A cash management account isn’t a bank account, but it does have some similarities: It’s a place where you store your cash, get your paycheck deposited, pay your bills, and earn interest. While they may feel like a bank account, the top cash management accounts (CMAs) also offer other features and benefits for consumers, such as fee-free ATMs, competitive annual percentage rates (APYs), and no overdraft fees.
Cash management accounts are offered by financial institutions other than banks or credit unions, often brokers or robo-advisors. Some people use cash management accounts instead of or in addition to checking and savings accounts.
These types of cash accounts are often overlooked as a way to grow your savings with much higher interest rates than traditional brick-and-mortar banks. Plus, they don’t charge monthly or overdraft fees, and the companies on our list don’t have minimum account balance requirements.
With many robo-advisors and brokerages offering these services at no extra cost, you can find some truly attractive cash management accounts with a lot of benefits.
Best Cash Management Accounts for 2024
Wealthfront
While Wealthfront is best known as a robo-advisor, their Cash Management Account is a great addition in its own right. It offers many of the most popular features, including interest on balances, fee-free ATMs, checking account benefits, debit cards, and no monthly fees. It’s no wonder Wealthfront won the Bankrate Award for Best Cash Management Account.
But you also get access to direct deposits up to two days early and unusual features like a portfolio line of credit (which lets you borrow money from your investment balance without a credit check). You can link external accounts to get a full view of your financial situation, and track your net worth using the platform’s visually appealing and customizable plan features. Oh, and Wealthfront also offers top-tier investing services.
Faithfulness
Fidelity has a well-deserved reputation as a customer-friendly company, and it shows with the CMA: You won’t be charged an account fee and there’s no minimum on your account, you’ll get ATM fees rebated when you use the account’s debit card, you can use the account to write cheques, and it also offers bill payment and mobile cheque deposit. If you’re just looking to add a debit card or bill payment to your existing brokerage account, Fidelity has you covered.
Here you can transform your brokerage account into an all-in-one account without any hassle.
Charles Schwab
Charles Schwab has long been known as an investor-friendly financial institution, and that reputation continues with Schwab Bank Cash Management accounts. Schwab checking accounts have no monthly fees or minimum account balances, and associated debit cards offer unlimited ATM fee discounts worldwide. There are also no foreign transaction fees.
If there’s a downside, it’s that Schwab’s interest rates aren’t as competitive as the other CMAs listed here. You need a brokerage account with Schwab to open a checking account, but you can open a checking account at the same time and there are no fees. When you’re ready to invest, you can quickly move funds 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 some very attractive (and very competitive) features on their cash management accounts.
Betterment offers some of the best interest rates on cash, fee-free ATMs, debit cards, and more. It also has all the perks you’d expect from a top cash account, including access to mobile check deposit, bill payment, and check writing. There are no overdraft fees, monthly fees, or foreign transaction fees. For individuals, deposits through Betterment’s partner banks are FDIC insured up to $2 million ($4 million for joint accounts).
Interactive Brokers
Interactive Brokers not only offers the best trading experience, but also attractive cash management features, making it a true “go anywhere” account. All funds are kept in your investment account, but the associated debit card allows you to pay bills directly from your account. If you exceed your available cash, your margin balance will increase and you will pay interest at just 1.5% above the benchmark rate. Very inexpensive.
You’ll also get access to mobile check deposit, bill payments to any payee, and automatic payroll deposit. Among brokers, Interactive Brokers pays the industry’s best rates on cash balances.
Pros and Cons of Cash Management Accounts
Strong Points
- Investing made easy: Many brokerages and robo-advisors offer cash management accounts, making it easy to start investing your savings.
- Growing interest: Many cash management accounts offer higher interest rates than traditional bank savings accounts.
- FDIC Insured: Many cash management accounts allow you to spread your savings among multiple banks within the program and provide FDIC insurance for funds above the usual $250,000 limit.
Cons
- High Yield Savings Accounts Interest Rates Below: While cash management accounts can earn you higher interest rates than traditional banks, they may not come close to the rates offered by high-yield savings accounts.
- Online only: Many cash management accounts are offered by online-only institutions, so they may not be a good fit if you prefer in-person banking.
- Minimum balance: Some cash management accounts require high minimum balances or regular deposits to take advantage of all the features they offer.
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 brokerages and robo-advisors. They have many of the same features as traditional savings and checking accounts, but also offer some investment options. Savings accounts are typically offered by traditional brick-and-mortar banks and do not offer investment features. Traditional savings accounts also typically offer lower interest rates than those offered by many cash management accounts.
The distinction between brokerage accounts and traditional bank accounts is increasingly blurring – more and more financial institutions do both – so in many cases you can use a cash management account as your main bank account even if you don’t take advantage of any of the associated investment features.
And that’s why we’re looking at brokers and robo-advisors to see how they’re competing with traditional banks and whether it might make sense to move at least some of our business there.
Conclusion
While you might be looking for a traditional bank account or a popular fintech app, don’t overlook the benefits of using a cash management account with a broker or robo-advisor. You’ll rarely need to use the investment features, but you can use them if you want everything in one place.
