What is a cash management account, and how does it work? (2024)

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• Cash management accounts are offered by online banking platforms.
• They are generally a hybrid of checking and savings accounts.
• Features common in cash management accounts include debit card access and high interest rates.

If you prefer online banking over a brick-and-mortar bank experience, there are many options to explore. For example, you can choose to open a cash management account with a fintech company (which also may be referred to as a neobank).

Learn about how cash management accounts work, how to determine if they're a good fit, and where to find them.

What is a cash management account?

Cash management accounts, also commonly called cash accounts, are a type of account offered by online-only institutions that aren't technically banks, like investing platforms or fintech companies.

Cash accounts serve as an alternative option to traditional checking and savings accounts. For example, you can use cash accounts to store your savings and manage money all in one place.

"It's a hybrid checking and savings that can give you the benefits of typically higher rates as well as more flexibility with your money that you probably aren't going to get with the traditional bank account," explains Tony Molina, CPA and product evangelist at Wealthfront.

One of the most notable distinctions between cash management accounts and traditional bank accounts is the number of transfers you can make. Cash accounts permit unlimited transactions from a single account while some traditional bank accounts have transfer limits.

The federal rule Regulation D states there are transfer limits for savings accounts. The Board of Governors of the Federal Reserve has amended Regulation D, so banks may choose to suspend the monthly transfer limit so customers can make unlimited monthly transactions — or they could enforce a six-per-month limit. It varies by bank.

If you exceed the transfer limit on a savings account at a bank that enforces a monthly transfer limit, you'll usually have to pay a fee for additional transfers or withdrawals.

How cash management accounts work

Cash management accounts are multifunctional accounts that combine checking and savings account features. Here are come of the most common traits shared by cash management accounts:

Is a cash management account worth it?

A cash account might be a strong choice if you already have an account with a specific brokerage or investment firm that offers cash management accounts. It also may be appealing if you're looking for a high interest rate and are comfortable with online banking.

Cash accounts may not be ideal if you frequently make large cash deposits. Since there aren't branches, you usually have to deposit cash at ATMs or select retailers where you may need to pay a fee. In some cases, you'll only have the option to link an external bank account and make deposits through ACH transfers.

Where to find cash management accounts

Below, you'll find fintech companies we've reviewed that have cash management accounts. Read through our reviews for more information about each financial institution:

• Aspiration Account: Aspiration is an online-only banking platform that supports environmental justice. It has two accounts: the Aspiration Account and Aspiration Plus Account. The Aspiration Account lets you choose how much you pay each month, and it pays an above-average rate if you spend $1,000 monthly using Aspiration's debit card. Aspiration Plus offers a higher interest rate on the first $10,000 on your account if you meet specific requirements, but you'll be charged a monthly service fee.
• Betterment Cash Reserve: Betterment is an online investment platform with a cash reserve account and checking account. It pays one of the highest interest rates available right now for new customers.
• Empower Personal Cash: Empower is an online investing platform that also has a cash management account with a very competitive interest rate.
• Fidelity Cash Management: This account has the features of a checking and savings account, but you can also invest your funds — it's technically a brokerage account. But uninvested cash is FDIC-insured and earns interest. The interst rate is decent, but not as high as you'll find with most other cash management accounts.
• Robinhood Cash Management Account: Robinhood is a financial services company that focuses on investing. It also has a cash management account with a high rate. Robinhood isn't accepting new applications right now, because it plans to transfer all existing Cash Management Accounts to its newer Spending Account.
• Wealthfront Cash Account: Wealthfront is an investing platform with a cash management account. The account pays a high rate and lets you receive paychecks up to two days early.

Cash management account FAQs