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> but the FDIC has helpfully pointed out that no FDIC insured account has defaulted which is the necessary condition for FDIC insurance to pay out This is what
by brundolf 2y ago
> but the FDIC has helpfully pointed out that no FDIC insured account has defaulted which is the necessary condition for FDIC insurance to pay out
This is what scares me. I use Betterment for everything, which strikes me as a much more legitimate company, but it follows the same model where accounts are "FDIC insured" by being distributed among various bank partners. I always thought that meant it was safe if the company had troubles, but it seems not.
- throwup238 2y agoI don’t think Betterment distributes funds to centralized accounts like Synapse does, it establishes accounts in your name at those partner banks and provides a unified interface over those funds. You can do the same thing yourself by going to each bank individually and opening up accounts manually, but then you’d have to deal with KYC for each one and their online banking interfaces of varying quality. That’s how they get their $2 million insurance number, since they open accounts at 8 banks and FDIC insures $250k per account. That was my understanding when I looked into Betterment Cash Reserve (I ended up just going the manual route because I’m paranoid).
- brundolf 2y agoGood to know! Yeah I guess that's the inverse of the OP: one account spread to multiple bank accounts vs multiple accounts dumped into one bank account
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