6 Best Cash Management Accounts | Smart Finance Guides

A cash management account (CMA) has a lot of the finest features of both checking and savings accounts. It helps you get high interest rates while still being able to easily get to and spend your money. CMAs can’t do all that a regular checking or savings account can, but they are good enough for many people’s financial needs.

Financial organisations sell CMAs to those that have a lot of capital that they need to protect. People who want the convenience that a checking account gives them but don’t want to miss out on the higher interest rates that savings accounts offer also use them.

But it can be challenging to pick the finest one because so many companies offer CMAs. You need to think about how much money you want to put in and what your main goal is: generating interest or just being able to get to your money.

It helps you get high interest rates while still being able to easily get to and spend your money. CMAs can’t do all that a regular checking or savings account can, but they are good enough for many people’s financial needs.

Financial organisations sell CMAs to those who have a lot of capital they need to protect. People who want the convenience that a checking account gives them but don’t want to miss out on the higher interest rates that savings accounts offer also use them.

Financial organisations market CMAs to those that have a lot of capital that they need to protect. People who want the convenience that a checking account gives them but don’t want to miss out on the higher interest rates that savings accounts offer also use them.

Best Cash Management Accounts (6 Best Cash Management Accounts)

There are plenty of top options for CMAs to choose from, no matter your financial goals. Many are associated with investment brokerages or robo-advisor platforms, which automatically allocate and manage your funds based on your personal risk tolerance and objectives.

Methodology: How We Select the Best Cash Management Accounts

Our most important considerations when evaluating cash management accounts are:

How much they earn (interest rate)
How much they protect (deposit insurance coverage)
How easy they make it to access your money (linked accounts, debit cards, and so on)
How much they cost (fees and expenses)
How do they fit into a larger financial ecosystem (connections to other accounts offered by the same company)?

Interest on Balances

“What’s the interest rate?” is the first question most people ask when shopping for cash management accounts. The best accounts pay interest on par with the top high-yield savings accounts, which as of mid-2023 typically yield between 4% and 5% APY.

Deposit Insurance Coverage & Limits

Generous deposit insurance coverage is a defining feature of cash management accounts. The best accounts protect multiples of the standard FDIC deposit insurance limit of $250,000, which is what you get with most ordinary checking, savings, and money market accounts.

Some go up to $8 million or even higher. The higher, the better.

Access to Balances

Cash management accounts are sort of like checking-savings hybrids, but in terms of access to your cash, many are more like savings accounts. They don’t have debit cards, peer-to-peer transfer capabilities, or instant transfers to external accounts.

Good cash management accounts tend to be more liberal on this front. Some even have debit cards that you can use at any merchant that accepts Visa or Mastercard.

Fees

The best cash management accounts have no monthly maintenance fees and low (or no) fees otherwise. However, most are associated with investment accounts that do charge management or trading fees. We look for accounts with reasonable fee schedules in any case.

Connection to Investment & Other Account Types (6 Best Cash Management Accounts)

Cash management accounts usually don’t exist by themselves. They’re often associated with investment or wealth management accounts that offer a much broader range of services than standard deposit accounts can. We favour these types of accounts, as they serve as comprehensive solutions for both banking and investing.

Cash Management Account FAQs (6 Best Cash Management Accounts)

If you understand how checking and savings accounts work, you have a basic understanding of cash management accounts too. But they have a few differences and oddities worth drilling down into.

What Is a Cash Management Account?

A cash management account is a deposit account that blends features of checking and savings accounts.

Like a checking account, a cash management account usually has no limit on withdrawals. Some come with debit cards and other checking-like features, such as instant person-to-person transfers.

Like a savings account, a cash management account typically has a high interest rate on balances. It often has a higher deposit insurance limit as well, a feature it shares with some certificates of deposit.

Is a Cash Management Account a Broking Account?

A cash management account is not a broking account, but many cash management accounts are associated with brokerage accounts. Either the account is housed within the broking account itself and receives proceeds from securities sales through a process known as cash sweeping, or it’s a separate account linked to the broking account for speedy transfers.

Are Cash Management Accounts Better Than Savings Accounts?

It depends on your financial situation and what you hope to get out of the account.

If your personal cash reserve falls significantly below the standard FDIC deposit insurance limit, it’s advisable to seek the highest possible yield, which may or may not be available in a cash management account. If you have more cash, it might be worth it to use a cash management account with a higher deposit insurance limit, even if its yield isn’t quite on par with the top savings accounts.

If you plan to use your cash (or some of it) to buy stocks or other securities, keeping it in a cash management account is more convenient than a standard savings account associated with a bank instead of a broking.

What’s the Difference Between a Cash Management Account and a Money Market Account?

Cash management accounts have a lot in common with money market accounts, which are also often described as checking-savings hybrids.

The biggest differences: a money market account is more likely to come with core checking features like a debit card and paper checks, and less likely to be directly associated with a broking account. Also, money market accounts often (but not always) have lower yields than savings accounts and cash management accounts.

Do You Have to Buy Stocks If You Have a Cash Management Account? (6 Best Cash Management Accounts)

No, you can keep all your money as cash in a cash management account even if the cash management account is directly associated with a broking account. If you worry you’ll be tempted to purchase risky securities out of a broking-linked cash management account, consider holding your funds in a separate external bank account.