Wealthfront is not a high-yield savings account—it's a robo-advisor that holds cash in partner banks
Wealthfront is an investment platform, not a savings bank. It does not offer a savings account of its own. Instead, Wealthfront holds your cash in sweep accounts at partner banks like Goldman Sachs Bank USA and Citibank, which means your money sits in those banks' high-yield savings accounts rather than in a Wealthfront account. The interest rate you earn depends on which partner bank holds your cash at any given time, and Wealthfront does not may provide a specific rate.
If you are looking for a straightforward high-yield savings account where you deposit money and earn interest, you should open an account directly with a bank or credit union instead. If you are already using Wealthfront to invest and want to know how it handles your cash balance, read on.
Key Takeaways
- Wealthfront sweeps uninvested cash into partner bank accounts, so you earn whatever rate those banks offer, not a rate Wealthfront sets.
- The interest rate changes when Wealthfront switches partner banks, which can happen without notice and has resulted in lower rates in the past.
- Your cash is FDIC-insured up to $250,000 per partner bank, but you have no control over which bank holds your money.
- If you want a may provide rate and full control, open a high-yield savings account directly with a bank instead of using Wealthfront's cash sweep.
How Wealthfront's cash sweep works
When you deposit money into Wealthfront, any cash you do not invest goes into a sweep account at one of Wealthfront's partner banks. Wealthfront does not hold the cash itself. The partner bank pays interest on that balance, and Wealthfront passes the rate through to you without taking a cut. You do not choose which bank holds your cash—Wealthfront makes that decision.
The sweep happens automatically. If you sell an investment or receive a dividend, the proceeds land in the sweep account. If you buy an investment, money moves out of the sweep account to pay for it. You can see which bank currently holds your cash in your Wealthfront account settings, but you cannot request a specific bank.
Interest rates change when Wealthfront switches banks
Wealthfront has moved its cash sweep between partner banks multiple times. When it switches, the interest rate you earn can go up or down. In 2023, Wealthfront moved cash from Citi to Goldman Sachs, and the rate dropped significantly for many customers. In 2024, it moved again. These changes happen at Wealthfront's discretion, not yours.
You will receive notice when a switch occurs, but you cannot prevent it or choose to stay with the previous bank. If the new rate is lower than you want, your only option is to withdraw your cash and move it to a different bank's high-yield savings account.
FDIC insurance and what it covers
Cash held in Wealthfront's sweep accounts is FDIC-insured. Each partner bank insures up to $250,000 per depositor, per account type. This means if you have $250,000 in the Goldman Sachs sweep account and $250,000 in a Citi sweep account at the same time, both amounts are covered. However, if Wealthfront holds more than $250,000 at a single partner bank, the amount over $250,000 is not insured.
Wealthfront does not may provide that your balance will stay under the insurance limit. If you deposit a large sum, confirm with Wealthfront how it will be distributed across partner banks before you proceed.
When Wealthfront's cash sweep makes sense
Wealthfront's sweep account is useful if you already use Wealthfront to invest and want your uninvested cash to earn interest without opening a separate bank account. It is convenient because deposits and withdrawals happen in one place, and you do not have to manage multiple logins.
The sweep account is not a substitute for shopping around. If you are comparing high-yield savings accounts, check the current rate at Wealthfront's partner bank against rates at other banks. Rates change frequently, and Wealthfront's rate may not be competitive at the time you are deciding.
Better alternatives if you want a may provide rate
If you want a high-yield savings account with a rate you control and can count on, open an account directly with a bank. Banks like Marcus, Ally, American Express Personal Savings, and Discover all offer high-yield savings accounts with no monthly fees and no minimum balance. You choose the bank, you see the rate before you open the account, and you can move your money if the rate drops.
You can also use both: keep your Wealthfront account for investing and open a separate high-yield savings account at a bank for cash you want to save. This approach gives you more control and lets you compare rates without being locked into Wealthfront's partner bank choices.
What happens if you need your money
Withdrawals from Wealthfront's sweep account are not instant. Money typically takes one to three business days to reach your bank account after you request a withdrawal. If you need cash urgently, a direct bank account may be faster because some banks offer same-day transfers to linked accounts.
There are no withdrawal limits or fees for moving money out of the sweep account. Wealthfront does not charge you to withdraw, but your bank may charge a fee if you exceed a certain number of transfers per month—check your bank's rules.
Frequently Asked Questions
Can I earn interest on my Wealthfront investment account without using the sweep?
No. Any uninvested cash in your Wealthfront account automatically goes into the sweep. You cannot opt out. If you do not want your cash in the sweep, you must withdraw it and move it to a bank account outside Wealthfront.
What happens to my money if Wealthfront goes out of business?
Your cash is held at partner banks, not at Wealthfront, so it is protected even if Wealthfront closes. The FDIC insures the cash at the partner bank up to $250,000. Wealthfront's investments are held in custody at a separate custodian, also protected from Wealthfront's creditors.
Can I move my cash to a different partner bank if I do not like the current rate?
No. Wealthfront controls which bank holds your cash. You cannot request a specific bank or stay with a bank after Wealthfront switches. Your only option is to withdraw the cash and move it outside Wealthfront.
Does Wealthfront charge a fee for the sweep account?
No. Wealthfront does not charge a fee for the sweep account itself. However, Wealthfront charges an advisory fee (typically 0.25% per year) on your total account balance, including cash in the sweep. This fee applies whether or not you use the sweep.
How do I know what rate I am earning right now?
Log into your Wealthfront account and go to the Cash Account section. It shows your current partner bank and the current interest rate. You can also call Wealthfront support to confirm the rate, but the rate shown in your account is the source of truth.