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What Is a Cash Management Account?

Sept. 13, 2019
Banking, Banking Basics, Checking Accounts, Personal Finance, Savings Accounts
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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 non-bank financial service providers, and some CMAs are able to provide high interest rates and reasonable or no fees thanks to the low overhead of online-only services.

» Jump ahead to see some of NerdWallet’s recommended cash management accounts

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

Pros

  • Fewer accounts to manage.
  • Higher interest rates than brick-and-mortar banks.
  • Benefits similar to checking and savings accounts.
  • FDIC insurance on your account, often provided through third-party bank partners.

Cons

  • 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 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.

High interest rates. Some cash management accounts have such stellar annual percentage yield rates that they rival high-yield online banks and blow most brick-and-mortar banks out of the water. For example, SoFi’s cash management account, SoFi Money, has a 1.60% APY, whereas many traditional banks offer 0.01%.

Alternative to checking and savings accounts. Cash management accounts often come with mobile check deposit, check writing, FDIC 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 non-bank 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 have higher interest rates. While accounts like SoFi Money have a competitive interest rate, some cash management accounts might not be so generous. The Fidelity Cash Management Account, for example, offers only 0.82% APY for balances under $100,000 (and 0.79% for more than that amount). If you’re looking for a strong return on your money, consider checking out NerdWallet’s list of 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 high 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.

Cash management accounts with high interest rates

Check out these three cash management accounts to get you started:

Wealthfront

at Wealthfront

NerdWallet bank rating:
4.0 NerdWallet rating
Betterment

at Betterment

NerdWallet bank rating:
4.0 NerdWallet rating
SoFi

at SoFi

NerdWallet bank rating:
4.5 NerdWallet rating

APY

1.82%





Monthly fees

$0





Bonus features

Highly rated mobile app



APY

Up to 1.85%





Monthly fees

$0





Bonus features

ATM fees reimbursed worldwide



APY

1.60%





Monthly fees

$0





Bonus features

ATM fees reimbursed worldwide



See high-yield savings accounts

» If high rates are a priority, you can also check out NerdWallet’s best savings accounts.

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. Keep in mind, however, that the 0.82% APY for this account isn’t very high compared with the other recommended accounts. For more information, read our full review.

Aspiration Spend & Save

Aspiration’s Spend & Save is a cash management account that offers cash-back rewards on every purchase, bonus rewards for spending at socially conscious businesses, a 1.00% APY on the “Save” aspect of the account, a “choose your own monthly fee” feature, no ATM fees worldwide and cell phone protection insurance. The account also has a unique socially conscious feature: Customers receive a score for how often they shop at sustainable businesses. In addition, Aspiration gives 10% of its earnings to charity. To learn more, read NerdWallet’s review of this account.

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