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A cash management account, or CMA, combines services and features that are common with checking and savings accounts — like debit cards, competitive interest rates, ATM fee reimbursements and early direct deposit — under one product. CMAs are typically offered by brokerages, and they can be a solid companion to an investment account and a place where you can keep your uninvested cash. CMAs usually provide higher than average interest rates with no or low fees.
Here are some of the typical features, benefits and drawbacks of cash management accounts.
Pros and cons of cash management accounts
Pros:
- Benefits similar to checking and savings accounts.
- Higher-than-standard federal insurance, provided through third-party bank partners.
Cons:
- Interest rates might be higher with online savings accounts or by investing.
- Customer service is primarily remote.
AD
on Wealthfront's website
Wealthfront Cash Account - Paid non-client promotion 
APY
Up to 4.30%
Min. balance for APY
$1
on Betterment's website
Betterment Cash Reserve – Paid non-client promotion 
APY
4.00%
Min. balance for APY
$0
What are the benefits of a CMA?
Simplified account ownership. A CMA can streamline your finances by allowing you to make transactions, earn high-yield interest and sometimes use a credit line that’s attached to your investment securities all without having to transfer funds between different accounts.
Above-average interest rates. Some cash management accounts have annual percentage yields that are higher than what most brick-and-mortar banks offer. For example, the Wealthfront Cash Account has a 3.30% APY.
Alternative to checking and savings accounts. Cash management accounts offer a variety of features like mobile check deposit, check writing, Federal Deposit Insurance Corp. insurance through third-party banks (sometimes even multiple times the usual coverage amount), bill pay, money transfers and more.
» Check out some options: see reviews of the Vanguard Cash Account and Fidelity Cash Management
Things to consider about CMAs
Customer service is done remotely. Like online banks, the brokerages that offer CMAs tend to have remote customer service like online chat or phone support. Without branches to operate, these brokerages can pass the savings on to their customers in the form of higher interest rates. While technology is making it easier to get virtual support, these online-only cash accounts can be a challenge for people who prefer face-to-face interaction.
Other financial products may have higher interest rates. If you’re looking for a strong return on your money, consider checking out NerdWallet’s list of high-yield online accounts in addition to cash management accounts. Or, if you’re looking to put away your savings for a long period, consider investing it instead for even higher returns or consider opening a certificate of deposit.
Is a CMA right for me?
If you’re a fan of online banking, chances are that you’ll like the similar features that cash management accounts have to offer. While face-to-face customer service might be swapped for virtual assistance, the savings in overhead allows some of these cash accounts to provide high interest rates and streamlined account features. Make sure you evaluate what a CMA offers and what fees it charges before you open an account.
» If high rates are a priority, you can also check out NerdWallet’s best savings rates
