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Best overall cash management account
Wealthfront is best known as a robo-advisor, but its cash management account . 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 up to 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 , pay bills to any payee and have automatic payroll deposit. Among brokers, Interactive Brokers pays among the industry’s best rates for cash balances. 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 , 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 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. What are the pros and cons of a cash management account
Pros
Easier to invest: With many brokerage firms and robo-advisors offering cash management accounts, it’s easy to start investing your savings. Interest boost: Many cash management accounts earn higher interest than is typically available through traditional bank savings accounts. FDIC insurance: Many cash management accounts funnel your savings to multiple banks in their program, which allows you to have on your funds beyond the typical $250,000 limit. Cons
Interest below high-yield savings accounts: Though cash management accounts can earn higher interest rates than traditional banks, they often fall short of those offered by high-yield savings accounts. Online only: Many cash management accounts are offered by institutions that only exist online, so if you prefer to bank in-person, it might not be a good fit for you. Minimum balances: Some cash management accounts require high minimum balances or regular deposits in order to receive all the features offered. What is the difference between a savings account and a cash management account
Cash management accounts are typically offered by non-bank financial institutions such as brokerage firms or robo-advisors. They come with many of the same features as traditional savings and checking accounts, but also have some investment options. A savings account is usually offered by traditional brick-and-mortar banks and doesn’t offer the ability to invest. You’ll also typically earn less interest in a traditional savings account than what is offered by many cash management accounts. Bottom line
While you might be looking for a traditional bank account or , 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. SHARE: Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers. Related Articles