There’s a new sheriff in town when it comes to savings account interest rates.
If you’re looking to build up an emergency fund, look no further than Wealthfront, a fintech company that provides their customers with automated investment options and financial planning.
Just this past week, they have raised their interest rates offered on their high-yield cash account to 2.51%.
The national average savings account interest rate for traditional financial institutions is between 0.01% and 0.09%. With 2.5% APY, Wealthfront’s cash accounts get to work right away, earning you the highest interest rate in the market, almost 25 times above the national average.
To put this into perspective, you can expect to earn $25 in interest a year with the current rate for every $1000 that you deposit with Wealthfront. it’s a secure place to grow your cash and reach your short-term goals faster, so don’t leave money on the table.
What To Expect
Wealthfront was established in February this year, and to reassure their clients here are some of their key promises:
- FDIC insurance of up to $1 million, which is four times the amount that traditional banks provide.
- No market risk, as your cash is kept outside the stock markets, avoiding short-term volatility.
- Unlimited, free transfers so you can move money in and out of your account as many times as you want.
- No advisory or management fees. So you can earn more and keep more.
- Fast and easy setup, all it takes is a couple of minutes to open an account from your phone.
- $1 minimum deposit, no additional deposit requirements.
In addition to all these advantages, you also don’t have to be a current customer of Wealthfront to sign up for this savings account. The sign up process is seamless, akin to the Marcus by Goldman Sachs (2.25%) and Ally Bank (2.2%), two popular alternatives that also offer above-average interest rates.
How It’s Done
Wealthfront has already announced on their site that they have earned their clients over $5 million in interest since the cash account launched half a year ago.
To fulfill their promise of FDIC insurance, Wealthfront actually holds your savings at partner banks. Once your cash is at the partner bank, the insurance kicks in so you are assured your money is safe.
To make a profit, Wealthfront takes a small portion of the interest and keeps costs low by using automation. The interest on the account compounds monthly as interest is accrued on a daily basis.
The Competitive Edge
Online banks and fintech companies like Wealthfront are pulling far ahead of the competition when it comes to savings account interest rates. On average, their rates are six times higher than local banks and credit unions.
Depending on your state, the difference can surprise you. Oklahoma offers the highest average interest at 0.39%, and Arkansas banks offering the lowest rates at 0.13%.
Having your company presence all online also makes a difference when you can do everything from the comfort of your phone. Wealthfront doesn’t have any tellers, but you can call or email with questions. And Marcus by Goldman Sachs offers a live chat with a savings specialist that’s open seven days a week.
In the near future, Wealthfront clients can also look forward to updated deposit features including debit card and ATM access, direct deposit, and mobile check deposits.
If you want to build up emergency savings then an online savings account is the way to go. If you want some extra input you can always give the Financial Helpers a call.
