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Cash Management Accounts vs. High-Yield Savings Accounts: How They Compare
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Cash management accounts and high-yield savings accounts are both solid options for earning high interest on your cash in the short term. Their APYs usually fall within the range of 1.00-2.00%, which is lower than what can you make over the long term in a retirement or investment account, but much higher than the average 0.24% savings rate that traditional brick-and-mortar banks offer.
So which should you choose? While features of cash management accounts differ, it may come down to a question of how easily you can deposit or withdraw your money and whether you want to link a brokerage account. CMAs don’t restrict the number of transactions or withdrawals you can make per month — savings accounts at banks are federally limited to six — and customers may find it more convenient to have their brokerage account and CMA under one roof.
High-yield savings accounts, on the other hand, have the convenience, familiarity and benefits typical of banks, so they can be a good place to park cash and let it earn interest without frequent withdrawals.
Read on to learn more about the features of cash management and high-yield savings accounts and which one might be right for you.
What’s the difference between cash management accounts and high-yield savings accounts?
Similarities
Differences
High interest rates.
Good short- to medium-term parking for savings, like an emergency fund.
Funds are federally insured.
Have similar things to consider before opening an account, such as fees, minimum balances, ATM access and whether you can link accounts.
Funds are subject to fluctuating interest rates that are dependent on the federal funds rate (the rate at which banks can lend money to each other).
Cash management accounts are typically provided by nonbank financial service providers (like robo-advisors or investment firms) while high-yield savings accounts are provided by banks.
High-yield savings accounts have a federally regulated limit on the number of withdrawals a customer can make; CMAs aren’t restricted by number of withdrawals.
Federal insurance is provided using different methods.
CMAs can often be linked to a brokerage or investment account with the same provider.
Check-writing is available with some CMAs.
Cash management account definition
A cash management account is a cash account offered by a nonbank financial service provider and typically has an interest rate that is much higher than traditional brick-and-mortar bank accounts.
This financial product is fairly new to the market and there are a couple of things to consider before getting one.
First, there may be restrictions on how easily you can deposit or withdraw your cash: some CMAs only allow electronic transfers to take money in and out of your account.
Second, the Federal Deposit Insurance Corp. coverage on your money doesn’t come from the CMA provider. Instead, the provider sweeps customer funds into FDIC-insured partner banks that provide coverage.
Top cash management accounts
Want to compare CMAs? See NerdWallet's picks of some of the best cash management accounts available.
3.25%SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) on savings balances (including Vaults) and 2.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 3.25% APY for savings and 2.50% APY for checking balances. Members without direct deposit will earn 1.20% APY on all account balances in checking and savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/30/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
3.00%3.00% APY (annual percentage yield) with $0 minimum balance to earn stated APY. Accounts must have a positive balance to remain open. APY valid as of 11/08/2022.
3.20%Annual percentage yield (variable) is as of 11/07/2022.
Min. balance for APY
$0
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
2.50%SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) on savings balances (including Vaults) and 2.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 3.25% APY for savings and 2.50% APY for checking balances. Members without direct deposit will earn 1.20% APY on all account balances in checking and savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/30/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
1.25%Receive monthly direct deposits totaling $1,500 or more to earn 0.40% APY. Use your Axos Visa® Debit Card for a total of 10 transactions per month (min $3 per transaction) or sign up for Account Aggregation/Personal Finance Manager (PFM) in Online Banking to earn 0.30% APY. Maintain an average daily balance of $2,500 per month in an Axos Managed Portfolios Invest Account to earn 0.20% APY. Maintain an average daily balance of $2,500 per month in an Axos Self Directed Trading Invest Account to earn 0.20% APY. Use your Rewards Checking account to make your full monthly Axos consumer loan payment to earn 0.15% APY.
Monthly fee
$0
Money market accounts pay rates similar to savings accounts and have some checking features.
Money market accounts pay rates similar to savings accounts and have some checking features.
High-yield savings accounts are savings accounts that offer interest rates that are usually much higher than traditional savings accounts. The best high-yield savings accounts are usually offered by online banks because online banks don’t have the business overhead that brick-and-mortar banks do, and they’re able to pass on the savings to their customers in the form of high APY.
3.25%SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) on savings balances (including Vaults) and 2.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 3.25% APY for savings and 2.50% APY for checking balances. Members without direct deposit will earn 1.20% APY on all account balances in checking and savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/30/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
3.00%3.00% APY (annual percentage yield) with $0 minimum balance to earn stated APY. Accounts must have a positive balance to remain open. APY valid as of 11/08/2022.
3.00%Advertised Online Savings Account APY is accurate as of 11/10/2022
Min. balance for APY
$0
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
3.20%Annual percentage yield (variable) is as of 11/07/2022.
Min. balance for APY
$0
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
2.50%SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) on savings balances (including Vaults) and 2.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 3.25% APY for savings and 2.50% APY for checking balances. Members without direct deposit will earn 1.20% APY on all account balances in checking and savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/30/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
1.25%Receive monthly direct deposits totaling $1,500 or more to earn 0.40% APY. Use your Axos Visa® Debit Card for a total of 10 transactions per month (min $3 per transaction) or sign up for Account Aggregation/Personal Finance Manager (PFM) in Online Banking to earn 0.30% APY. Maintain an average daily balance of $2,500 per month in an Axos Managed Portfolios Invest Account to earn 0.20% APY. Maintain an average daily balance of $2,500 per month in an Axos Self Directed Trading Invest Account to earn 0.20% APY. Use your Rewards Checking account to make your full monthly Axos consumer loan payment to earn 0.15% APY.
Monthly fee
$0
Money market accounts pay rates similar to savings accounts and have some checking features.
Money market accounts pay rates similar to savings accounts and have some checking features.
With both CMAs and high-yield savings you’ll likely get high interest rates on your cash, so when it comes to choosing what account you want, consider the following.
Research what kind of access you’ll have to your funds. Savings accounts and cash management accounts can have very different means of depositing and withdrawing money. While savings accounts tend to have pretty standard access via branches, ATMs and online banking, CMAs can be trickier.
Depending on the type of cash management account you choose, ATM access may be available through a large network or you may not be able to withdraw cash from an ATM at all. Some CMAs only allow customers to deposit and withdraw cash through electronic transfer to outside accounts. Also, some CMAs don’t allow check deposits. Be sure to look into these types of restrictions before you open a cash management account to see if it’ll work for you.
Keep in mind that savings accounts have withdrawal limits. The Federal Reserve Board puts a limit of six transactions per month on transfers and withdrawals from bank savings accounts. CMAs, on the other hand, aren't bank accounts, so customers don’t have the same restrictions on how many transactions they can make per month. If you’re planning to open a new account that you want to use for regular daily purchases, you may want to look at a CMA that offers a debit card. If you would rather park your money for a while and not touch it, a high-yield savings account might be a better bet.
Think about what kind of extra features you want with your account. Debit cards and check-writing aren’t always standard with cash management accounts, although they’re very common options for bank checking accounts, which are typically available to link to savings accounts.
Some cash management accounts offer bonus perks as well. Aspiration’s Spend & Save account, for example, gives a bit of cash back for spending money at socially conscious businesses.
Think about whether you want to link other accounts. If you have a high-yield savings account, you’ll likely be able to open a checking account with the same bank, allowing for quick and easy transfers. Banks also sometimes allow customers to create sub-accounts so that you can have different savings accounts for different goals.
Some cash management account providers allow you to link brokerage or investment accounts at the same firm, which can make it easier to transfer money back and forth.
