Yes, Betterment is FDIC insured, but only for its cash products. Cash Reserve carries FDIC coverage up to $2 million for individual accounts and $4 million for joint accounts through a network of program banks, and Betterment Checking is FDIC insured through nbkc bank. Investment accounts at Betterment are not FDIC insured at all; they receive SIPC protection instead, which covers a different risk entirely.
Betterment itself is not a bank. What protects your money depends on which Betterment product is holding it.
Cash Reserve Coverage: Up to $2 Million
Cash Reserve is Betterment’s high-yield cash account. Because Betterment is not a bank, it obtains FDIC insurance by sweeping your deposits into a network of FDIC-insured program banks.1Betterment. Betterment Cash Reserve Details The insurance comes from those underlying banks, not from Betterment.
Your money is spread across up to eight program banks, each providing $250,000 of FDIC coverage per depositor per insurable capacity. That’s how you get to $2 million for an individual account. Joint accounts double it: each co-owner qualifies separately at each bank, so aggregate coverage can reach $4 million.2Betterment. FDIC and SIPC Disclosures Cash Reserve currently pays a variable APY of 3.25%, which can change at any time.1Betterment. Betterment Cash Reserve Details
Betterment Checking Coverage
Checking is a separate product, offered through 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.3Betterment. Is my cash FDIC insured in Betterment Checking?
If you already hold deposits at nbkc bank directly, or through another fintech that uses nbkc as its banking partner, those balances count against the same $250,000 limit. Worth checking before you assume you have full coverage.
Investment Accounts Are Not FDIC Insured
Betterment’s taxable brokerage accounts and IRAs hold securities like ETFs and stocks. Securities are not eligible for FDIC coverage. They carry market risk instead.2Betterment. FDIC and SIPC Disclosures
These accounts are covered by SIPC. Betterment Securities is a FINRA-regulated broker-dealer, and SIPC protects customer 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
SIPC does not reimburse investment losses. If your portfolio drops 30% because markets fall, SIPC pays nothing. It only steps in if Betterment Securities were to fail and customer assets couldn’t be located or returned. That’s the point where confusion is most common: SIPC covers firm failure, not price movement.
Betterment does not appear to carry excess SIPC insurance above 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.5Betterment. How SIPC insurance protects against the loss of cash and securities
Why Your Actual Coverage May Be Less Than $2 Million
The $2 million figure for Cash Reserve assumes you have no deposits at any of Betterment’s program banks. That assumption often fails in practice.
FDIC insurance is calculated per depositor, per ownership category, per bank. If you already hold a savings account at one of Betterment’s partner banks, that balance is combined with whatever Cash Reserve sweeps into the same bank. If the combined total exceeds $250,000, the excess is uninsured.6Federal Deposit Insurance Corporation. Understanding Deposit Insurance
Betterment lists its current program banks on the Cash Reserve page. The list includes large national institutions like Wells Fargo, HSBC, Truist, and Morgan Stanley, among others.1Betterment. Betterment Cash Reserve Details Compare that list against your own banking relationships. Betterment notes that clients are responsible for monitoring their own deposits across banks to avoid exceeding FDIC limits.
Joint and Trust Accounts
Joint accounts are a separate ownership category from individual accounts. Each co-owner on a joint Cash Reserve account gets $250,000 per program bank, and if either co-owner also holds an individual account at one of the same banks, those balances are calculated independently and not combined.2Betterment. FDIC and SIPC Disclosures
Trust accounts follow different rules. Revocable trust deposits are insured up to $250,000 per eligible beneficiary, with a maximum of $1,250,000 if you have five or more beneficiaries, and that calculation applies at each program bank.7FDIC. Trust Accounts Trust funds swept through Cash Reserve can therefore qualify for substantially more coverage than a standard individual account.
One Gap: Money in Transit
Your Cash Reserve balance is not always FDIC insured while it’s moving. Funds in transit to or from program banks are generally not covered by FDIC insurance and are protected by SIPC instead. Once cash lands in a sweep account after a deposit, or before a withdrawal leaves, FDIC coverage applies and SIPC does not.2Betterment. FDIC and SIPC Disclosures The transit window is brief, but full FDIC coverage doesn’t begin until your cash reaches the program banks.