robo-advisor, Betterment recommends an optimized portfolio for your specific situation and goals. They can also provide you with financial advice based on your time horizon, risk and goals.

This company aims to be the one stop shop for your finances, now offering tools for saving money, spending money and investing money.

The Checking and Cash Reserve features will appeal to those trying to make the most of their cash while avoiding unnecessary fees. 

With both services, fees are limited and the goal is to make managing your money as easy as possible. 

Betterment Cash Reserve offers a traditional bank savings account alternative that offers a place to park your cash. With interest rates higher than most traditional banks, Betterment Cash Reserve allows you to make the most of your uninvested cash. 

On the other hand, the checking account offers an account where you can manage and track your day to day transactions. With a limit of $2,000 in transactions per day, users may have to be wary of overspending. However, with no monthly maintenance fees or overdraft fees, Betterment checking offers a user-friendly service to those who are looking to conduct paperless banking. 

Sign up for Betterment here!


*$1,000,000 in FDIC insurance is a goal and not a guarantee. Betterment uses 4 member banks to hold cash deposits. Each bank covers $250,000 in FDIC insurance, but it is not guaranteed your account will be spread across these 4 banks proportionately.

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Betterment checking vs cash reserve
Article written by Ed Canty, CFP®
Ed is a CERTIFIED FINANCIAL PLANNER™. At his day job, Ed helps clients plan for retirement, manage their investments, and navigate their tax situation. In his free time, Ed enjoys golfing, traveling, fishing, and wrenching on his old car.

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