Cash management accounts are not bank accounts, but they share some similarities. It’s a place to store your money, get your paycheck deposited, pay bills and earn some interest. While it may feel like a bank account, the best cash management accounts (CMAs) offer other features and benefits to consumers, including free ATM fees, a competitive annual yield (APY) and no overdraft fees.
You’ll find cash management accounts at a financial institution other than a bank or credit union, often from a broker or robo-advisor. Some people use a cash management account instead of a checking or savings account, or in addition to them.
These types of cash accounts are often overlooked as a way to grow your savings at a much higher interest rate than traditional brick-and-mortar banks. Additionally, there are no monthly fees, overdraft fees, or minimum balance requirements for the companies on our list.
Many robo-advisors and brokers offer these services at no extra cost to you, so you can find a really attractive cash management account with a ton of benefits.
Best Cash Management Accounts in May 2024
Wealth front
Wealthfront is best known as a robo-advisor, but the cash management account is a formidable feature in its own right. It offers many of the most popular features: interest on balances, free ATM fees, checking benefits, a debit card, and no monthly fees. It’s no wonder Wealthfront took home the Bankrate Award for Best Cash Management Account.
But you also get some of the rarer features, like access to your direct deposit up to two days early and a portfolio line of credit, which lets you borrow money against your investment balance without having to run a credit check. You can link external accounts to get a holistic view of your financial situation and track your net worth with the platform’s visually appealing and customizable Plans feature. And oh yes, Wealthfront also offers a top-notch investment service.
Fidelity
Fidelity has rightly built a reputation as a customer-friendly company, and this is reflected in the CMA. You will not be charged any account fees, nor will the account have a minimum. You’ll get ATM reimbursement when you use the account’s debit card, and you’ll be able to write checks using the account, along with access to bill pay and mobile check deposit. If you prefer to simply add a debit card or bill to your existing investment account, Fidelity can do that for you too.
You can really convert your trading account into an all-in-one account here without any problems.
Charles Schwab
Long known as an investor-friendly institution, Charles Schwab assumes this representation in the cash management account at Schwab Bank. Schwab’s checking account has no monthly fees or account minimums, and offers unlimited discounts at ATMs around the world when you use the associated debit card. You also do not pay foreign transaction costs.
If there’s a downside, it’s that Schwab’s interest rate isn’t competitive with other CMAs listed here. You need a Schwab brokerage account to open a checking account, but you can open one at the same time and pay no fees. When you’re ready to invest, you can quickly shuffle money between the two accounts.
Improvement
Betterment and Wealthfront have been fierce competitors in the robo-advisor space for years, so it’s no surprise that they offer very attractive (and highly competitive) features in their cash management accounts.
At Betterment, you’ll earn some of the best interest rates for your money, get access to free ATMs, a debit card, and more. It also checks all the boxes you’d expect from one of the best cash accounts with access to mobile checking, bill payment, and check writing – all with no overdraft fees and no monthly fees or foreign transaction fees. As an individual, you also have up to $2 million (or $4 million for a joint account) in FDIC insurance on deposits made through Betterment’s partner banks.
Interactive real estate agents
Interactive Brokers offers one of the best trading experiences, but also has attractive cash management features that can make it a true ‘go anywhere’ account. All money is held in your investment account, but you can use the associated debit card to pay bills directly from the account. If you exceed your available funds, you’ll build up a margin balance and pay interest rates that are just 1.5 percent above the benchmark rate – so cheap.
You can also use mobile checks, pay bills to any beneficiary and make automatic payroll payments. Among brokers, Interactive Brokers pays one of the best rates in the industry for cash balances.
Advantages and disadvantages of cash management accounts
Plus points
- Investing easier: With many brokerage firms and robo-advisors offering cash management accounts, it’s easy to invest your savings.
- Interest boost: Many cash management accounts earn a higher interest rate than is typically available through traditional bank savings accounts.
- FDIC Insurance: Many cash management accounts send your savings to multiple banks in their program, allowing you to have FDIC insurance on your money beyond the typical $250,000 limit.
Cons
- Interest on high-yield savings accounts: While cash management accounts can earn higher interest rates than traditional banks, they may lag behind those of high-yield savings accounts.
- Online only: Many cash management accounts are offered by online-only institutions, so if you prefer in-person banking, this may not be right for you.
- Minimum balances: Some cash management accounts require a high minimum balance or regular deposits to take advantage of all the features offered.
What is the difference between a savings account and a cash management account?
Cash management accounts are typically offered by non-bank financial institutions, such as brokerage firms or robo-advisors. They have many of the same features as traditional savings and checking accounts, but also offer some investment options. A savings account is usually offered by traditional brick-and-mortar banks and does not offer the option to invest. You also typically earn less interest on a traditional savings account than on many cash management accounts.
The distinction between a securities account and a traditional bank account continues to blur. More and more financial institutions are doing it all. So in many cases, you can actually use the cash management account as your primary bank account, even if you don’t benefit from the associated investment features at all.
And that’s one reason to consult brokers and robo-advisors to see how they compete with a traditional bank and whether it might make sense to move at least some of your business there.
In short
While you may be looking for a traditional bank account or even a popular fintech app, don’t overlook the benefits of using a cash management account from a broker or robo-advisor. You often don’t need to use the investment features, but they are there if you want to bring everything under one roof.
