Best Cash Management Accounts for May 2024

Many brokers and robo-advisors offer their clients a feature known as a cash management account, which essentially turns their uninvested cash into a bank account. Cash management accounts can offer some of the features you love about your checking account and savings account. And they do it without the hassle of keeping your money at a separate institution from your investments.

On this page, we'll discuss our best cash management accounts, how money management accounts work, and we'll discuss how to choose the best cash management account for you.

How to compare the best cash management accounts

The most obvious thing to look at is the interest rate you'll get paid, also known as the annual percentage yield, or APY. All things being equal, a yield of 1% is far better than a yield of 0.01%. And there is a wide spectrum of yields from the best cash management accounts. Some have yields on par with a high-yield online savings account.

What is a cash management account?

A cash management account, often abbreviated as a CMA, is a financial account offered by a non-bank financial firm, such as a brokerage, robo-advisor, or a financial app. While the features offered can vary, most CMAs offer some of the same features that are commonly provided by checking or savings accounts.

For example, some cash management accounts allow owners to write checks on the account, use a debit card to withdraw money at ATMs or pay at stores, and transfer money between accounts at other financial institutions. The best cash management accounts also typically pay interest, although the interest rates paid can vary widely by institution.

Because the companies offering cash management accounts aren't banks, it is important to know that these accounts are offered in partnership with chartered banks. While you may be able to access your money through the app or website of the brokerage or robo-advisor offering the cash management account, in reality, the money is kept at a partner bank (or several). For example, Betterment's Cash Reserve account uses 12 different partner banks, including Citibank and Wells Fargo.

The reason for this is insurance. Chartered banks qualify for FDIC insurance on as much as $250,000 in deposits per person. For high-balance cash management accounts, funds are often spread among a few different financial institutions to make sure all of the client's money is secured. For example, the Betterment Cash Reserve offers up to $2 million in FDIC insurance per depositor because of the multiple-bank strategy.

In some (but not all) cases, you must be a customer of the brokerage or robo-advisor's investment account services in order to use its cash management account features. For example, you can't open a Betterment Cash Reserve account unless you're a customer of Betterment's investment services.

Do the best cash management accounts charge fees?

First, let's be perfectly clear. None of the cash accounts on our list charge a monthly account maintenance fee or any other type of account fees, regardless of balance size, for cash management services. There are a few out there that do, but under no circumstances should you have to pay a fee to keep your money in a cash account, especially if you're giving the firm your business by being a stock brokerage customer. There are also usually no minimum balance requirements or money transfer fees.

Having said that, there are some fees you might run into as a cash management account customer. For example, some charge a fee for withdrawals at foreign ATMs. There are also likely to be fees for services like wire transfers, which are standard at most banks. And since a cash management account typically has to be paired with an investment account from the same company, it's important to take the fees from the investment side of the business into consideration as well.

Are cash management accounts insured?

Yes, because they are issued through partner banks, cash management accounts are FDIC insured, or are protected by the Federal Deposit Insurance Corporation. Technically speaking, deposits are swept into these partner banks, even though customers can still access their cash management accounts through the issuing brokerage or robo-advisor. FDIC insurance is crucial to have with any type of cash balance account, as it protects you in the event of a bank failure. And this is different from the SIPC insurance that protects investment assets in your brokerage or robo-advisory account.

In fact, many of the best cash management accounts offer several times the standard $250,000 FDIC insurance limit because they partner with several banks. It's not uncommon to see cash management accounts that offer $500,000 to $1.5 million in maximum FDIC-insured balances.

Brokerages we evaluated for consideration on this page: Acorns, Ally Invest, Axos Self-Directed Trading, Betterment, Cash App Investing, Charles Schwab, Delphia, Domain Money, Ellevest, Empower, eToro Brokerage, E*TRADE Core Portfolios, E*TRADE, Fidelity, Fidelity Cash Management, Fidelity Go®, Firstrade, FOREX.com, Interactive Brokers, J.P. Morgan Self-Directed Investing, M1 Finance, Magnifi, Marcus Invest, Merrill Edge® Self-Directed, moomoo, NinjaTrader, Personal Capital, Plynk, Prosperi Academy, Public, Robinhood, Rocket Dollar, Schwab Intelligent Portfolios, SoFi Active Investing, SoFi Automated Investing, Stash, Stockpile, Tastytrade, Titan, Tornado App, TradeStation, Tradier, Vanguard, Vanguard Digital Advisor®, Wealthfront, Webull, Zacks Trade.