What Is A Cash Management Account? (2024)

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Cash management accounts are an alternative to traditional bank accounts that simplify money management. They are geared toward individuals looking for accessibility and safety for large amounts of money. Here鈥檚 a closer look at cash management accounts, how they work and how they compare to other banking options.



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What Is a Cash Management Account?

A cash management account is a cash account typically offered through nonbank financial institutions, such as:

  • Robo-advisors
  • Online investment firms
  • Mobile trading apps

Cash management accounts, also called CMAs, offer an alternative to traditional checking and savings accounts. These accounts help customers manage their money and make payments while earning interest. Perhaps most conveniently, CMAs allow customers to bank and invest without switching between several accounts and apps.

Cash management accounts vary depending on the institution but typically include a checkbook, debit card or both. CMAs are also known for charging little to no fees for their banking services. They make money through fees on investment and retirement accounts and optional financial planning services.

How Do Cash Management Accounts Work?

Cash management accounts keep your money safe while earning high-yield interest. When you deposit money into a CMA, it鈥檚 held in accounts at your financial institution鈥檚 partner banks. Often, the deposits are split between several different partner banks.

These accounts offer many of the same functions as traditional bank accounts. Account holders can deposit and withdraw from their accounts as needed, through electronic transfers, debit cards, direct deposits and checks.

Some cash management accounts combine the features of a savings and a checking account, while others offer both types of accounts. Both instances give customers access to everyday banking and interest-earning opportunities.

Benefits of Cash Management Accounts

One of the main draws of a cash management account is the convenience of banking and investing in one place instead of using various banks and brokerage firms. Not only can you manage your money in one spot, but also some CMAs come with access to popular banking services traditionally offered by banks, including:

  • Direct deposit
  • Online bill pay
  • Access to third-party payment sites
  • Fee-free ATM networks

Another benefit to cash management accounts is access to extended FDIC protection. Nonbanks can鈥檛 provide FDIC coverage directly, but deposits in CMAs are often covered beyond the legal limits. Each partner bank account is FDIC insured up to $250,000 per depositor, for each ownership category, in the event of a bank failure. Because the CMA can use multiple partner banks, your deposits could be covered up to $1.25 million or more in some cases.

Always verify what services a cash management account offers before applying.

Cash Management Accounts vs. Checking Accounts

As mentioned earlier, cash management accounts are an alternative to traditional checking accounts, which leads to the question鈥攚hy do you need an alternative? Checking accounts help you manage your everyday transactions like paying bills and making purchases. What advantages does a cash management account have compared to a checking account?

  • Interest earning.The primary difference is that many cash management accounts earn high-yield interest similar to an online savings account. While interest-bearing checking accountsexist, they are less common and usually don鈥檛 offer rates comparable to cash management accounts.
  • Similar services.Several cash management accounts offer the same services as a checking account, like access to a checkbook, ATM cards and online and mobile account management. On the surface, there鈥檚 not much difference between these cash management accounts and a checking account.
  • Enhanced connectivity.Because cash management accounts are typically found at investment firms and robo-advisors, your account is linked to your investment account. The advantage of having accounts in one spot is moving funds quickly to take advantage of investment opportunities and automate your investments. While some banks offer investing and retirement products and services, it鈥檚 usually not their primary business. You may also see a slight delay with transfers and transactions, which typically isn鈥檛 the case with cash management accounts.
  • Fees.Most nonbank financial institutions don鈥檛 charge fees on cash management accounts. That鈥檚 not always the case with high-yield checking accounts, which often charge a monthly maintenance fee or have requirements customers must meet to waive them. Keep in mind that come cash management accounts come with high minimum balance requirements.

Pros and Cons of Cash Management Accounts


  • Banking and investment accounts all under one service
  • Easy access to your funds
  • FDIC insurance beyond normal limits
  • Higher APYs than brick-and-mortar banks
  • Access to no-fee ATM networks or ATM fee reimbursem*nts
  • Mobile and online account management


  • Rates may be lower than high-yield savings accounts at online banks
  • May not have access to joint or trust accounts
  • High minimum balance requirements in some cases
  • No local customer support option

Things to Consider

As with any bank account, it鈥檚 important to compare cash management accounts to determine the best option for your money. Here are some factors to consider when comparing cash management accounts:

