Wealthfront and Betterment are battling it out, and it’s great news for savers

• Betterment, the online investing adviser, debuted a high-yield savings account in July.
• Betterment joined fellow robo-adviser Wealthfront in the high-yield savings space, which debuted its Cash Account earlier this year.
• It’s difficult, if not impossible, to declare an outright winner between the two robo-advisers’ high-yield accounts.
• Both Betterment’s and Wealthfront’s high-yield accounts are fee-free, allow unlimited transfers, and offer insurance coverage on up to $1 million.
• As the Fed has cut interest rates since the accounts were launched, the APY for both accounts has steadily fallen. However, there are benefits to opening a high-yield savings account when interest rates are low.
• Read more personal finance coverage.

Betterment and Wealthfront are online investing advisers at their core, but they’re making a clear play for ordinary savers.

Betterment joined fellow robo-adviser Wealthfront this summer in the high-yield savings space — a niche more commonly occupied by online banks and large financial institutions — with the debut of its Everyday Savings account. The account initially offered an eye-popping annual percentage yield (APY) of up to 2.69%, besting Wealthfront’s 2.57% APY.

But since the Federal Reserve announced its continuing cuts to the interest rate benchmark over the summer and through October, Betterment’s Everyday Savings account now earns up to 1.86% APY and Wealthfront’s Cash Account earns 1.82% APY (as of November 4). Those rates are still well above the industry norm — the average general savings account earns 0.09%.

You can open a Betterment Everyday Savings account with as little as $10 and start earning the 1.86% APY immediately if you join the waitlist for Betterment’s forthcoming checking account. Otherwise, the APY on your savings is 1.61%.

While technically a cash account, Wealthfront’s account has the same features as a high-yield savings account. Wealthfront debuted its Cash Account earlier this year with a 2.24% APY and had been steadily increasing it until the Fed announced its first rate cut.

It’s difficult, if not impossible, to declare an outright winner between the two robo-advisers’ high-yield accounts. Both Betterment and Wealthfront still offer the highest rates on the market right now, plus their accounts are fee-free, allow unlimited transfers, and are FDIC-insured up to $1 million.

Yutong Yuan/Business Insider

High-yield savings accounts are a great place to store money for emergencies and short-term goals — including money you’re shoring up to invest — because there’s zero risk of losing it, it’s easily accessible, and it grows while it’s sitting there. Still, the current interest rate probably shouldn’t be the sole factor in deciding which account to open, as interest rates are subject to change at any time at the behest of the Federal Reserve.

But regardless of how the rate shifts over time, you’ve already made progress toward automatically building wealth by keeping your money a high-yield savings account over a traditional savings or checking account, particularly if it’s fee free.

Wealthfront’s and Betterment’s high-yield savings accounts may also be particularly attractive to those looking to segue into robo-investing.

For longer-term growth on your money, Betterment offers customized investment portfolios in its taxable brokerage accounts, IRAs for retirement savings and investing, and trust accounts. Meanwhile, Wealthfront allows you to invest in low-cost index funds with as little as $500, set up and contribute to an IRA, or save in a 529 college plan.

Learn more about the Betterment Everyday Savings account »

Learn more about the Wealthfront Cash Account »

This post was updated on November 4, 2019, to reflect both accounts’ changing interest rates.

• Read more:
• Betterment dropped the rate on its fee-free, high-yield savings account less than 2 weeks after its debut
• Saving money is a good start, but where you keep those savings can matter even more
• Here’s how much $1,000 could grow over 5 years in Wealthfront’s high-yield savings account, which has the highest rates available right now
• Ally vs. Marcus vs. Wealthfront: How 3 of the most popular high-yield savings accounts stack up