The Wealthfront Cash Account offers a high yield of 4.00% APY and up to $8 million in FDIC insurance through our partner banks. In some ways, that might sound similar to a high-yield savings account. But Wealthfront is not a bank, and the Cash Account is not a savings account or high-yield savings account—it’s something better. In this post, we’ll explain the differences.
Difference #1: The Wealthfront Cash Account has a high APY
The first difference between the Wealthfront Cash Account and savings accounts is the interest rate. When we launched the Wealthfront Cash Account, we committed to passing along as much interest to our clients as we could. This is in stark contrast to most banks, which often pay pennies per month on savings account balances. Even so-called “high-yield” savings accounts often offer lower APYs than the Wealthfront Cash Account does.
History shows we have delivered on our promise. The Wealthfront Cash Account has consistently offered one of the highest APYs on the market. We also have a proven track record of passing along a large portion of every increase in the federal funds rate (in the form of a higher APY) since the Cash Account launched. And notably, we’ve raised our APY more quickly than two of the most popular high-yield savings accounts.
Difference #2: The Wealthfront Cash Account offers more FDIC insurance
FDIC insurance protects the money held in bank accounts in case the bank fails. If you have a savings account or high-yield savings account, you probably get up to $250,000 in FDIC insurance (or $500,000 for joint accounts). But the Wealthfront Cash Account offers up to $8 million in FDIC insurance through our partner banks and $16 million for joint accounts.
How are we able to do this? Because Wealthfront isn’t a bank, we sweep your deposits to multiple FDIC-insured partner banks. This means you can benefit from more FDIC insurance without the hassle of dealing with those banks yourself.
We sweep your money to up to 32 partner banks, keeping your deposits below the $250,000 threshold at each partner bank up to the limit. Every partner bank in our program is FDIC insured, and you can see the full list of them here. All of our partner banks undergo an initial risk assessment and also undergo regular, ongoing risk reviews to remain in our program.
As a result, the Wealthfront Cash Account offers far more FDIC insurance than a savings account or high-yield savings account. That translates to more peace of mind for you.
Difference #3: The Wealthfront Cash Account has no account fees
Banks are notorious for charging fees. Savings accounts can come with maintenance fees, excess activity fees, overdraft fees, and more. Combined, these account fees can eat into your savings in a significant way. High-yield savings accounts can come with fees, too.
The Wealthfront Cash Account, by contrast, charges absolutely no account fees—not even for things you might expect, like sending wires. We want the Cash Account to be an ideal home for your short-term cash, and charging account fees feels at odds with that. It also helps that we don’t have an expensive network of bank branches to maintain—our costs are low, and we share the savings with you.
Difference #4: The Wealthfront Cash Account makes it easy to access your cash
It’s important to be able to access your cash when you need it. Every savings account operates differently, but many offer a fixed number of free transfers and withdrawals each month and charge for anything beyond that. This is partially due to longstanding rules limiting transfers from savings accounts set by the Federal Reserve.
Wealthfront’s Cash Account, on the other hand, offers unlimited transfers and free same-day withdrawals—even on weekends and holidays. Plus you get free wires (although receiving institutions may charge their own fee) and access to a debit card, 19,000+ free ATMs plus two out-of-network ATM fee reimbursements per month, compatibility with your favorite payment apps (Google Pay, Venmo, Apple Pay, CashApp, PayPal). You can also use your account and routing numbers to pay bills and businesses and even send checks for free.
Difference #5: The Wealthfront Cash Account makes investing simple and automatic
Wealthfront’s vision is to make it delightfully easy to build long-term wealth on your own terms. That means helping you get in the market within minutes when you’re ready to invest.
You can even set up an automated savings plan that regularly sweeps money from your Cash Account to a dedicated category for a particular goal (a new car, a vacation), your Wealthfront Automated Investing Account, or Wealthfront IRA. We don’t know of a savings account or high-yield savings account that makes saving and investing for your future this easy and intuitive.
