Note: As of June 17, 2022, the Wealthfront Cash Account has a 1.40% APY. Read more about it here .

We’re living in extraordinary times. On Sunday, March 15 the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate by 1.00% to 0%–0.25% because of concerns about the impact of the coronavirus COVID-19 on economic activity. The cut (which was the second surprise rate cut this month) occurred ahead of the FOMC’s scheduled meeting later this week and was accompanied by news of a $700 billion quantitative easing program. These actions reflect just how unusual the current situation really is. 

As we’ve written before, a decrease in the fed funds rate means we need to decrease the interest rate we pay on the Wealthfront Cash Account, too. We are lowering our interest rate (APR) by 1.00%, which due to compounding, translates to an APY decrease of 1.01%. This means the APY on our Cash Account is changing from 1.27% to 0.26%.

We know that these are difficult times for everyone and it’s particularly painful to also see the APY on your Cash Account cut. We understand, and we empathize. While we cannot control the fed funds rate (or news headlines or financial markets), we are committed to being transparent in our communications and continuing to build the best products we can. 

What does this mean for you?

Here’s what a lower APY on your Wealthfront Cash Account means for your money: a 1.01% rate decrease means that every $1,000 in your account will now earn $10.10 less in annual interest.

Why is the rate going down?

The partner banks where we broker our deposits pay us a rate based on a fixed premium to the effective federal funds rate (EFFR). This means that when the EFFR declines, our rate also declines. Because we are a broker-dealer, regulations do not allow us to pay out a rate in excess of what our partner banks pay us. As a result, we are forced to lower the rate on the Wealthfront Cash Account whenever the Fed lowers rates. We want to pay you more, but we can’t. 

Even with a lower rate, you’ll still enjoy everything you love about your Wealthfront Cash Account, which comes with unlimited free transfers, no fees, and FDIC insurance up to $1 million through our partner banks. And we’re hard at work on features that will make your Cash Account even better: late this spring we’ll add debit cards, direct deposit, and the ability to pay bills.

Will the rate go up?

We can’t predict what the Fed will decide in the future. We expect the federal funds rate to go back up eventually, but we don’t know exactly when that will be. We do know this: when the Fed raises interest rates, we’ll increase our rate, too.  

Our commitment to you

These are uncertain times, but our commitment to you remains the same. We’ll deliver innovative products that earn our clients more money on all their money and make it easy to manage their financial lives. While some things are out of our control, we are here for you and we remain committed to rewarding our clients as much as we can. 

While we can’t pay out more interest at this time, we will continue to give away a total of $100,000 by giving $25,000 to one winner each week over the next four weeks per our announcement on Friday. Cash Account clients are automatically entered to win – there’s nothing else you need to do. 

We appreciate your continued trust in us and promise to remain transparent with you about these changes. Stay healthy.

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No purchase necessary. Void where prohibited by law and outside the US, DC, PR and Guam. Must be 18+ (19+ in AL and NE; 21+ in MS) to enter. Odds of winning depend on # of eligible entries received. For full details and how to enter without a Wealthfront Cash Account, see Official Rules here.

The Annual Percentage Yield (APY) for the Cash Account may change at any time, before or after the Cash Account is opened. The APY for the Wealthfront Cash Account represents the weighted average of the APY on the aggregate deposit balances of all clients at the program banks. Deposit balances are not allocated equally among the participating program banks.

Cash Account is offered by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a member of FINRA/SIPC. Neither Wealthfront Brokerage nor any of its affiliates are a bank, and Cash Account is not a checking or savings account. We convey funds to institutions accepting and maintaining deposits. The cash balance in the Cash Account is swept to one or more banks (the “Program Banks”) where it earns a variable rate of interest and is eligible for FDIC insurance. FDIC insurance is not provided until the funds arrive at the Program Banks. While funds are at Wealthfront, before they are swept to the program banks, they are subject to SIPC’s protection limit of $250,000 for cash. FDIC insurance coverage is limited to $250,000 per qualified customer account per banking institution. Wealthfront Brokerage uses more than one Program Bank to ensure FDIC coverage of up to $1 million for your cash deposits. For more information on FDIC insurance coverage, please visit Customers are responsible for monitoring their total assets at each of the Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits at Program Banks are not covered by SIPC. This is not an offer, or solicitation of any offer to buy or sell any security, investment or other product.

Nothing in this communication should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront Advisers or its affiliates endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.

Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and brokerage related products, including the cash account, are provided by Wealthfront Brokerage LLC, a member of FINRA/SIPC.

Wealthfront Advisers and Wealthfront Brokerage are wholly owned subsidiaries of Wealthfront Corporation.

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About the author(s)

The Wealthfront Team believes everyone deserves access to sophisticated financial advice. The team includes Certified Financial Planners (CFPs), Chartered Financial Analysts (CFAs), a Certified Public Accountant (CPA), and individuals with Series 7 and Series 66 registrations from FINRA. Collectively, the Wealthfront Team has decades of experience helping people build secure and rewarding financial lives. View all posts by The Wealthfront Team