The battle for business between online financial services continues to benefit consumers.
Wealthfront on Thursday announced the Wealthfront Cash Account, offering a 2.24 percent yield. That’s more than 20 times the national average of 0.1 percent for savings accounts, according to Bankrate data, though there are a number of banks offering higher yields on savings accounts and money market accounts.
The Cash Account is available only to current Wealthfront clients, though the company says it will be available to everyone in the coming months.
Account details: High yield with no hurdles
Clients can open an account with as little as $1, and there are no additional deposit requirements after opening. There are no fees, and clients can make unlimited free transfers.
One advantage to Wealthfront’s Cash Account is the extended coverage. Because Wealthfront isn’t a bank itself, it spreads deposits across multiple banks. In total, cash deposits are insured up to $1 million, which is four times the standard insurance offered by individual banks.
Clients who open a Cash Account will receive free financial planning through Wealthfront’s mobile app, including personalized recommendations on accounts best suited for their financial goals.
Wealthfront also offers investing services through low-cost index funds. The company builds custom portfolios based on each individual client’s desired risk and charges a 0.25 percent annual advisory fee, which the company claims to be a quarter of the industry average. Assets held in a Wealthfront brokerage account are covered by SIPC insurance.
It pays to shop around
A recent Bankrate survey found that only 40 percent of Americans could pay an unexpected $1,000 expense. The Cash Account’s 2.24 percent yield could be a great jump-start for consumers looking to build an emergency fund once it’s open to those who aren’t currently Wealthfront customers. Additionally, the lack of restrictions and requirements on the account, compared with competitor accounts like Varo Money’s savings account, make the hefty yield widely accessible.
Dan Carroll, co-founder of Wealthfront, says the new, high-interest accounts could be a game-changer for consumers.
“If the $8 trillion in cash sitting at the commercial banks was moved to a service like Wealthfront instead, consumers would have an additional $170 billion in their pockets every year,” Carroll said in the company’s announcement. “Imagine how impactful that extra money could be on people’s lives.”
You can compare savings accounts on Bankrate to find a high-yield account that fits your needs.