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Cash management accounts are alternative banking accounts that can offer you the best of both worlds from checking and savings accounts. If you're looking for a cash management account to manage your finances, there are several options from which you can choose.
Understanding how they work and what they offer can help you determine whether cash management is a better option than traditional banking and which account is the best fit for you.
The 5 Best Cash Management Accounts
Depending on what type of account you're looking for, there may be a cash management option. The best cash management accounts offer high-interest rates, low to no monthly maintenance fees, a lot of insurance on your deposits and other features that can add value to your banking experience.
Some even offer cash back on your purchases, access to certificates of deposit and more.
Aspiration Spend & Save
Aspiration is an environmentally-conscious broker that offers cash management users an opportunity to help protect the environment.
For example, you can opt to round up each of your debit card purchases to the nearest dollar and donate that amount to the broker's mission of planting trees.
Other ways Aspiration helps you be environmentally conscious is by:
- Offering a personal impact score based on your spending
- Providing cash back on purchases made with retailers that belong to the broker's Conscious Coalition™, which includes TOMS, Lola, Allbirds and many more
- Promising not to use deposits to fund fossil fuel exploration or production
- Offering a credit card that plants a tree every time you make a purchase
Aspiration offers up to $2 million in FDIC insurance per depositor by stashing your deposits with various partnering banks. There are two tiers to the Aspiration Spend & Save Account: Aspiration and Aspiration Plus.
Aspiration
The basic plan doesn't have a monthly maintenance fee, though you can opt to pay what you think is fair. It offers 3.00% APY on the first $10,000 in your account if you spend $1,000 or more every month with your debit card. You won't earn any interest if you don't meet that spending requirement.
You'll also earn between 3% and 5% cash back on purchases made with retailers in the Conscious Coalition. There is a $10 minimum opening deposit to get started.
Aspiration Plus
The paid plan costs $7.99 per month, though you can cut that to $5.99 per month if you pay annually. With that, you'll get a 5.00% APY on the first $10,000 in your account if you spend $1,000 or more on your debit card each month.
If you don't meet that spending requirement, you'll earn just 0.25% APY on up to $10,000. All funds beyond that threshold earn 0.10% APY.
This paid option also offers 10% cash back on Conscious Coalition purchases, one out-of-network ATM fee reimbursement each month (with more than 55,000 fee-free ATMs in its network), purchase assurance and Planet Protection (which purchases carbon offsets for each gallon of gasoline you purchase).
As with the free tier, there is a $10 minimum opening deposit.
Wealthfront Cash Account
Wealthfront is a robo-advisory firm that offers both traditional and socially-responsible investment portfolios.
The Wealthfront Cash Account has no account fees, and its minimum opening deposit is an easy $1. The broker offers up to $1 million in FDIC insurance by working with partner banks that can offer that coverage. You'll also earn a 3.80% APY on your balance with no minimums or caps.
You'll get a debit card that you can use with the account, with access to more than 19,000 ATMs, and you can also make unlimited fee-free transfers to external accounts. If you invest with Wealthfront, you can move your money into your brokerage account in minutes.
Personal Capital Cash
Personal Capital is a wealth management firm that also offers free and paid financial tools that can help with every aspect of your financial plan.
Personal Capital Cash is the firm's cash management account. It charges no fees and offers an APY of up to 3.45% — that's 3.35% APY as a base rate and 3.45% for the broker's advisory clients, which have at least $100,000 invested with Personal Capital. There's no minimum balance or cap on these interest rates.
The account charges no fees and offers up to $1.25 million in FDIC insurance via bank accounts with its partner institutions.
But while you can open a joint account, set up a direct deposit and make transfers, this account doesn't offer check-writing privileges or a debit card. You'd need to transfer money to your checking account with another financial institution for those features.
Betterment Cash Reserve
The Cash Reserve account from Betterment, another robo-advisor, charges no fees and offers an APY of 3.20% on your balance. There's a $10 minimum opening deposit, but you don't need to maintain a minimum balance after that. However, there's no balance cap on the broker's interest rate.
