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A cash management account, or CMA, is a cash account that combines services and features that are similar to checking, savings and/or investment accounts under one product. CMAs are typically offered by nonbank financial service providers, and some CMAs are able to provide above-average interest rates and reasonable or no fees thanks to the low overhead of online-only services.
While providers vary in what they offer, here are some of the typical features, benefits and drawbacks of cash management accounts.
Pros and cons of cash management accounts
Fewer accounts to manage.
Higher interest rates than some brick-and-mortar banks.
Benefits similar to checking and savings accounts.
FDIC insurance on your account, often provided through third-party bank partners.
You could miss out on higher-interest investments, like index funds.
Savings accounts at online banks might offer higher interest rates.
Customer service might not be face to face.
What are the benefits of a CMA?
Simplified account ownership. A CMA can streamline your finances by allowing you to make transactions, earn 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, Betterment’s cash management account, Betterment Cash Reserve, has a 3.20% APY, whereas many traditional banks offer 0.01%.
Betterment says: "Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients' brokerage accounts at Betterment Securities. Learn more: https://www.betterment.com/cash-reserve."
Alternative to checking and savings accounts. Cash management accounts often come with mobile check deposit, check writing, Federal Deposit Insurance Corp. insurance through third-party banks (sometimes even multiple times the usual coverage), bill pay, money transfers, goal-setting, overdraft programs and more.
Things to consider about CMAs
You might not get in-person customer service. Like online banks, the nonbank financial service providers that offer CMAs tend to have remote customer service so that they can have lower overhead and pass the savings on to their customers in the form of higher interest rates. While technology is making it easier to get virtual support, online cash accounts can be a challenge for people who prefer face-to-face interaction.
Banks, credit unions or other financial products may still have higher interest rates. The Fidelity Cash Management Account, for example, offers only 1.58% APY. If you’re looking for a strong return on your money, consider checking out NerdWallet’s list of best high-yield online accounts. If you’re looking to put away your savings for a long period of time, consider investing it instead for even higher returns.
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 offer above-average interest rates and streamlined account features. Make sure you evaluate what a CMA offers and what fees it charges before you pull the trigger on opening an account.
Check out these accounts to get you started:
» If high rates are a priority, you can also check out NerdWallet’s best savings rates.
Other recommended cash management accounts
Fidelity Cash Management
The Fidelity Cash Management Account has no monthly fees or minimum balance requirements, and it offers ATM fee reimbursement and free check writing. Fidelity’s Cash Management Account has FDIC insurance of $1.25 million, five times the typical coverage offered by most financial institutions. However, the 1.58% APY for this account isn’t very high compared with the 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 1.50% APY on uninvested cash, and customers can make purchases and withdraw cash with the Robinhood debit card. There are no account minimums, no monthly fees and no foreign transaction fees with Robinhood Cash Management. Read NerdWallet’s full review for more details.
Personal Capital Cash
Personal Capital Cash has a 2.60% APY — 2.70% for clients who also use Personal Capital's advisory services — with no fees and no minimum balance. Customers can have either individual or joint accounts, which can make it easier for couples to co-manage finances. There’s currently no option for cash deposits, cash withdrawals or check writing, but direct deposits, electronic transfers and wire transfers are supported. Read NerdWallet’s full review of Personal Capital Cash for more information.
» For a full list of recommended CMAs, check out NerdWallet's list of best cash management accounts.