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Wealthfront Cash Account APY Increase: 2.57%.

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I've had their cash account since their increase to 2.51%, and just got an email for an automatic increase to 2.57%. They generally seems to want to take market share and is offering one of the best rates I see with ease of liquidity for those who want some returns but are currently risk-adverse from investing. Easy integration for deposits/withdrawals for your main checking/savings account as well.

https://support.wealthfront.com/h...h-Account-

Some FAQ:

Q: What is Wealthfront's Cash Account?
A: It is a saving account offering 2.57% APY with FDIC insurance for up to $1 million (split over four banks). There are zero fees to open and maintain. There is Zero market risk as the cash is kept out of the markets (this is not their investment vehicle although they also offer a roboadvisor program). There are unlimited, free transfers but there is no direct deposit available (so you'd still have to set up transfers from your main bank account). There is a $1 minimum to open and there are no additional deposit requirements.

Q: How do they offer such a high APY?
A: Compared to traditional banks, internet banks can offer higher rates as they have lower overhead (no B&M costs). They do currently offer the highest rate, including against other internet banks, which they claim is possible because of their "smarter" business model. I also think they eat a small part of the costs in order to gain market share.

Q: Is my money safe?
A: Short answer - yes. It's as safe as putting your money in any other bank due to the FDIC insurance. In the rare case of complete annihilation to our global economy, you may have to jump through some hoops, but you'll get your money in the end. As any good financial advisor will tell you however - diversify. You shouldn't be putting all your eggs in one basket, so if you need the liquidity and flexibility of a checking/savings on a day to day basis, this account may not be for you as there is a slight time delay due to the transfers (if you needed to pay bills or write a check within a day for example). Otherwise, this is a very good secondary option - as a point of reference, my checking and emergency savings fund remains at my BoA / Capital One banks whilst the majority of my non-invested cash (cash that is basically going towards a house, future childcare costs - any other future major expenses or investments really) sits here.

I've personally also used their robo-investor and have been happy with it. The tax-loss harvesting feature is really nifty and would have been a headache to do myself, or costly by hiring a talented tax/financial accountant. I haven't had any issues with using Wealthfront over the past three years I've used them from the investment side. Some more helpful articles / disclosures:

https://blog.wealthfront.com/how-...YxkeQ4YWM0

https://support.wealthfront.com/hc/en-us/articles/360022405992--How-does-Wealthfront-offer-FDIC-insurance-​ [wealthfront.com]

https://www.wealthfront.com/stati...losure.pdf
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#2
Is there a cap on how much you can have in an account?
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#3
Quote from ValueRanger
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Is there a cap on how much you can have in an account?
No but FDIC is up to $1m
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#4
Quote from Bawston
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No but FDIC is up to $1m
wasnt fdic limited to 250k , did they change it?
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#5
Quote from Bawston
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No but FDIC is up to $1m
FDIC is 250 but Wealthfront splits your money across 4 banks. Hence the $1m
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#6
How do they maintain such a high APY when ally just decreased yesterday?
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#7
lol, wealthfront increases there's after i get an email from the pink bank talking about a decrease.
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#8
Quote from pranrasvij
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wasnt fdic limited to 250k , did they change it?
got it :
To provide you with the benefit of FDIC insurance, the cash balance in your account is automatically swept into unaffiliated banks that provide FDIC insurance on your deposits. FDIC insurance coverage is limited to $250,000 per qualified customer account per banking institution. Wealthfront uses more than one bank to ensure FDIC coverage of up to $1 million for your cash deposits. These banks are referred to as Program Banks. Your monthly statements will show which bank(s) we are using to hold your funds.
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#9
Quote from ThriftyNarwhal797
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How do they maintain such a high APY when ally just decreased yesterday?
I assume they have a better business model / lower costs of operation than Ally. Plus, they may eat some of the costs in hopes of customers switching to their robo-advisor offering which they charge management fees for.

Edit: Dug further, found an article explaining why they're able to provide these higher rates. It's an article written by them so take it as you will, but there are some decent insights within here, especially for readers who might not fully understand how banks make their money.

https://blog.wealthfront.com/how-...use-to-do/
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Last edited by Bawston June 26, 2019 at 02:44 PM.
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06-26-2019 at 02:43 PM
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#11
Quote from soopervoo
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No B&M costs since they're all online
True but not true. B&M does lower overhead costs, but Ally is also an internet bank which doesn't necessarily answer the question.
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#12
Nice! Just opened an acct there last week.
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#13
Wealthfront Cash account just keeps getting better. I think I started at 2.29% rate and it feels like every few months they just crank it up.
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#14
Why is Ally lowering rates?
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#15
Not so great for me:
"Please note that we currently do not support the ability to set up a direct deposit (i.e. from your payroll) or to pay bills out of your Wealthfront account by entering the routing/account number at another institution. Any ACH transfers in or out of Wealthfront need to be initiated through our website"
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