Looking for a place to stash your cash, earn interest, and avoid fees? Cash management accounts might be the solution for you. While not traditional bank accounts, CMAs offer similar features like direct deposit, bill pay, and interest earnings. Top CMAs also provide perks such as fee-free ATMs and no overdraft fees.
Cash management accounts can be found at financial institutions other than banks or credit unions, often offered by brokers or robo-advisors. Some individuals use CMAs in place of or in addition to traditional checking or savings accounts.
These accounts are often overlooked for their potential to grow savings at higher interest rates compared to brick-and-mortar banks. Additionally, many CMAs do not have monthly fees, overdraft fees, or minimum balance requirements.
Robo-advisors and brokerages frequently provide these services at no extra cost, making it easy to find a cash management account with attractive benefits.
Best Cash Management Accounts in 2024
Wealthfront
Wealthfront, known for its robo-advisor services, offers a competitive cash management account with features like interest on balances, fee-free ATMs, and a debit card. It also provides unique benefits such as early direct deposit access and a portfolio line of credit.
Other features include external account linking for a comprehensive financial view and a visually-appealing Plan feature to track net worth. Wealthfront also offers top-tier investing services.
Fidelity
Fidelity’s CMA stands out for its customer-friendly approach, with no account fees or minimums. The account includes ATM fee reimbursements, check-writing capabilities, bill pay, and mobile check deposit. Fidelity can also add debit card and bill pay features to existing brokerage accounts.
With Fidelity, you can consolidate various financial activities into one account hassle-free.
Charles Schwab
Charles Schwab’s CMA at Schwab Bank offers no monthly fees or account minimums, along with unlimited ATM fee rebates globally. The account also eliminates foreign transaction fees. While the interest rate may not be the highest, Schwab’s CMA provides seamless integration with brokerage accounts.
Opening a checking account alongside a brokerage account allows for easy fund transfers between the two.
Betterment
Betterment, a fierce competitor in the robo-advisor space, offers an attractive CMA with competitive interest rates, fee-free ATMs, and essential features like mobile check deposit and bill pay. The account has no overdraft fees, monthly fees, or foreign transaction fees. Betterment also provides FDIC insurance on deposits through partner banks.
Interactive Brokers
Interactive Brokers, known for its trading platform, also offers a versatile CMA with features like bill payments, mobile check deposit, and automatic payroll deposits. The associated debit card allows for bill payments directly from the account, with a low interest rate on margin balances. Interactive Brokers also offers competitive rates for cash balances.
Pros and Cons of Cash Management Accounts
Pros
- Easier to invest: Many brokerage firms and robo-advisors offer CMAs, simplifying the investment process.
- Interest boost: CMAs often provide higher interest rates than traditional bank savings accounts.
- FDIC insurance: CMAs distribute funds across multiple banks for extended FDIC insurance coverage.
Cons
- Interest below high-yield savings accounts: While CMAs offer competitive rates, they may not match high-yield savings accounts.
- Online-only: Many CMAs are offered by online institutions, which may not suit individuals preferring in-person banking.
- Minimum balances: Some CMAs require high balances or regular deposits for full feature access.
Difference Between Savings and Cash Management Accounts
Cash management accounts are typically offered by non-bank institutions like brokers or robo-advisors, providing similar features to traditional accounts with added investment options. Savings accounts, usually from brick-and-mortar banks, lack investment capabilities and offer lower interest rates.
As financial institutions expand services, the line between brokerage and bank accounts blurs. CMAs can serve as primary accounts even without utilizing investment features.
Consider exploring brokers and robo-advisors to compare offerings against traditional banks and potentially consolidate your financial activities.
Final Thoughts
When considering banking options, don’t overlook the benefits of cash management accounts from brokers or robo-advisors. Even if you don’t utilize investment features, CMAs offer a convenient all-in-one solution for your financial needs.