Looking for online high-yield savings account options? Here's how Betterment's Smart Saver and Marcus by Goldman Sachs stack up.
Building an emergency savings fund can help protect you from financial disaster. But if you keep your money in a traditional savings account, your funds will lose value over time. The average savings account only earns .09% interest, which doesn’t come close to keeping up with inflation.
Many banks and investment advisors offer saving solutions that can help your savings grow at a faster rate. Here’s a breakdown of two of those products: Betterment Smart Saver and Marcus by Goldman Sachs.
Betterment’s Smart Saver solution is a managed investing account that lets you grow your savings over time using low-risk investments. Cash deposited in a Smart Saver account is invested as follows:
80% in U.S. Short-Term Treasury Bonds
20% in U.S. Short-Term Investment Grade Bonds
These bonds are extremely low-risk investments that are backed by the U.S. government. Currently, Betterment states that you can earn 2% APY after fees, which is much higher than what you’d earn from a typical savings account.
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You can deposit funds to your account via automatic or on-demand bank transfers. Funds can be withdrawn at any time without penalty, though you’ll have to wait four or five business days before they appear back in your bank account.
Smart Saver investments are not FDIC-insured.
Current anticipated yield is 2% after fees
Basic digital account: .25% annual fee, based on account balance.
Premium account: .4% annual fee, based on account balance, with access to investment advice and Certified Financial Planners. $100,000 minimum balance required.
Investments are low-risk and backed by the U.S. government, and can earn a much higher yield than the average savings account. Moving money between your bank account and Smart Saver account is easy. There aren’t any early withdrawal penalties.
There is always an inherent risk when investing, even with low-risk bonds. If you do have an emergency and need quick access to your cash, moving funds back to your bank account can take four or five business days.
Smart Saver is best in the following scenarios:
You want to invest your funds but you don’t like the idea of higher-risk investments.
You have extra cash sitting around earning little or no interest.
You think you’ll spend or invest the money you hold in a checking or savings account, but you don’t know when.
Marcus by Goldman Sachs is a high-yield online savings account that earns a higher APY. Online banks can afford to pay higher rates because they don’t have the physical overhead of brick-and-mortar banks.
Currently, Marcus savings accounts earn a 2.05% APY, which is much greater than the earnings you’d receive with any traditional bank account.
You can deposit funds to your account via automatic or on-demand bank transfers, wire transfers or physical checks. Unlike a physical bank, you can only access your account online and speak to a representative over the phone or via online chat. There are no checking, ATM or debit card features - to access your money, you must transfer it back to your bank account.
Marcus savings accounts are FDIC-insured for up to $250,000. There are no service charges or withdrawal fees with a Marcus savings account, but under Regulation D you are limited to six withdrawals or transfers in a monthly statement period.
$0 (to earn APY, you'll have to deposit $1 minimum)
Deposits are FDIC-insured for up to $250,000. Your funds can be transferred back to your bank account at any time. There are no fees.
APY rates can change at any time, before or after your account is opened. There’s no checking or ATM option, so accessing your funds isn’t as convenient as with a traditional savings account.
Marcus is best in the following scenarios:
You currently have savings earning little or no interest.
You want to grow your savings, but you aren’t interested in investing.
You want low fees and you don’t mind the lower level of service you get from an online bank.
Both Smart Saver and Marcus offer the opportunity to grow your savings faster than you can with a regular savings account, but each account has its own pros and cons.
If you’re weary of investing your funds or you’re looking to avoid fees, a Marcus savings account is the better option. You can earn 2.05% APY on your savings at no cost and move your money back to your bank account any time you need it. The downside is that you have no checking or ATM options, and you’re limited to six withdrawals or transfers in a monthly statement period.
Betterment allows you to invest in bonds that are extremely low-risk and offer predictable growth. There are no withdrawal or transfer limits, and moving funds from an existing Betterment investment account is extremely easy. However, you’ll earn a lower APY than Marcus currently offers and there are annual fees based on account balances.
Want to start investing, but feel intimidated? Here are some tips on investing when the idea scares you.
No matter where you park your money, saving or investing more is never a bad idea. Here are some tips on how to save extra:
Set a budget: every good savings plan starts with a budget. Analyze your cash flow and expenses to determine how much you can afford to save and identify extra savings opportunities.
Diversify your income: opening your own business or starting a side hustle can help you earn extra money that can be invested or saved.
Set a goal: working toward an established goal month after month can help you stay on track. It’s a good idea to save at least three to six months worth of expenses in case of emergency.
Pay off your debts: the less debt you have, the more you’ll be able to save. Try to avoid taking on too much debt, and work on paying off your existing obligations.
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