Personal Capital Cash Review: Large FDIC Insurance Coverage

Personal Capital Cash Review: Large FDIC Insurance Coverage

In 2021, Personal Capital, launched a new high-yield account with aggregated FDIC insurance that covers balances up to $1.25 million. They called this Personal Capital Cash. They also launched the Savings Planner. It is a savings tool to help people plan annual retirement savings, an emergency fund, and pay down debt.

Now anyone can open an account through Personal Capital Cash with no minimum balance. You can do so straight from your mobile device.

Further, Personal Capital Cash has the flexibility of an unlimited number of withdrawals. It has aggregated insurance protection up to 5 times more than what most banks offer.

Personal Capital Cash

“We have more than 2 million registered users who combined hold more than $41 billion in cash or money market accounts,” explained Personal Capital CEO Jay Shah.

“If those folks are earning the national rate on that cash, that amounts to more than $900 million in lost interest annually. We saw that and immediately knew we had to do something. So we built Personal Capital Cash to put that money back in the hands of American consumers.”

The latest Report on the Economic Well-being of U.S. Households, published by the FederalReserve, found that 40% of Americans couldn’t cover an unexpected $400 expense with cash, illustrating the need for savings support beyond retirement or vacation planning.

With the company’s holistic approach to financial planning, Personal Capital launched a new tool on its dashboard in addition to the new high-yield account: Savings Planner. Savings Planner calculates, breaks down, and tracks annual savings goals for retirement and an emergency fund accounts.

“Too many financial companies are trying to tell Americans that saving is simple – that they canjust make coffee at home instead of buying that latte,” continued Shah. “But we know better.

Saving, whether it’s for retirement, a short-term goal, or in case of an emergency, can cause anxiety. Personal Capital is creating complete, clear solutions to help people feel confident about their money decisions.”

Personal Capital Cash Interest Rate Decline

When Personal Capital first launched in 2021, it provided an APY of 2.3% for non-clients and a 2.35% APY for clients. Unfortunately, interest rates have plummeted in 2021 due to the flight to safety in bonds. As a result, Personal Capital Cash is offering less than a 0.5% APY for clients today.

For a higher online savings rate, check out CIT Bank Savings instead.

Personal Capital Cash was launched by Personal Capital in partnership with Institutional Banking at UMB Bank. UMB’s Institutional Banking team provides large scale banking services and insured deposit account solutions for broker-dealers, non-bank financial institutions, and fintech companies.

The most impressive part about Personal Capital Cash is not the interest rate, but the FDIC insurance of $1.25 million.

How Can You Have FDIC Insurance On $1.25 Million?

Given the FDIC only covers $250,000 in principal and interest per depositor per program bank, I found this $1.25 million FDIC coverage to be interesting. Personal Capital Cash has the largest FDIC insurance I’ve ever seen.

Here is a response from Rachel Chanco, a Director at Personal Capital. I asked her when I asked how $1.25 million FDIC coverage is possible:

“The program currently has 5 participating banks all of which allow for $250,000 in FDIC insurance coverage.  To be more specific taking language from our disclosure agreements; “FDIC insurance up to $250,000 (including principal & interest) per depositor per program bank. The cash balance you place through the program is swept to one or more program banks. This is where it earns a variable rate of interest and is eligible for FDIC insurance.””

To participate in the program, you must open an account at UMB Bank (all through the personal capital dashboard), through which your funds will be placed in accounts at participating program banks. The advertised interest rates are paid by participating program banks. 

Personal Capital provides the best free wealth management tools online today. I’ve been using them since 2012 to track my net worth and investment exposure. Partly thanks to them, my net worth has growth by 5X since.

You can sign up for Personal Capital for free to use their tools. The better you can track your finances, the more you can optimize your finances.

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