Wealthfront’s Cash Account Now Offers FDIC Coverage Up To $8 Million (2024)

FAQs

Wealthfront’s Cash Account Now Offers FDIC Coverage Up To $8 Million? ›

A given bank can only provide up to $250,000 of FDIC insurance per individual. Wealthfront is not a bank, but by sweeping deposits to up to 32 partner banks and keeping the amount held in each bank below the $250,000 limit, the Wealthfront Cash Account enables access to up to $8 million in FDIC insurance coverage.

Yes, the Wealthfront Cash Account is FDIC insured up to $8 million for individual cash accounts and $16 million for joint cash accounts through partner banks.

The maximum insured amount for a trust is now $1.25 million per trust owner per insured depository institution. The general rule that a trust account receives $250,000 of coverage per beneficiary is unchanged. A trust account with one owner (the trustee) and three beneficiaries is insured for $750,000.

For Wealthfront cash accounts, you can deposit and withdraw a minimum of $1. Transfer maximums vary by transfer type, and can be found in this FAQ. You can make a one-time deposit or schedule recurring deposits via bank transfer (ACH). Recurring deposits can be scheduled weekly, bi-weekly (1st & 15th), or monthly.

Your cash is insured by the Federal Deposit Insurance Corporation (FDIC). This coverage protects your cash in the event that a bank goes out of business. Wealthfront uses multiple partner banks to ensure FDIC coverage of up to $8 million for your cash deposits.

At the end of the business day, the private bank, as custodians of their various accounts, sells off enough liquid assets to settle up for that day. Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank.

The main con of Wealthfront is that its required $500 minimum deposit is higher than other free robo-advisors like SoFi Invest® and Betterment Investing.

I am excited to announce that Wealthfront has agreed to be acquired by one of the premier brands in wealth management, UBS, in a transaction valued at $1.4 billion.

Wealthfront Brokerage is a member of SIPC, which insures Cash Balances swept into Money Market Funds as follows: Customers are protected up to the applicable SIPC limits if Wealthfront Brokerage were to go out of business and there were customer securities or funds unaccounted for.

Is it bad to keep more than $250,000 in one bank? ›

The FDIC insures up to $250,000 per account holder, insured bank and ownership category in the event of bank failure. If you have more than $250,000 in the bank, or you're approaching that amount, you may want to structure your accounts to make sure your funds are covered.

The Depositors Insurance Fund (DIF) is another option for insuring excess deposits. This program covers deposit account balances beyond the $250,000 FDIC limits at member banks. So, once you exhaust your FDIC coverage limits, you're still protected.

FDIC insurance coverage is limited to $250,000 per qualified customer account per banking institution. Wealthfront uses more than one program bank to ensure FDIC coverage of up to $8 million for your cash deposits. For more information on FDIC insurance coverage, please visit www.FDIC.gov.

The lack of fees on the cash account offered by Wealthfront, a top robo-advisor, make it a worthy cash account to consider. Best for: Wealthfront brokerage customers who are looking for a free companion cash account that earns some interest. Offers a 5.00% annual percentage yield.

For any taxable investment accounts with dividends or realized gains/losses, we'll post a Consolidated 1099. For cash accounts that generate more than $10 of interest or received $600 or more in awards, we'll post a tax form 1099.

If you have a Cash App Card, or are a sponsor of any active sponsored accounts, up to $250,000 of your cash and savings balances in Cash App is covered by FDIC insurance through our partner bank Wells Fargo Bank, N.A., Member FDIC.

Green Dot is one of our FDIC-insured partner banks. We're not a bank, so we work with Green Dot to provide your routing and account numbers, as well as your Wealthfront debit card. This is a pretty common relationship in our industry (ahem, “fintech”).

If you earned more than $10 in interest or $600 in awards in a Wealthfront Cash Account, we'll send you a 1099. Use this form to file your 2023 tax return. If you have a taxable investment account with dividends or realized capital gains, we'll send you a Consolidated 1099. Use this form to file your 2023 tax return.

Long answer: it's in our best interest to offer our clients a competitive rate, so we're always looking for opportunities to do just that. When our partner banks pay us more for our deposits, we pay it forward to you with a better APY. We'll always notify you when the rates change.