Yes, Betterment is FDIC insured — but only for its cash products. Cash Reserve balances are covered up to $2 million per individual account and $4 million per joint account through a network of partner banks, and Betterment Checking is covered up to $250,000 through nbkc bank.1Betterment. FDIC and SIPC Disclosures2Betterment. Is my cash FDIC insured in Betterment Checking? Betterment’s investment accounts are not FDIC insured; they carry SIPC protection instead, which is a different form of coverage against a different risk. Betterment itself is not a bank, so which protection applies depends entirely on which product holds your money.
Cash Reserve: Up to $2 Million in FDIC Coverage
Cash Reserve is Betterment’s high-yield cash management product. Because Betterment isn’t a bank, it obtains FDIC insurance by sweeping your deposits into a network of FDIC-insured program banks.3Betterment. Betterment Cash Reserve Details The insurance sits at those underlying banks, not at Betterment. Your money is spread across up to eight program banks, and each one provides $250,000 of FDIC coverage per depositor per insurable capacity.
Multiply it out: $250,000 across eight banks gives an individual account up to $2 million in coverage. Joint accounts double that. Each co-owner is insured separately at each program bank, so a joint Cash Reserve account can reach $4 million in aggregate FDIC coverage.1Betterment. FDIC and SIPC Disclosures Cash Reserve currently pays a variable APY of 3.25%, which can change at any time.3Betterment. Betterment Cash Reserve Details
Betterment Checking: FDIC Insured Through nbkc Bank
Checking services are provided by nbkc bank, an FDIC member. Joint checking accounts are eligible for up to $250,000 of FDIC insurance per depositor at nbkc bank and its deposit network.2Betterment. Is my cash FDIC insured in Betterment Checking? The limit is lower than Cash Reserve because there’s no multi-bank sweep behind it — the deposits sit at one institution.
If you already hold deposits at nbkc bank directly, or through another fintech platform that uses nbkc as its banking partner, those balances count toward the same $250,000 limit. It’s worth checking before you assume you’re fully covered.
Investment Accounts: SIPC, Not FDIC
Betterment’s investment accounts — taxable brokerage accounts and IRAs — are not FDIC insured. They hold securities like ETFs and stocks, which carry market risk and fall outside FDIC coverage entirely.1Betterment. FDIC and SIPC Disclosures Instead, because Betterment Securities is a FINRA-regulated broker-dealer, your investment accounts receive SIPC protection.
SIPC is a non-profit corporation funded by member brokerage firms. It covers securities and uninvested cash up to $500,000 per customer, with a $250,000 sub-limit on cash claims.4Betterment. How do you keep my money safe Here’s where people most often get confused: SIPC does not protect you if your investments lose value. If your portfolio drops 30% because the market falls, SIPC reimburses none of that. SIPC only steps in if Betterment Securities itself were to fail and your assets couldn’t be located or returned.5Securities Investor Protection Corporation. About SIPC – Our Mission
Betterment does not appear to carry excess SIPC insurance beyond the standard $500,000 limit. Some larger brokerages purchase supplemental policies through Lloyd’s of London or similar insurers. If you hold more than $500,000 in securities at Betterment, the amount above that threshold would not be covered if the firm failed.6Betterment. How SIPC insurance protects against the loss of cash and securities
The Overlap Problem: Program Banks You May Already Use
The $2 million headline figure for Cash Reserve assumes you don’t already hold deposits at any of Betterment’s program banks. That assumption breaks down more often than you’d think. FDIC insurance is calculated per depositor, per ownership category, per bank. If you hold a savings account directly at one of Betterment’s partner banks, that balance combines with whatever Cash Reserve sweeps into the same bank. Anything over $250,000 at that bank is uninsured.7Federal Deposit Insurance Corporation. Understanding Deposit Insurance
Betterment’s Cash Reserve page lists the current program banks, which include Wells Fargo, HSBC, Truist, and Morgan Stanley, among others.3Betterment. Betterment Cash Reserve Details Several are large national banks where you might already have accounts. Comparing that list against your existing banking relationships is the single most important step to confirm your coverage is intact. Betterment notes that clients are responsible for monitoring their own deposits across banks to avoid exceeding FDIC limits.
Joint Accounts and Trust Accounts
Joint accounts are treated as a separate ownership category from individual accounts. Each co-owner on a joint Cash Reserve account is insured up to $250,000 per program bank, which is how two co-owners across eight banks reach $4 million in aggregate coverage.1Betterment. FDIC and SIPC Disclosures If either co-owner also holds a separate individual account at one of the same program banks, the individual balance is calculated independently from the joint balance. They don’t get combined.
Trust accounts work differently again. Revocable trust deposits are insured up to $250,000 per eligible beneficiary named in the trust, with a maximum of $1,250,000 if you have five or more beneficiaries.8FDIC. Trust Accounts That per-beneficiary calculation applies at each program bank individually, so a trust account swept through Cash Reserve can qualify for substantially more coverage than a standard individual account. The actual distribution of funds among beneficiaries doesn’t affect the insurance calculation.
Funds in Transit Aren’t Always FDIC Covered
One gap catches people off guard. Your money isn’t always FDIC insured while it’s moving between Betterment and the program banks. Funds in transit are generally covered by SIPC rather than FDIC. The exception is when those funds sit in a sweep account after a deposit or before a withdrawal — at that point FDIC coverage applies and SIPC does not.1Betterment. FDIC and SIPC Disclosures The transit window is brief in practice, but full FDIC coverage doesn’t start until your cash actually reaches the program banks.