Historically, checking accounts have seldom stood out as remarkable. However, recent years have witnessed the emergence of financial institutions like Betterment, simplifying and reducing the cost of everyday banking. Betterment’s online-only platform introduces Betterment Checking, a fee-free checking account that liberates customers from the constraints typically associated with traditional accounts. Moreover, account holders have the opportunity to earn cash back with designated merchants. Betterment further complements its offerings with a high-yield savings account and a selection of investment opportunities.

Below, we delve into the essence of Betterment and elucidate how it may align with your financial needs.

Understanding Betterment

Founded in 2008, Betterment LLC initially operated as a robo-advisor, leveraging algorithms to manage investor portfolios at a fraction of the cost of traditional, hands-on management. Among its robo-advisory peers are Wealthfront, Stash, and Ellevest, among others. Over time, Betterment expanded its services to include banking products, such as the Betterment Checking account and Cash Reserve account.

While Betterment itself is not a bank, it partners with nbkc bank (member FDIC) to provide its banking services. It’s worth noting that Betterment does not offer the full suite of services typically available through brick-and-mortar banks and credit unions. Nevertheless, its banking products stand out, especially for individuals seeking relief from the prevalent fees associated with traditional deposit accounts.

Betterment’s Checking Account Offerings

Betterment’s Checking account stands as the singular checking option within the institution’s offerings, deviating from the array of choices typical of other banks. Nevertheless, its enticing features, including fee waivers and cash back incentives, may captivate certain consumers. Here’s a comprehensive overview to guide you through the essentials.

1. Features and Advantages

Amidst the customary features associated with a checking account, such as mobile check deposit, direct deposit capabilities, and paper checks, several noteworthy benefits await.

1.1 Cash Back Rewards

While various checking accounts extend cash back perks for debit card usage, Betterment distinguishes itself by potentially offering more generous rewards rates on specific purchases in comparison to its counterparts.

By utilizing your debit card with select merchants, both online and in-store, you stand to earn cash back rewards. As evidenced by examples on Betterment’s official website, these rates may soar to as high as 5% or even surpass that threshold. Typically, the cash back amount is credited the following day, though occasionally it may take up to 90 days.

Admittedly, not every purchase qualifies for rewards, diverging from the ubiquitous rewards system seen with some debit cards. However, you can readily track available cash-back offers via the “Earn Rewards” section within your Betterment account, conveniently accessible through the mobile app.

Though Betterment Checking does not accrue interest, this may prove inconsequential if your debit card usage is substantial enough to accumulate significant cash-back rewards.

1.2 FDIC Insurance Coverage

While Betterment is not a traditional banking institution, your deposits are safeguarded through its partnership with nbkc bank, an FDIC member institution. This collaboration ensures that your funds are protected by the FDIC insurance up to the maximum limit of $250,000, providing you with the peace of mind and security you deserve.

1.3 Contactless Payment Convenience

The Betterment Checking debit card offers a convenient tap-to-pay feature, enabling you to make purchases effortlessly by simply tapping your card on a contactless-enabled card reader, eliminating the need for swiping or inserting the card. This process not only enhances the security of your point-of-sale transactions but also streamlines the checkout process, ensuring a smooth and efficient payment experience.

1.4 No-Fee Joint Account Flexibility

Recognizing the diverse needs of its customers, Betterment has introduced joint checking accounts, offering the same fee-free benefits as individual checking accounts. Each user on a joint account will receive a Visa® debit card, facilitating shared expenses and promoting financial collaboration. Betterment users have the flexibility to choose between individual and joint checking accounts, with a maximum of two checking accounts permitted, catering to their specific financial requirements.

1.5 Discontinuation of Cellphone Protection

Previously, Betterment offered cellphone protection to customers who paid their phone bills using their Betterment Visa® Debit Card or a Betterment Checking account. However, as reported by some users, this service was discontinued at the beginning of 2023. While cellphone protection has gained popularity among credit card issuers, it has yet to become a widespread offering among checking account providers, making this feature particularly unique and valuable when it was available to Betterment customers.

2. Truly Fee-Free Banking Experience

Numerous online banking options boast about their absence of hidden fees. However, this often translates to merely avoiding typical charges such as monthly fees and in-network ATM fees, while other less conspicuous fees may still apply, lurking within the account’s terms and conditions.

Contrarily, Betterment Checking stands out by truly adhering to a fee-free policy. This encompasses a complete absence of monthly fees, overdraft fees, ATM fees, and more, with no imposition of a minimum balance requirement.

2.1 Unrestricted ATM Access

Unlike traditional banks and credit unions that maintain their own ATM networks, Betterment Checking opts for a different approach. Instead of restricting customers to specific ATMs, the institution generously reimburses all ATM fees incurred, alleviating the need to hunt for in-network ATMs. This flexibility ensures seamless access to cash regardless of location.

2.2 No International Transaction Fees

Furthermore, Betterment Checking extends its fee-free ethos to international transactions. In partnership with Visa®, the account reimburses the typical 1% foreign transaction fee on all purchases made abroad, ensuring a hassle-free experience for globetrotters.

3. Accessing Your Account

When it comes to accessing your account with Betterment, you won’t find any physical branches. Instead, the convenience lies in various digital avenues including the mobile app, ATMs, a secure website, and compatible third-party payment applications.

3.1 Mobile App Convenience

Betterment’s mobile application offers comprehensive account management features. From checking balances and reviewing transactions to executing transfers and utilizing mobile check deposits, the app caters to your banking needs efficiently.

Moreover, integration with platforms like Zelle®, Venmo, and Cash App facilitates seamless peer-to-peer payments directly from your Betterment account.

3.2 In-Person Service Consideration

Betterment operates exclusively as an online entity, prioritizing mobile accessibility. This implies the absence of physical branches for in-person banking assistance. If this poses a significant concern for you, exploring alternative banking options may be prudent.

However, if conducting your banking activities primarily online aligns with your preferences, Betterment presents a reliable solution.

Exploring Betterment Cash Reserve Account

In addition to Betterment Checking, exploring the Betterment Cash Reserve account could be advantageous. The Cash Reserve account serves as a high-yield savings option, boasting an impressive APY of 4.75%, significantly surpassing the meager 0.46% average rate of traditional savings accounts, as per April 2024 FDIC data.

Furthermore, the account provides FDIC insurance coverage of up to $2 million, distributed across eight program banks, with each offering $250,000 in protection. Notably, there are no minimum balance requirements to enjoy the lucrative APY benefits.

Additional Financial Offerings

At present, Betterment’s product lineup encompasses a checking account, a high-yield savings account named Cash Reserve, and a selection of investment accounts. In terms of investment options, clients can opt for a retirement account or a robo-advisory account.

The fees associated with Betterment’s investment accounts are relatively low when compared to other brokerage firms. However, it is important to note that a robo-advisor service does not grant investors direct control over the specific allocation of their funds. Instead, Betterment constructs a portfolio tailored to the individual based on the personal information provided by the client.

Is Betterment Suitable for Your Needs?

Betterment offers several advantages, particularly for individuals who prefer online banking. Clients can enjoy fee-free checking with the potential to earn cash rewards, a competitive savings account, and a range of investment account options, including IRAs. If you are comfortable with the absence of in-person service and embrace the convenience of online banking, Betterment could be an excellent choice for managing your finances.

However, if you prefer face-to-face customer service or require access to a broader range of banking products, it may be beneficial to explore alternative options and conduct a thorough comparison to ensure your needs are met.