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Is Betterment FDIC Insured?

Minho Investment Association| Updated: August 29, 2023

Betterment is a robo-advisor that aims to make investing and financial planning more accessible and user-friendly through technology-driven solutions to help individuals manage their money and achieve their financial goals.

In this article, we examine Betterment’s structure and how it affects investor protection regarding FDIC Insurance.

Is Betterment FDIC Insured?

No, Betterment is not a bank but a robo-advisor. As such, your investments at Betterment are not FDIC-insured. However, Betterment Checking and Savings accounts are eligible for FDIC insurance coverage. 

So, technically, Betterment is not under the FDIC, but your money is protected, in practice, since it uses FDIC insurance banks to deposit it.

Think of it like this:

  1. Betterment Checking and Savings: FDIC-insured, safe up to $250,000 (per member, per bank);
  2. Money you’ve put into stocks, bonds, etc.: NOT FDIC-insured. It has a different kind of protection called SIPC protection1 (covered up to $500,000)

Betterment Cash Reserve Account

The Betterment Cash Reserve Account is a notable feature of Betterment’s suite of financial services. It is designed to offer users a high-yield savings option with competitive interest rates and FDIC insurance coverage to provide them with a safe and secure place to hold their uninvested cash.

Is Betterment FDIC Insured? 1

Source: Betterment

You can check the Betterment Cash Reserve Account by visiting Betterment’s official website.

Understanding FDIC Insurance

The Federal Deposit Insurance Corporation (FDIC) insurance stands as a cornerstone of financial security for depositors in the United States. This protection offers peace of mind by safeguarding your funds against potential bank failures.

In essence, FDIC insurance is a safety net for your deposits, covering a wide range of accounts, including savings, checking, and certificates of deposit (CDs).

The assurance extends up to $250,000 per depositor per bank, ensuring that a significant portion of your funds remains safeguarded even in the face of unexpected challenges.

It’s important to note that FDIC insurance applies exclusively to traditional banking products, not investments like stocks, bonds, mutual funds, or other securities. The coverage primarily pertains to cash deposits, ensuring that even if a bank faces financial difficulties, your hard-earned money is shielded up to the specified limit.

FDIC deposit insurance covers: FDIC deposit insurance does not cover:
Checking accounts Stock investments
Negotiable Order of Withdrawal (NOW) accounts Bond investments
Savings accounts Mutual funds
Money Market Deposit Accounts (MMDAs) Life insurance policies
Certificates of Deposit (CDs) Annuities
Cashier’s checks Municipal securities
Money orders Safe deposit boxes or their contents
Other official items issued by an insured bank U.S. Treasury bills, bonds, or notes
Crypto assets

Understanding Betterment: A Closer Look

Betterment is recognised as a fintech pioneer that has merged banking and investment solutions to redefine how individuals manage their finances. Betterment is described as a Robo-Advisor, and its services include a wide range of products, such as:

  • Banking: It allows users to earn interest on uninvested cash. It offers an annual percentage yield on cash balances, providing a competitive rate compared to traditional savings accounts.
  • Investing: It automates investment management. Users answer a set of questions about their financial goals, risk tolerance, and time horizon, and based on this information, Betterment creates and manages a diversified investment portfolio of ETFs.
  • Borrowing: It allows users to borrow against their investment portfolios. Users can access up to 30% of their portfolio’s value as a line of credit, which can be used for various purposes. The interest rates for these lines of credit start from a competitive rate.
  • Planning: Betterment provides personalised financial planning guidance based on individual goals and circumstances. The platform helps users plan for major life events and offers tools and insights to assist users in making informed financial decisions.

This platform offers a unified approach to diverse financial needs, from automated investing to high-yield cash accounts. Users benefit from tailored accounts, including customisable portfolios and cash management tools, accessing a range of investments like ETFs and stocks.


In conclusion, Betterment operates as a robo-advisor, utilising technology to simplify financial management. While not a bank, it offers FDIC-insured options such as Checking and Savings accounts, enhancing security for users’ funds.

The Cash Reserve Account, a prominent feature, provides competitive interest rates along with FDIC coverage for uninvested cash. This highlights Betterment’s approach to integrating banking and investment solutions.

Understanding FDIC insurance’s scope is essential, particularly its coverage for traditional banking deposits. Betterment’s multifaceted approach encompasses high-yield savings, automated investing, portfolio customisation, and financial planning, catering to diverse financial needs and striving to make financial management more accessible and pragmatic.

1SIPC (Securities Investor Protection Corporation) coverage safeguards funds invested in securities, such as stocks and bonds, in case of broker insolvency.

Minho Investment Association

The Minho Investment Association (MIA) is a junior initiative from the University of Minho (Portugal), which aims to promote financial literacy among young people.