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Cash management accounts were created in response to consumer frustration with complex banking systems. They simplify your money management, allowing you to do all your banking through one account -- without sacrificing competitive rates or other banking features.
A cash management account may be more convenient than spreading your money across several accounts. Moving money between multiple accounts can take days and result in expensive fees. (If you want to simplify banking, consider opening an account.)
But what are cash management accounts? Read on to find out whether one of these super simple accounts is right for you, plus how to open one.
A cash management account is an all-in-one financial account. It combines checking account perks with the high interest rates of savings accounts.
Depositing money into a cash management account is simple. In fact, it's similar to depositing money into an online bank account.
You can withdraw funds several ways. Some cash management accounts include checks, as well as debit cards with ATM fee reimbursements. You may be able to transfer funds electronically or use automatic bill pay.
Certain cash management account providers offer linked checking and savings accounts (which you open together). Other providers offer a single account that offers some features of both.
If your cash management account consists of separate but linked accounts, pay attention to which account holds the bulk of your money. The checking account probably won't earn as much interest as the savings account -- put money in savings to earn more.
Some brokers offer cash management accounts, which you can often link to a brokerage account. Many of the best cash management accounts are offered by brokers.
Cash management accounts are protected by Federal Deposit Insurance Corporation (FDIC) insurance. With a traditional bank account, the FDIC protects your money up to $250,000 per person per bank. But if your cash management account partners with many insured banks, you could end up with FDIC insurance of $1 million or more.
Here's a quick look at some of the pros and cons of cash management accounts.
Here are a few things to consider when choosing a cash management account:
Reasons to open a cash management account:
Consider a money market account, a high-yield savings account, or a checking account if you think something other than a cash management account is the right place for your money.
In order to open a cash management account, you must first choose an account, and then complete an application for that account.
Some brokers offer cash management accounts. You can also find these accounts with some fintech companies like Aspiration. Shop around to snag great deals.
You apply for a cash management account the same way you'd apply for a savings account. To open a bank account online, you must choose a bank, gather relevant financial information, apply on the bank's website, and fund the account.
If your account includes a debit card, your cash management account provider will mail this to you once you finish setting up your account. You'll also be able to order checks (if your account features that option).
Cash management accounts have their pros and cons. Check out the best cash management accounts to safely manage your money in one place and earn interest on it.
Cash management accounts can replace checking and savings accounts. Basically, you can do your spending and earn interest in one place. Plus, the interest rates may be better than what you'd find with a typical savings account.
Yes, typically. Account providers give different options. Fidelity lets you withdraw cash by inserting your debit card at ATMs that accept Visa. You can also electronically transfer funds from your Fidelity Cash Management Account to a linked bank account.
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