- Cash management accounts are offered by online banking platforms.
- They are generally a hybrid of checking and savings accounts with increased FDIC insurance.
- Features common in cash management accounts include debit card access and high interest rates.
If you prefer online banking over a brick-and-mortar bank experience, there are many options to explore. One account type offered by fintech companies, investment platforms, and robo-advisors, is a cash management account.
Learn about the features of cash management accounts, how to determine if they're better fit for you than directly banking with the best banks, and where to find them.
What is a cash management account?
Cash management accounts (CMAs), also commonly called cash accounts, are a type of deposit account offered by online-only institutions that aren't technically banks, like robo-advisors.
Cash accounts are an alternative to traditional checking and savings accounts. You can use cash accounts to store your savings and manage your cash flow while earning some interest on your balance.
"It's a hybrid checking and savings that can give you the benefits of typically higher rates as well as more flexibility with your money that you probably aren't going to get with the traditional bank account," explains Tony Molina, a CPA and head of community at Wealthfront.
Key features of cash management accounts
Cash management accounts are multifunctional accounts that combine checking and savings account features. Here are come of the most common traits shared by cash management accounts:
- Interest rates: Cash management accounts generally offer high interest rates competitive with the best high-yield savings and high-yield checking accounts. You'll usually earn a much higher interest rate than the average savings account, which only pays a little over 0.41% APY, according to the FDIC.
- Fees: Cash management accounts generally do not charge monthly bank maintenance fees, out-of-network ATM fees, foreign transaction fees, or overdraft fees.
- Minimum opening deposit: Cash management accounts often have low minimum opening deposits, or none at all.
- Access to your account: Cash accounts often include debit cards, as a checking account does. You likely won't have to worry about transfer limits with a cash management account because many offer unlimited transactions.
- Online and mobile access: Fintech companies are primarily online-only, so you won't be able to visit any branches to conduct transactions. You'll have to be comfortable banking online.
- Depositing money: Some online platforms accept cash deposits, but you may have to pay a fee for each transaction.
- FDIC insurance: Fintech companies partner with banks that provide FDIC insurance for cash management accounts. Some fintechs are backed by multiple banks, so your cash management account may be FDIC-insured for $1 million or more (a typical deposit account is insured for $250,000 per owner, per account type, per bank).
- Investing account access: Since many cash management accounts are offered by investment platforms, they make it easy to open and connect a brokerage account so that you can transfer your money into the market without much effort.
Benefits of using a cash management account
Investing and savings in one place
A cash account might be a strong choice if you already have an account with a specific brokerage or investment firm that offers cash management accounts. It also may be appealing if you're looking for a high interest rate and are comfortable with online banking.
Ability to make large cash deposits
Cash accounts may not be ideal if you frequently make large cash deposits. Since there aren't branches, you usually have to deposit cash at ATMs or select retailers where you may need to pay a fee. In some cases, you'll only have the option to link an external bank account and make deposits through ACH transfers.
Extended federal insurance coverage
Cash accounts often have extended federal insurance coverage through programs where fintechs partners with multiple FDIC-insured banks. This is often referred to as pass-through deposit insurance coverage because the fintechs aren't technically banks, but they have an arrangement with a federally insured financial institutions to provide insurance.
Cash accounts can be FDIC-insured for up to millions of dollars. That said, it's important to also know which banks are listed in these programs because they are not considered a separate ownership category. If a person already has a bank account with that financial institution, both are accounted for in terms of the federal insurance limit.
The FDIC also lists requirements for pass-through deposit insurance coverage. Make sure your cash account fulfills the necessary criteria to ensure your money is safe.
How CMAs compare to other bank accounts
One of the most notable distinctions between cash management accounts and traditional savings accounts is the number of transfers you can make. Cash accounts permit unlimited transactions from a single account while some savings accounts have transfer limits.
The federal rule Regulation D states there are transfer limits for savings accounts. The Board of Governors of the Federal Reserve amended Regulation D, so banks may choose to suspend the monthly transfer limit so customers can make unlimited monthly transactions — or they could enforce a six-per-month limit. It varies by bank.
If you exceed the transfer limit on a savings account at a bank that enforces a monthly transfer limit, you'll usually have to pay a fee for additional transfers or withdrawals.
Choosing the right cash management account
If you need daily access to your money, want to earn a competitive interest rate, and you prefer banking online to banking in person, a cash management account could offer more benefits than a traditional bank account.
As with any financial product, it's important to comparison shop. Consider your own financial habits—for example, how often you withdraw, transfer, or deposit cash—and the purpose of the account.
Consider the features, minimum balance requirements, fees, interest rates, ease of access, and insurance coverage of different accounts.
Where to find cash management accounts
Below, you'll find fintech companies we've reviewed that have cash management accounts. Read through our reviews for more information about each financial institution:
- Aspiration Account: Aspiration is an online-only banking platform that supports environmental justice. It has two accounts: the Aspiration Spend & Save Account and Aspiration Spend & Save Plus Account. The Aspiration Spend & Save Account lets you choose your monthly fee (it can be as little as $0), and it pays interest on the first $10,000 in your account if you make certain qualifying transactions. You'll earn a higher interest rate with Aspiration Spend & Save Plus Account.
- Betterment Cash Reserve Account: Betterment is an online investment platform with a cash reserve account and checking account. It pays one of the highest interest rates available right now for new customers.
- Empower Personal Cash™: Empower is an online investing platform that also has a cash management account with a very competitive interest rate.
- Fidelity Cash Management Account: This account has the features of a checking and savings account, but you can also invest your funds — it's technically a brokerage account. But uninvested cash is FDIC-insured and earns interest. The interest rate is decent, but not as high as you'll find with most other cash management accounts.
- Wealthfront Cash Account: Wealthfront is an investing platform with a cash management account. The account pays a high rate and lets you receive paychecks up to two days early.
- Brex Business Account: Brex, an online fintech company providing services for businesses, offers a business-specific cash management account.
- Webull Cash Management Account: Webull is an online investing platform that offers a cash management account to earn interest on money that hasn't yet been invested.
- Public High-Yield Cash Account: Public is an investing platform that has a high-yield cash account. It offers FDIC insurance of up to $5 million.
- Rho Business Checking: Similar to Brex, Rho is an online fintech company for business owners. It offers business accounts with their partner banks.
- Ramp Business Account: Ramp is another online fintech with business banking products. It has a business account which is FDIC-insured and an investment account where you can invest cash in a money market fund.
Cash management account FAQs
Who should consider opening a cash management account?
Individuals and businesses may consider a cash management account to streamline their finances, earn a higher interest rate on their balance, and potentially qualify for more FDIC insurance than a traditional checking or savings account can offer.
Can a cash management account replace a checking or savings account?
Yes, as long as it includes the features you need. Evaluate factors like your ability to access the account, make transfers, use a debit card, and deposit cash or checks to determine whether it's a good fit.
Are funds in a cash management account FDIC insured?
Yes, even though cash management accounts are offered by fintech companies, they are backed by banks. Many offer FDIC-insurance on up to $1 million in deposits, since they are backed by multiple banks each offering $250,000 in insurance per depositor, per account type.
What fees are associated with cash management accounts?
Fees associated with cash management accounts may include monthly service fees, ATM fees, and overdraft fees before opening an account. Cash management accounts typically have lower fees than traditional bank accounts. Since they're offered by online-only banks and fintechs, they tend to have lower overhead costs.
How do I choose the best cash management account for my needs?
Consider your own financial habits and its purpose to choose the best cash management account for your needs. Compare the features, fees, interest rates, ease of access, and insurance coverage of different accounts.
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.
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