Wealthfront

On Sunday, the Fed lowered the federal funds rate by 1.00% in the second surprise rate cut this month because of the coronavirus COVID-19’s continuing impact on economic activity. As a result, we need to lower the interest rate (APR) on our Cash Account by 1.00%, which translates to an APY decrease of 1.01%. This means the APY on your Cash Account is now 0.26%.

The Fed lowered interest rates this week by 0.50%, which means we need to lower the rate on your Wealthfront Cash Account. We’re decreasing our interest rate (APR) by 0.50%, which, due to compounding, translates to an APY decrease of 0.51%. This means beginning today, the APY on your Cash Account is changing from 1.78% to 1.27%.

What does this mean for me?
This decrease means that for every $1,000 in your Cash Account, you’ll earn $5.10 less in annual interest. Even with this change, we continue to get you the highest rate we possibly can — over 14x the national average*.

Your other benefits remain the same — unlimited transfers, no fees and FDIC insurance for up to $1 million through our partner banks.

Why did the interest rate change?
The rate we can offer is based on the federal funds rate. On Tuesday, two weeks before its next scheduled meeting, the Fed lowered the target range for the federal funds rate by 0.50% to 1%–1.25% because of risks posed to the U.S. economy by the coronavirus, COVID-19.

We expect other financial institutions to lower their rates as well, but it may not happen for a few weeks. It may be tempting to move your savings to an institution that has yet to lower their APY. We analyzed this behavior, and found that it’s likely to cost you even more because you miss days’ worth of interest when moving money between accounts.

Our pledge to you
Our goal remains to get you more on your cash. We promise to remain transparent with you about these changes and continue to pass on as much interest as we possibly can.