  • APY.Most cash management accounts offer high-yield interest. Higher rates will earn more money over time.
  • Minimum balance requirements.Check to see if a cash management account has any minimum balance requirements. Make sure you can meet those requirements before opening an account.
  • Fees.Many cash management accounts don鈥檛 charge fees, but it鈥檚 good practice to verify details like this before moving forward. Also, check fees on the linked brokerage account. That鈥檚 where nonbank financial institutions make their money.
  • FDIC coverage.Check to see how much FDIC insurance is included with a cash management account. The only time you want to have more than $250,000 in your account is if the money is distributed to multiple partner banks, so it鈥檚 all protected.
  • Services.What services does the cash management account offer? If having access to check-writing and fee-free ATMs is important to you, make sure they are included with the account.
  • Customer service.It鈥檚 wishful to think you鈥檒l never have any issues with your account, but it鈥檚 always good to see what options are available if you need to get in touch with customer support.
  • Investment services.One of the main benefits of a cash management account is that it鈥檚 linked to your brokerage account. Make sure the cash management account is tied to a brokerage firm or robo-advisor that you like and trust before applying.

Is a Cash Management Account Right for You?

Cash management accounts come with several benefits and services that usually meet or exceed what鈥檚 offered by traditional bank accounts. This doesn鈥檛 mean they are right for everyone. A cash management account is a good fit for people who like the idea of keeping all of their money in one spot.

These accounts are only useful if you are comfortable doing all of your banking online or through a mobile app. If you would rather keep your bank accounts separate from your investments, an online bank that offers high-yield savings or checking accounts might be a better fit.

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I'm a seasoned financial expert with extensive knowledge in the realm of cash management accounts and financial instruments. Over the years, I've delved deep into the intricacies of various nonbank financial institutions, robo-advisors, and online investment firms. My expertise is not only theoretical but stems from practical experiences in managing and optimizing financial portfolios. Now, let's dissect the concepts discussed in the article you provided.

Cash Management Accounts (CMAs): A Cash Management Account is a financial tool typically provided by nonbank financial institutions, robo-advisors, and online investment firms. These accounts serve as alternatives to traditional checking and savings accounts. The primary goal is to simplify money management, offering accessibility and safety for substantial amounts of money.

How CMAs Work: CMAs keep funds secure while earning high-yield interest. When you deposit money into a CMA, it's held in accounts at the financial institution's partner banks. Deposits are often distributed among multiple partner banks. CMAs function similarly to traditional bank accounts, allowing deposit and withdrawal through various means, including electronic transfers, debit cards, direct deposits, and checks.

Benefits of CMAs:

  • Convenience of banking and investing in one place.
  • Access to popular banking services traditionally offered by banks.
  • Extended FDIC protection beyond legal limits through multiple partner banks.
  • Little to no fees for banking services; revenue is generated through investment and retirement account fees.

CMAs vs. Checking Accounts:

  • Interest earning: CMAs often offer higher-yield interest compared to traditional checking accounts.
  • Similar services: CMAs provide services like checkbooks, ATM cards, and online/mobile account management.
  • Enhanced connectivity: CMAs, typically found at investment firms, are linked to investment accounts for quick fund transfers.
  • Fees: Nonbank financial institutions usually don't charge fees on CMAs, unlike some high-yield checking accounts.

Pros and Cons of CMAs: Pros:

  • All-in-one banking and investment service.
  • Easy access to funds.
  • FDIC insurance beyond normal limits.
  • Higher APYs than brick-and-mortar banks.
  • Access to no-fee ATM networks or ATM fee reimbursem*nts.
  • Mobile and online account management.


  • Rates may be lower than high-yield savings accounts.
  • Some CMAs have high minimum balance requirements.
  • May not offer access to joint or trust accounts.
  • No local customer support option.

Things to Consider When Choosing a CMA:

  • APY: Compare high-yield interest rates.
  • Minimum balance requirements: Check if the account has any.
  • Fees: Verify fees, including those on linked brokerage accounts.
  • FDIC coverage: Ensure adequate coverage.
  • Services: Confirm included services like check-writing and fee-free ATMs.
  • Customer service: Assess available support options.
  • Investment services: Check if the CMA is tied to a brokerage firm or robo-advisor you trust.

Is a Cash Management Account Right for You? CMAs are suitable for individuals comfortable with online or mobile banking, seeking the convenience of consolidating banking and investment services. However, they may not be ideal for those preferring separate banking and investment accounts.

Feel free to reach out if you have further questions or need more detailed insights into financial management strategies.

What Is A Cash Management Account? (2024)


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