Key takeaways: Wealthfront Cash Account vs high-yield savings accounts
We built the Wealthfront Cash Account to be the ideal home for your cash until you’re ready to invest. The Cash Account isn’t a high-yield savings account or a savings account –– we think it’s much better. To recap, the Wealthfront Cash Account:
- Has a higher APY than most savings accounts
- Offers more FDIC insurance than savings accounts
- Has no account fees
- Makes it easy (and free) to access your cash
- Makes investing simple, fast, and automatic
We sometimes get questions about the “Wealthfront high-yield savings account,” when in reality, it is a cash account. As a result, we wanted to set the record straight. We hope this helps!
Disclosure
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 partner banks who accept and maintain deposits, provide the interest rate, and provide FDIC insurance. Investment management and advisory services–which are not FDIC insured–are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and financial planning tools are provided by Wealthfront Software LLC (“Wealthfront”).
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.
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. FDIC insurance coverage is limited to $250,000 per qualified customer account per banking institution. We use more than one program bank to ensure FDIC coverage of up to $8 million for your cash deposits. For more information on FDIC insurance coverage, please visit www.FDIC.gov. 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.
Please note, Real-Time Payments (RTP) transfers may be limited by destination institutions, daily transaction caps, and by participating entities such as Wells Fargo and the RTP® Network. New Cash Account deposits are subject to a 2-4 day holding period before becoming available for transfer. Wealthfront doesn’t charge for transfers, but receiving institutions may impose an RTP fee.
We’ve partnered with Green Dot Bank. The checking features offered on your Wealthfront Cash account are provided by and the Wealthfront Visa® Debit Card is issued by Green Dot Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Visa is a registered trademark of Visa International Service Association. Checking features for the Cash Account are subject to identity verification by Green Dot Bank and the Wealthfront Visa® Debit Card is optional and must be requested. Wealthfront products and services are not provided by Green Dot Bank. Green Dot Bank operates under the following registered trade names: GO2bank, GoBank and Bonneville Bank. All of these registered trade names are used by, and refer to, a single FDIC-insured bank, Green Dot Bank. Deposits under any of these trade names are deposits with Green Dot Bank and are aggregated for deposit insurance coverage. Fee-free ATM access applies to in-network ATMs only. Each calendar month, current eligible clients with ATM Transactions will receive a reimbursement of certain fees associated with their first two out-of-network ATM Transactions. Wealthfront Brokerage will utilize its best efforts to reimburse Green Dot’s $2.50 “out-of-network fee” and up to $5.00 of any operator or owner’s fee for your ATM Transactions, up to a maximum reimbursement of $7.50 per ATM Transaction (the “Reimbursement”). Your maximum total monthly Reimbursement shall be $15.00 ($7.50 + $7.50). If an ATM operator charges fees other than out-of-network fees and/or owner’s fees, Wealthfront Brokerage will not reimburse any portion of those fees. Once the maximum total monthly Reimbursement has been reached, no subsequent out-of-network ATM fees or charges that occur that calendar month will be reimbursed. For full details please review the Out-of-Network ATM Fee Reimbursement Terms and Conditions. Fees and Eligibility requirements may apply to certain checking features, please see the Deposit Account Agreement for details. Copyright 2024 Green Dot Corporation. All rights reserved.
The information contained in this communication is provided for general informational purposes only, and should not be construed as investment or tax advice. Nothing in this communication should be construed as tax advice, a solicitation or offer, or recommendation, of any specific security or strategy. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront Advisers, Wealthfront Brokerage or any affiliate 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.
Wealthfront, Wealthfront Advisers and Wealthfront Brokerage are wholly owned subsidiaries of Wealthfront Corporation. Copyright 2024 Wealthfront Corporation. All rights reserved.
About the author(s)
Leotie Fukawa is a Product Specialist at Wealthfront and a Certified Financial Planner (CFP). She holds Series 66 and Series 7 licenses from FINRA. View all posts by Leotie Fukawa, CFP
