Webull’s Cash Management Account in 2024 offers a 5.00% APY with $0 minimum balance and no fees. In this article, we review Webull’s Cash Management Account features for American investors, whether it’s safe, and how Webull’s cash sweep stacks up to alternative investments and competitors like competitors like Robinhood.
Webull Cash Management Account Features
The Webull Cash Management Account offers 5.00% APY on uninvested cash. Webull accomplishes this for customers by sweeping uninvested cash to its program banks. While this is a rate that far surpasses the average offered by traditional savings accounts, it’s not the highest cash rate you can earn right now on Webull (more on this below). Regardless, the Webull Cash Management Account guarantees that your liquidity isn’t just sitting idle but is actively generating returns.
Furthermore, the Webull Cash Management Account has no minimum opening deposits and monthly service fees.
Safety is also a key component of the Webull Cash Management offer. Any cash held in a Webull Cash Management Account is FDIC-insured up to $250,000 per depositor per bank, and $1,000,000 in total. This provides an added layer of security for protecting your uninvested cash.
Webull Money Market Funds
Money market funds are among the most popular places to park uninvested cash. Competing platforms such as Fidelity, Charles Schwab, and Vanguard all offer industry-leading money market funds that generate high yields on your cash. Unfortunately, Webull does not allow the purchase of money market funds from other fund providers, and there is no “Webull money market fund”.
HYSA vs. Webull Cash Management
You might also be considering a high-yield savings account (HYSA) instead of the Webull Cash Management Account.
HYSAs are provided by banks, and they’re known for their higher APYs compared to traditional savings accounts. However, HYSAs usually offer lower interest rates than the best cash investments, and there are potential penalties for excessive withdrawals in a HYSA. This makes them a less attractive investment for uninvested cash compared to money market funds or ultra short-term bond ETFs.
On the other hand, Webull’s Cash Management account provides a competitive 5.0% APY with the added convenience for those who already engage in Webull brokerage activities. There’s no minimum balance requirement, and the account does not charge fees. If you’re an existing Webull customer, the Webull Cash Management Account is probably a better solution than moving your money to an external HYSA.
Our Recommendation On the Best Place to Park Uninvested Cash and Earn Interest on Webull
For investors seeking to maximize returns on uninvested cash within their Webull accounts, we recommend purchasing ultra short-term bond ETFs such as SGOV, BIL, USFR, and TFLO. These ETFs, which exclusively hold short-duration Treasury bills or floating rate notes, offer a compelling alternative for investors to the Webull Cash Management Account.
These ETFs on average pay the highest interest rates than CDs and money market funds, and are also extremely liquid. In addition, these ETFs primarily invest in Treasury bills and thus benefit from a large state tax exemption. The interest earned through the Webull Cash Management Account is taxed as regular income, and subject to both state and federal taxes.
There is also no cost for buying these ultra short-term Treasury bill ETFs on Webull. These investments will generate a higher return on your cash at the lowest possible costs (the yield you earn from these ETFs already takes into account the ETF’s expense ratios)
There are two main types of ultra short-term bond ETFs to take into account: Treasury ETFs and Floating rate Treasury ETFs. Treasury ETFs, including SGOV and BIL, maintain a ladder of 13-week T-Bills that refresh weekly, mimicking the structure of Treasury money market funds. On the other hand, Floating rate Treasury ETFs like USFR and TFLO hold Treasury floating rate notes, ensuring investors always receive the most recent 13-week T-Bill rate.
Is Webull Trustworthy?
Your Webull Cash Management account is FDIC insured, providing a layer of security for your cash deposits. Additionally, Webull is a member of the SIPC, so you’re offered protection against the loss of securities, including Treasury ETFs, up to $500,000. This activates if Webull fails.
However, the Better Business Bureau (BBB) has given Webull an F rating, which raises concerns. Customers on the Better Business Bureau have collectively rated Webull a 1.16 out of 5, with over 200 complaints lodged as of March 2024.
There have also been government actions against Webull, including a $5,000 penalty for not responding to a consumer complaint and a $3 million fine from the Financial Industry Regulatory Authority (FINRA) for insufficient diligence in customer approvals for options trading.
Webull Cash Management Account vs. Robinhood Gold Review
Webull’s Cash Management Account competes with Robinhood Gold‘s offering. With Robinhood, uninvested cash in a traditional Robinhood brokerage account earns a 1.5% APY. However, with Robinhood Gold, a subscription service priced at $5 per month, your uninvested cash will earn an interest rate of 5.00% APY, the same rate offered by Webull.
Therefore, the main difference between Webull and Robinhood is that Webull will pay you a 5.00% APY on your cash for no fees, whereas Robinhood requires you to sign up for the Robinhood Gold subscription which costs $5 a month.
Besides the fees, your decision to choose Webull vs. Robinhood may come down to your specific preferences around the user experience, app design, and other product features.
Should You Park Your Cash At a Webull Cash Management Account?
In summary, if you have an account with Webull, the Webull Cash Management account offers a 5.00% interest rate on your uninvested cash that far outpaces the average savings account. With a $0 minimum balance and no fees, the cash management account is an accessible option for Webull customers to earn interest on uninvested cash.
However, we recommend looking into ultra short-term Treasury bill ETFs including SGOV, BIL, USFR, and TFLO. These funds can be purchased on Webull for free and with no commission, and they offer a higher APY than the 5.00% APY offered by the Webull Cash Management Account.
Frequently Asked Questions
How does Webull’s FDIC insurance coverage work for Cash Management Accounts, and are there any limits to the protection?
You’re covered by FDIC insurance up to $250,000 per depositor, per bank, within Webull’s program. If your cash is spread across multiple banks in the program, you’ll get the same amount of coverage at each, up to $1,000,000 in total.
Up to $250,000 in uninvested cash that isn’t swept to program banks and is held within your brokerage account will be protected through SIPC insurance.
What banks does Webull use for its Cash Management Account?
As of November 2, 2023, Webull uses the following FDIC-insured banks for its cash management program:
- Webster Bank
- Keystone Bank
- First State Bank
- Legacy Bank & Trust
- Preferred Bank
Webull may change the network of program banks at any time.
How does the interest accrual Process work for Webull Cash Management Accounts, and when is the interest credited?
Your interest in a Webull Cash Management Account compounds daily and is credited on the 15th of every month. This means you’ll see your earnings reflected in your account balance once a month.
Are there any fees associated with transferring money in or out of a Webull Cash Management Account, Especially for large transactions?
You won’t face any fees for transferring money in or out of your Webull Cash Management account, regardless of the transaction size.
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