What is a Cash Management Account? Definition, Pros and Cons

By Sara


Last Updated: September 6, 2022



Most people know about a traditional savings account and possibly even a high-yield savings account.

People may have heard of a certificate of deposit or a money market account. What about a Cash Management account?

This is a unique type of savings account that combines aspects of checking, savings, and investment account into one account. They can’t be found at a traditional bank, so many people may not know that this is an option for your savings. 



What is a Cash Management Account? 

A Cash Management account, also known as a CMA, is a combination account. It has aspects of a checking, savings, and investment account all into one account. You will not find a CMA at a traditional bank.

However, institutions like Fidelity will have a CMA that you can open. Similar to a high-yield savings account, a CMA will have higher interest rates because there is not as much overhead. 

The biggest feature of a CMA is that this may be the only savings account you need since it acts as three accounts in one. As a result, you will have fewer accounts to manage and allow you to streamline your finances. 

CMA’s also offer higher interest rates when compared to a traditional savings account.

For example, the average interest rate for a CMA is 0.3%, while the average interest rate for a traditional savings account is 0.01%



Choosing a Cash Management Account

When choosing a CMA, you want to pick an account with the highest interest rate, lowest fees, lowest minimum balance, and so on. This is just like all the other accounts we have talked about in the past. 


Things to consider when looking for a Cash Management Account 

Like other accounts, you want to make sure you are choosing the right Cash Management Account. The first things to always check on are interest rates, minimum balance required, and fees. Always opt for the highest interest rate, lowest minimum balance required, and low to no fees. Each institution will be different, so make sure to do your research. 

Many CMA accounts will sometimes have a signup offer for opening an account and using it for direct deposits. Some accounts will have an interest rate of 0.25% to 1%. In addition, most CMA accounts will not have any fees or minimum balances required. You also can get a debit card with most CMA accounts and usually have any fees waived or have access to 55,000 ATMs with no fees. 

Since most CMAs are with online institutions, consider researching their app and customer support. A good app and 24/7 customer support can improve your CMA experience. 



If you do not enjoy managing many different accounts, a CMA could be an option for you.

Since this account is similar to a checking, saving, and investment account, you might not need as many accounts in your personal life. 

Having a higher interest rate is also another benefit of this account. But, again, you can get a higher rate compared to other accounts. 

A CMA will give you access to a debit card because it has similar aspects to a checking account. This is similar to a money market account, but money market accounts are with traditional banks instead of investment accounts like Fidelity. 



While a CMA can be a great option for some, it might not be right for everyone.

For example, if having the highest possible interest rate is very important, you may opt for a high yield savings account over a CMA.

This is because a CMA’s interest rate is higher than a traditional savings account, but it’s not the highest interest rate account either. 

If you want an option to physically go o a bank, a CMA may not be right for you either.

Most CMAs are through online investment accounts where there is no in-person location. Some people like to go into a bank for their banking needs, and if you have a CMA, you may be unable to do this. 



Final Thoughts 

A cash management account is a great option if you want an online banking experience, access to a debit card, and a higher interest rate.

This account can be a great option for people who want to have one account that can act like three - checking, saving, and investing. Try to find an account with no fees, no minimum required balance, and the highest interest rate. 

Photo by energepic.com


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