Cash management accounts are cash accounts offered by a financial institution other than a bank or credit union — often from a broker. A cash management account can be used instead of a checking or savings account, or in addition to one.
These types of cash accounts are often overlooked as a way to deliver value. If you’re on the hunt for a great robo-advisor or online broker, don’t forget the extra tangible benefits a good cash management account can provide. As fees decline, brokers and robo-advisors are competing increasingly on feature-rich services to differentiate themselves – and that means value for you!
Many top cash management accounts (CMAs) offer a ton of features and benefits. Some of the most popular or desirable features include:
- A competitive annual percentage yield (APY)
- Fee-free ATMs
- A checking account
- Debit card
- No monthly fee
- No overdraft fees
- Early paycheck direct deposit
- “Round-up” investing
- A portfolio line of credit
Many robo-advisors and brokerages offer these services at no extra cost to you, so you can find a truly attractive cash management account with a ton of benefits.
The distinction between a brokerage account and a traditional bank account continues to collapse. Increasingly there are more and more financial institutions that do it all. So in many cases you could actually use the cash management account as a primary bank account even if you don’t take advantage of the related investing features at all.
Best cash management accounts in July 2021
Wealthfront is best known as a robo-advisor, but its cash management account may be the best among the investing-focused sites. It offers many of the most popular features: interest on balances, fee-free ATMs, checking benefits, a debit card and no monthly fees.
But you’ll also get some of the rarer features such as access to your direct deposit two days earlier and a portfolio line of credit, which allows you to borrow money against your investing balance with no credit check. And, oh yeah, Wealthfront offers a top-flight investing service, too.
Interactive Brokers offers one of the best trading experiences but also has attractive cash management features that can make it a true “go anywhere” account. All funds will be held in your investing account, but with the associated debit card, you can pay bills straight from the account. If you run over your available cash, you’ll run up a margin balance, and pay interest rates that are just 1.5 percent above the benchmark rate – so cheap.
You’ll also be able to use mobile check deposit, pay bills to any payee and have automatic payroll deposit. When interest rates were higher, Interactive Brokers paid among the industry’s best rates for cash balances, but with the Fed dropping rates to zero, the broker has done the same.
Fidelity has rightly earned a reputation as a customer-friendly outfit, and you’ll see that in its CMA. You won’t get socked with an account fee, nor does the account have a minimum. You’ll have ATM fees reimbursed when you use the account’s debit card, and you’ll be able to write checks using the account, along with access to bill pay and mobile check deposit. If you’d prefer to simply add a debit card or bill pay to your existing brokerage account, Fidelity can get that done, too.
You can really turn your brokerage account into an all-in-one account here without the hassle.
Betterment’s cash management account is no slouch, and it’s one of the best on offer among robo-advisors. Betterment’s CMA is technically two accounts – checking and savings – but the experience will feel seamless. Betterment offers a competitive yield and traditional checking features, including a debit card. ATM fees are reimbursed worldwide, too. The checking account is FDIC-insured up to $250,000, while the savings account is protected up to $1 million through Betterment’s partner banks.
You’ll be able to sign up for the account without setting up an investing account, if you’re not ready to take your relationship to the next level. Total cost: $0.
Charles Schwab has long been known as an investor-friendly institution, and it takes that rep to its cash management account at Schwab Bank. Schwab’s checking account has no monthly fees or account minimums, and offers unlimited ATM fee rebates across the world if you use the associated debit card. You won’t pay foreign transaction fees either.
If there’s a downside, it’s that Schwab’s interest rate isn’t competitive with other CMAs listed here. But maybe that doesn’t matter much in a world of near-zero rates. You’ll need to have a Schwab brokerage account to open a checking account, but you can open one at the same time, and you won’t pay fees on it. When you’re ready to invest, you can quickly shuffle money between the two accounts.
Ellevest offers a cash management account as part of all its service tiers, meaning you can start with an investing account and CMA for just $1 a month. It’s actually two accounts, checking and savings, both of which are FDIC-insured up to $250,000 at Ellevest’s partner bank. You’ll get a debit card with rewards and can dodge overdraft fees, too. You can access ATMs at no cost if you’ve received a payroll direct deposit in the last 30 days, and you won’t pay any extra account fees.
You can also turn on a round-up feature that rounds up any purchases to the next dollar and deposits the difference in the savings account and then onward to your investing account. When you’re ready to make the move to an investing account, Ellevest is ready to go.
In addition to no-commission trading on stocks, options and cryptocurrency, Robinhood offers an attractive FDIC-backed cash management account. You’ll get a competitive interest rate on your cash as well as a debit card (or even a virtual one for Apple Pay and Google Pay). You’ll be able to use bill pay or cut checks, if needed.
With Robinhood’s CMA, you’ll escape maintenance fees and overdraft fees (because the debit card will prevent overdrafts), and get access to 75,000 fee-free ATMs in the network. It’s a great addition if you’re already using Robinhood for your trading, or even if you aren’t.
While you might be looking for a traditional bank account or even a popular fintech app, don’t overlook the benefits of using a broker or robo-advisor for your cash management account. You often won’t have to use the investing features, but they’ll be there as your financial life grows.