Some of the best cash management accounts offer higher yields, helping you earn more.
A Cash Management Account (CMA) combines the features of a checking, savings, and investment account. CMAs are typically offered by brokerage firms and integrate various financial services into one account. Compared to traditional savings, these accounts offer higher interest rates and easier access to money for investing.
How a Cash Management Account Works
CMAs are designed to facilitate seamless money management by offering a range of services:
- Deposit and Withdrawal: Like a checking account, CMAs allow you to deposit and withdraw funds easily. They often come with check-writing capabilities, debit cards, and online bill pay.
- Interest Earnings: Unlike traditional checking accounts, CMAs typically offer higher interest rates, similar to high-yield savings accounts. Rates are variable.
- Investments: Many CMAs offer the option to invest in money market funds, which allow your cash to grow while remaining easily accessible.
- FDIC/SIPC Insurance: Funds in CMAs are often insured by the FDIC (Federal Deposit Insurance Corporation) or SIPC (Securities Investor Protection Corporation), offering a layer of protection.
Top 5 Best Cash Management Accounts
- Webull High-Yield Cash Management
- M1 High-Yield Cash Account
- Robinhood Gold
- Betterment Cash Reserve
- Wealthfront Cash
Continue reading to learn more about the best cash management accounts offered by online brokerages.
1. Webull High-Yield Cash Management
Webull is a commission-free trading app that allows you to buy and sell stocks. Open a high-yield cash management account to earn a 5.0% APY on uninvested cash in your Webull account.
- Interest (APY): 5.0%
- Minimum Balance: None
- Fees: None
- Debit Card: No
- ATM Access: N/A
- Deposit Insurance: FDIC insurance up to $250,000 per program bank ($1,000,000 in total).
Cash Management is a service provided by Webull Financial LLC, a broker-dealer registered with the Securities and Exchange Commission (SEC).
2. M1 High-Yield Cash Account
M1 Finance is an online brokerage that offers investors a pie-based approach to long-term investing. Get 5.00% APY with an M1 High-Yield Cash Account.
- Interest (APY): 5.0%
- Minimum Balance: None
- Fees: None
- Debit Card: No
- ATM Access: N/A
- Deposit Insurance: FDIC-insured up to $3.75 million.
M1 High-Yield Cash Account(s) is an investment product offered by M1 Finance, LLC, an SEC registered broker-dealer, Member FINRA / SIPC. M1 is not a bank.
3. Robinhood Gold
Robinhood offers commission-free trades of stock, ETF, and cryptocurrency. Robinhood Gold subscribers can have their idle cash earn 5% APY.
- Interest (APY): 5.0%
- Minimum Balance: None
- Fees: Up to $6.99/month for Gold subscription
- Debit Card: No
- ATM Access: N/A
- Deposit Insurance: FDIC-insured up to $3.75 million.
Robinhood Financial LLC (“RHF”) is a registered broker-dealer (member SIPC), not a bank.
4. Betterment Cash Reserve
Betterment is a robo-advisor that recommends an investment strategy and manages your portfolio. Grow your savings with a high-yield cash account.
- Interest (APY): 5.0%
- Minimum Balance: None
- Fees: None
- Debit Card: No
- ATM Access: N/A
- Deposit Insurance: FDIC insurance up to $2 million ($4 million for joint accounts).
Betterment Cash Reserve (“Cash Reserve”) is offered to clients of Betterment LLC, which is not a bank.
5. Wealthfront Cash Reserve
Wealthfront is a robo-advisor that recommends an investment strategy and manages your portfolio. Grow your savings with a high-yield cash account.
- Interest (APY): 5.0%
- Minimum Balance: None
- Fees: None
- Debit Card: Yes
- ATM Access: 19,000+ surcharge-free ATMs nationwide
- Deposit Insurance: FDIC insurance up to $8 million.
Cash Account is offered by Wealthfront Brokerage LLC, a Member of FINRA / SIPC. Wealthfront is not a bank.
Want more options? Check out the financial marketplace for more options.
Best Cash Management Account FAQs
Using the best cash management accounts can be a powerful financial tool for optimizing your money’s earning potential.
What are the Pros and Cons of Cash Management Accounts?
Pros
- Offer higher interest rates compared to traditional checking and savings accounts.
- Integration of checking, savings, and investment features simplifies financial management.
- FDIC or SIPC insurance protection.
- Excess cash is often automatically swept into higher-yielding accounts.
Cons
- Some come with monthly maintenance fees or transaction fees.
- Limited physical access or locations.
- Integration of various features can be confusing for some users.
- Might require a high minimum balance to avoid fees or earn interest.
What’s the difference between a cash management account and a high-yield savings account?
A Cash Management Account (CMA) is a hybrid financial product that integrates features of checking, savings, and investment accounts. In contrast, a High-Yield Savings Account (HYSA) is a type of savings account that offers a higher interest rate compared to traditional savings accounts. HYSAs are typically offered by online banks and financial institutions, focusing on maximizing the interest earned on deposited funds.
Why do online brokerages offer cash management accounts?
Many of these brokerages want to deepen their relationships with customers and attract new customers to use their more profitable products and services.
How is money insured in a cash management account?
Deposit insurance in CMAs depends on how the account is structured and the number of banks that partner with online brokerages.
CMAs often sweep funds into accounts held at partner banks, which are FDIC-insured. Some CMAs spread deposits across multiple partner banks to increase the total amount of insured funds, potentially offering coverage beyond $250,000.
If a brokerage firm offers a CMA, the cash and securities in the account may be covered by SIPC insurance.SIPC insurance protects against the loss of cash and securities if the brokerage firm fails, but it does not protect against declines in the value of investments due to market fluctuations.
Why Use a Cash Management Account?
CMAs are ideal if you’re looking for higher interest rates and flexible access to their funds. They are particularly useful for:
- Investors: The ability to keep cash liquid while earning returns through money market funds.
- High Net-Worth Individuals: Efficiently managing large sums of money with integrated financial services.
