What is a cash management account?

A cash management account, or CMA, is a cash account that combines services and functionality similar to checking, savings and / or investment accounts under one product. CMAs are typically offered by non-bank financial service providers, and some CMAs are able to offer above-average interest rates and reasonable or no fees due to the low overhead of online-only services.

Main cash management accounts

Want to compare CMAs? Check out NerdWallet’s selections from the best cash management accounts available.

Although providers vary in their offering, here are some of the typical features, advantages and disadvantages of cash management accounts.

Pros and Cons of Cash Management Accounts

Benefits

  • Fewer accounts to manage.

  • Higher interest rates than some traditional banks.

  • Benefits similar to checking and savings accounts.

  • FDIC insurance on your account, often provided by third-party banking partners.

The inconvenients

  • You might miss out on higher interest rate investments like index funds.

  • Savings accounts at online banks may offer higher interest rates.

  • Customer service may not be face to face.

What are the advantages of a CMA?

Simplified account ownership. A CMA can streamline your finances by allowing you to transact, earn interest, and sometimes use a line of credit attached to your securities – all without having to transfer funds between different accounts.

Higher than average interest rates. Some cash management accounts have higher annual percentage returns than most traditional banks offer. For example, Betterment’s cash management account, Betterment Cash Reserve, has a 0.30% APY, while many traditional banks offer 0.01%.

Alternative to checking and savings accounts. Cash management accounts often come with mobile check deposit, check writing, Federal Deposit Insurance Corp. through third-party banks (sometimes even multiple times the usual coverage), bill payment, money transfers, goal setting, overdraft programs and more.

Things to consider about CMAs

You might not get in-person customer service. Like online banks, non-bank financial service providers that offer CMAs tend to have remote customer service so that they can have lower overhead costs and pass the savings on to their customers in the form of interest rates. higher interest. While technology makes it easier to obtain virtual assistance, online cash accounts can be a challenge for people who prefer face-to-face interactions.

Banks, credit unions, or other financial products may still have higher interest rates. The Fidelity cash management account, for example, only offers 0.01% APY. If you are looking for a good return on your investment, be sure to check it out NerdWallet’s List of the Best High Yield Online Accounts. If you are looking to put your savings aside for a long time, think about investing it instead for even higher returns.

Is a CMA Right For Me?

If you’re a fan of online banking, chances are you’ll like the similar features that cash management accounts have to offer. While face-to-face customer service can be replaced by virtual assistance, the overhead savings allow some of these cash accounts to offer above-average interest rates and streamlined account features. Be sure to assess what a CMA offers and the fees it charges before you pull the trigger when opening an account.

Check out these accounts to get you started:

Other recommended cash management accounts

Fidelity cash management

The Fidelity cash management account has no monthly fees or minimum balance requirements, and it offers reimbursement of ATM fees and free check writing. Fidelity’s cash management account has FDIC insurance coverage of $ 1.25 million, five times the typical coverage offered by most financial institutions. However, the 0.01% APY for this account is not very high compared to other recommended accounts. For more information, read our full review.

Robinhood Cash Management

Robinhood Cash Management is a feature of the Robinhood Brokerage Account. Customers can earn up to 0.30% APY on uninvested cash, and customers can make purchases and withdraw money with the Robinhood debit card. There is no minimum account, no monthly fees and no foreign transaction fees with Robinhood Cash Management. Read Full NerdWallet review for more details.

Personal capital treasury

Personal cash capital has a 0.05% APY – 0.10% for clients who also use Personal Capital’s advisory services – with no fees or minimum balances. Clients can have individual or joint accounts, which can make it easier for couples to co-manage finances. There is currently no option for cash deposits, cash withdrawals, or writing checks, but direct deposits, wire transfers, and wire transfers are supported. Read NerdWallet’s full review of Personal Capital Cash for more information.

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