Online wealth advisor Betterment is launching checking and savings accounts.
Founder and CEO Jon Stein said having the highest rate is part of a strategy to usher in new customers, and a more obvious way to compare value between banks and other fintech checking account offerings.
“It’s really hard for banks to follow us here,” Stein told CNBC in a phone interview. “If you look at where the big banks and brokerages make most of their money in their retail savings accounts.”
The savings account will have 2.69% annual yield, higher than the average yield nationally of 0.10%, according to Bankrate.com. Betterment charges 25 basis points, or .25%, on its investment accounts. For the new products, it plans to profit off of part of the interchange fee charged when you swipe a debit card, which it also shares with Visa and the acquiring banks.
Since Betterment is not a bank, in order to offer banking services it has to partner with FDIC-insured institutions. This is a common set-up for…