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Today, we’re excited to announce we’ve doubled the FDIC insurance you get on your deposits in a Wealthfront Cash Account. Your Cash Account deposits are now insured for up to $2 million through our partner banks, which is 8x the amount available in a traditional bank account. For joint accounts, Cash Account deposits are now insured up to $4 million.
What is FDIC insurance?
FDIC insurance protects the cash held in bank accounts up to $250,000 per depositor, per FDIC-insured bank, per account category. It is offered by the Federal Deposit Insurance Corporation, which was founded in 1933 as an independent agency of the U.S. government. In the unlikely event your bank suddenly lost your money, the FDIC would pay you as soon as possible, via either a new account at another insured bank or a check in the amount of your insured balance.
FDIC insurance is an important consideration when deciding where to keep your cash. Bank failures are rare but not unheard of. FDIC insurance gives you some peace of mind that, even in the event of a bank failure, you’re covered. More FDIC insurance is better.
How does Wealthfront offer up to $2 million in FDIC insurance?
Wealthfront isn’t a bank, so we work with partner banks where we broker your deposits. Every partner bank we work with is FDIC insured. We can offer you far more FDIC insurance on your Cash Account deposits than you’d get in a regular savings account because we sweep your money to multiple partner banks. At any given time, your cash could be at up to eight partner banks, which is why you get up to 8x the FDIC insurance you’d get in a regular savings account. Previously, we swept your cash to up to four partner banks.
Clients sometimes ask us if their money is protected while it’s in transit to or from a partner bank, and the answer is yes. This rarely comes up because we sweep your cash to our partner banks on the same day we receive it. But even if your funds take a day to arrive, they’re still well protected because our Cash Account is offered by Wealthfront Brokerage, a federally registered broker-dealer, and therefore includes Securities Investor Protection Corporation or SIPC insurance. SIPC insurance covers up to $250,000 of your cash while it’s on its way to a partner bank, so you’re protected even before FDIC insurance kicks in.
The bottom line
At Wealthfront, we take the responsibility to keep your money safe very seriously. We’re delighted to offer far more FDIC insurance than a regular savings account can — this is just one of the many ways in which the Cash Account is far superior to what a bank is able to offer.
The Cash Account is an ideal home for your short-term savings no matter what you’re saving for. It earns a high APY of 3.30% which is many times the national average and comes with absolutely no account fees — including maintenance fees, overdraft fees, or transfer fees. Whether you’re building an emergency fund, saving for a big purchase like a car or down payment, or just keeping money handy for your regular expenses, the Wealthfront Cash Account is a smart place to keep your cash and help it grow faster. The Cash Account also has best-in-class automation features so you can organize your savings into categories, track your progress against your goals, and invest your money within minutes during market hours when you’re ready to build long-term wealth. And you can sleep better at night knowing your money has far more protection (in the form of FDIC insurance) than it would at your bank.
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Image and article originally from www.wealthfront.com. Read the original article here.