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A cash management account, or CMA, is a cash account that combines services and features that are similar to checking, savings and/or investment accounts under one product. CMAs are typically offered by nonbank financial service providers, and some CMAs can provide high interest rates and reasonable or no fees thanks to low overhead that comes from online-only services.
Top cash management accounts
Want to compare CMAs? See NerdWallet's picks of some of the best cash management accounts available.
While providers vary in what they offer, here are some of the typical features, benefits and drawbacks of cash management accounts.
Pros and cons of cash management accounts
Pros:
Fewer accounts to manage.
Potentially higher interest rates than standard bank accounts.
Benefits similar to checking and savings accounts.
Federal insurance on your account, often provided through third-party bank partners.
Cons:
Interest rates might be higher with online savings accounts or by investing.
Customer service may not be face-to-face.
Learn More
on Wealthfront's website
Wealthfront Cash Account
Min. balance for APY
$1
Learn More
on Betterment's website
Betterment Cash Reserve – Paid non-client promotion
APY
5.50%
Min. balance for APY
$0
What are the benefits of a CMA?
Simplified account ownership. A CMA can streamline your finances by allowing you to make transactions, earn high-yield interest and sometimes use a credit line that’s attached to your investment securities all without having to transfer funds between different accounts.
Above-average interest rates. Some cash management accounts have annual percentage yields that are higher than what most brick-and-mortar banks offer. For example, Betterment’s cash management account, Betterment Cash Reserve, has a 4.75% APY**, whereas the average national interest rate on savings products is 0.46% APY.
**See more from Betterment
Betterment says: "*Base annual percentage yield (variable) is 4.75% as of 7/31/23. 5.50% APY reflects a .75% boost available as a special offer with qualifying deposit. Terms apply. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through clients’ brokerage accounts at Betterment Securities."
Alternative to checking and savings accounts. Cash management accounts often come with mobile check deposit, check writing, Federal Deposit Insurance Corp. insurance through third-party banks (sometimes even multiple times the usual coverage amount), bill pay, money transfers, goal setting, overdraft programs and more.
Things to consider about CMAs
You might not get in-person customer service. Like online banks, the nonbank financial service providers that offer CMAs tend to have remote customer service so that they can have lower overhead and pass the savings onto their customers in the form of higher interest rates. While technology is making it easier to get virtual support, online cash accounts can be a challenge for people who prefer face-to-face interaction.
Other financial products may have higher interest rates. If you’re looking for a strong return on your money, consider checking out NerdWallet’s list of high-yield online accounts in addition to cash management accounts. Or, if you’re looking to put away your savings for a long period, consider investing it instead for even higher returns or consider opening a certificate of deposit.
Is a CMA right for me?
If you’re a fan of online banking, chances are that you’ll like the similar features that cash management accounts have to offer. While face-to-face customer service might be swapped for virtual assistance, the savings in overhead allows some of these cash accounts to provide high interest rates and streamlined account features. Make sure you evaluate what a CMA offers and what fees it charges before you open an account.
» If high rates are a priority, you can also check out NerdWallet’s best savings rates.
Cash management accounts (CMAs) represent a versatile financial tool, seamlessly blending the functionality of checking, savings, and investment accounts into a single product. These accounts, often provided by nonbank financial service providers, aim to combine convenience, higher interest rates, and various services typically found across different financial accounts.
One key aspect of CMAs is their ability to offer competitive interest rates, sometimes surpassing those offered by traditional brick-and-mortar banks. For instance, Betterment's Cash Reserve boasts a 5.50% APY as a special offer for qualifying deposits, significantly exceeding the average national interest rate on savings products, which hovers around 0.46% APY.
The benefits of CMAs extend beyond high interest rates. They provide a consolidated approach to managing finances, allowing for streamlined transactions, potentially offering credit lines linked to investment securities, and eliminating the need for frequent fund transfers between multiple accounts.
Despite their advantages, CMAs also pose certain considerations. While they provide a broad array of services like mobile check deposit, bill pay, and money transfers, they might lack in-person customer service, a feature preferred by some individuals. Additionally, for those seeking the highest returns, exploring other high-yield online accounts or considering long-term investments might prove more beneficial than a CMA.
Ultimately, whether a CMA suits your needs depends on your preferences and financial priorities. If you favor online banking and value the amalgamation of features in one account, a CMA could be an ideal fit. However, it's essential to thoroughly assess the offerings, fees, and the absence of in-person services before making a decision.
Now, diving into the concepts mentioned in the article:
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Cash Management Account (CMA): A financial account that combines the functionalities of checking, savings, and investment accounts into a single product. Typically offered by nonbank financial service providers, CMAs aim to offer convenience, higher interest rates, and various financial services.
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High-Interest Rates: CMAs often boast competitive interest rates, sometimes exceeding those provided by traditional brick-and-mortar banks or standard savings accounts.
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Consolidated Financial Management: CMAs streamline financial activities by providing a unified platform for transactions, potentially offering credit lines linked to investment securities, and eliminating the need for frequent fund transfers between multiple accounts.
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Online Financial Services: CMAs, like online banks, usually provide remote customer service to reduce overhead costs, offering higher interest rates as a result. However, the absence of face-to-face interaction might not suit everyone.
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Alternative Financial Products: Besides CMAs, exploring other high-yield online accounts or considering long-term investments may offer potentially higher returns for those seeking increased profitability.
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Consideration for Personal Preference: Choosing a CMA depends on individual preferences, with factors like the preference for online banking, value for higher interest rates, and a willingness to forego in-person customer service being essential considerations. Thorough evaluation of offered services and associated fees is crucial before opting for a CMA.
