(New York)

We saw an article that caught our eye today. How does earning a 1.8% yield on cash sound? If that sounds enticing, consider putting some money in Betterment’s new Smart Saver option. Betterment is seeking to compete with digital banks, who have been boosting interest payouts recently, by offering a product for cash that might be stagnating in a savings account. The yield is backed by a mix of 80% short-term US Treasury bonds and 20% US short-term investment bonds. The only catch is that the account is not FDIC insured, which is a hindrance compared to some bank accounts which are offering comparable yields and are FDIC insured.

FINSUM: This seems like a good offering in principle. Betterment’s argument against the competition is that unlike banks, their holdings directly track the Fed instead of being artificially manipulated to optimize net interest margin.