- What is Cash Reserve? It’s like a holding area for money you plan to invest later. Don’t think of it as a long-term saving spot.
- Where Does Your Money Go? Betterment Securities, acting for you, puts your money in special bank accounts at different banks. These are called “Deposit Accounts”.
- Is Your Money Safe? Yes, up to certain limits. The government’s FDIC insures these Deposit Accounts. If a bank in the program goes under, your money (and any interest it earned) is safe up to $250,000 per bank.
- Example: If you put money in the Cash Reserve and Betterment spreads it across 8 banks, you could have up to $2 million ($250,000 x 8 banks) insured.
- What if I Don’t Want My Money in Certain Banks? You can choose to exclude some banks. But remember, if you exclude banks, you might have less FDIC insurance coverage overall.
- Will I Earn Interest? Yes. The banks decide the rate, and it can change daily. You’ll see how much interest you earn at the start of each month.
- Any Fees? Betterment Securities doesn’t directly take a cut from Cash Reserve. But they do earn from the banks in the program.
- How Do I Track My Money? Every month, Betterment Securities will give you a statement showing:
- Money you put in or took out.
- Your account balance at each bank.
- The interest you earned.
- The interest rate of each bank.
- Taxes? The interest you earn will probably be taxed. Every year, Betterment Securities will send you a tax form called Form 1099-INT. Speak to a tax advisor about any tax questions.
- Changes to the Program? Betterment can change the terms. They’ll tell you if they do. Always check their website for the latest info.
Please note: This is a summary and simplification of the real detailed program. Always consult the actual terms and conditions or a financial advisor for full details and advice.