Betterment offers insurance of up to $1 million per depositor through the FDIC and program banks, which means you can get up to $2 million if you have a joint account.
Unfortunately, the account doesn't come with check-writing privileges or a debit card. But you can open a Betterment Checking account and get those features. You can also transfer money from your account and get next-day deposits, or get the deposits within two business days.
Fidelity Cash Management Account
Fidelity is one of the largest brokerage firms in the world, offering a wide variety of investment products and services.
The Fidelity Cash Management Account has no minimum balance requirement, no account fees and up to $1.25 million in coverage through the FDIC via program banks. You can also get unlimited domestic ATM fee reimbursements.
The account offers a 1.96% APY on your balance, with no minimum or maximum. If you want better interest rates and you can lock up your money for several months or years, you can take advantage of Fidelity's brokered certificates of deposit. These have APYs ranging from 2.50% and 3.50% and terms from three months to five years.
What Is a Cash Management Account?
Cash management accounts are hybrid financial accounts that function similarly to both checking and savings accounts at the same time. For example, you may get a debit card to use for everyday spending, but you can also earn a high-yield interest on your deposits.
In most cases, investment brokerage firms offer cash management accounts, so it's tied to your investment accounts.
Because this type of alternative banking account isn't offered by a bank or credit union, it's not technically NCUA or FDIC-insured by the provider. In some cases, though, brokers partner with banks to provide FDIC insurance, sometimes much more than the standard $250,000 limit. In others, they offer insurance through the Securities Investor Protection Corporation (SIPC), which is the FDIC equivalent for brokerage accounts.
A cash management account can be a good fit for you if you're looking for an easy way to link your banking and brokerage accounts or if you want to take advantage of some of the features they have to offer.
As you consider your options, here are some of our top choices for the best cash management accounts on the market.
How to Choose the Right Cash Management Option for You
If you're considering an alternative to traditional bank accounts, cash management accounts from brokers and other non-bank financial institutions could be a good choice. As you compare your options, think about what matters most to you. Is it the higher-yielding accounts, the lack of fees or other features?
In addition to these cash management products, you may consider others, such as:
- Morgan Stanley CashPlus
- TD Ameritrade Cash Management
- Interactive Brokers® Integrated Cash Management
- Merrill Cash Management Account®
You may also consider some of the checking accounts that some brokers, which also function as banks, can offer. Some options include:
- Betterment Checking
- SoFi Money®
- Schwab Bank High Yield Investor Checking®
As you consider each of these options, focus on the features that matter the most to you. Also, if you invest with any of these brokers, it might make sense to have everything under one roof to make matters simpler.
Whatever you do, do your due diligence to find the best cash management option for your needs.
Is a Cash Management Account Right for You?
Cash management accounts can be a good alternative to traditional checking and savings accounts, but there can be limitations depending on which option you go with.
For example, brokers are less likely to have brick-and-mortar branches, where you can get in-person service when you need it. They may also not allow cash deposits or even provide the ability to use a debit card or write checks.
Depending on your banking needs, think carefully about how cash management can help you better manage your money and how it can make things more difficult.
For example, many cash management options offer high interest rates, so if you want to just stash your savings in one and use your regular checking account for everything else, that can be a good compromise.
Also, if you happen to have a huge chunk of cash for a short-term goal that you don't want to invest, a cash management account can be a great alternative to bank accounts because it can offer much more insurance through the FDIC, SIPC or both.
Again, take your time to assess your needs and preferences and review multiple options before settling on the right one.
Featured photo courtesy of Aspiration
Ben Luthi
Ben Luthi is a personal finance and travel writer and credit card expert. He has a degree in finance from Brigham Young University and worked in financial planning, banking and auto finance before writing full-time for NerdWallet and Student Loan Hero. Ben is now a full-time freelance writer and enjoys traveling and spending time with his two kids. His work has appeared in several publications, including U.S. News & World Report, USA Today, Money, Success and Slickdeals.
