What is a Cash Management Account?

Written By
G. Dautovic
July 06,2023

Managing your finances and accounts can often give you a headache. If you are trying to achieve financial stability, you’ll frequently find yourself juggling between checking, savings, and investing accounts. 

However, there is an easier way to do this. What if we told you that you could get the benefits of all three account types while only having to worry about one unified balance? Let’s cover this all-in-one checking, savings, and investment account and its pros and cons so you can decide whether this could be your solution to easier banking. 

What Is a Cash Management Account (CMA)?

This type of account has all the benefits of your regular checking, savings, and investment accounts merged into one. These accounts are offered by online financial companies, robo-advisors, or other non-bank institutions. 

What Are The Pros of This Type of Account?

This type of account has a lot of things going for it. First of all, it allows for excellent money management, as you can access all your essential accounts from one location. It provides a simplistic and straightforward overview and control of all your finances. 

With a CMA account, you can make transactions as you would with a regular checking account. Some of the standard features you will find with this type of account are debit cards and easy bill payments. Mobile apps allow effortless money transfers on the go, and some account offers even include checkbooks. 

At the same time, you can earn interest, which is often higher than you would get with a regular savings account. These online providers don’t have high-maintenance, brick-and-mortar-related expenses to worry about. You get to benefit from this, too. You’ll probably get higher annual percentage yields than you would at any bank with lots of physical locations.

Investing your funds is also simple with cash management accounts.  Many of these accounts are typically offered by investment companies. So, linking your checking and savings accounts to your investment one is effortless. You can purchase investments with funds in your checking account and any sales land in the same account.

When summed up, this type of account makes investing in your future simple but also safe. Unlike money market funds and other investment-only accounts, your funds are covered by FDIC insurance. The coverage goes up to $250,000 with a cash management account. This insurance will cover your money in case of a bank failure.  These banks don’t have their long-standing brick-and-mortar places you can turn to in case a problem occurs. So, it is reassuring to know that even if one of these online banks goes belly-up, your money won’t vanish into thin air. After all, your money is insured through a third-party bank, which is often a renowned and established institution. 

Are There Any Cons? 

By definition, cash management accounts are great for managing your cash. That being said, there are a couple of downsides to consider, as with most things in life.

The first and most obvious con is that there is no local branch you can visit in an emergency. Some people prefer it that way, as queuing in a line at a bank is not a fun way to spend an afternoon. However, on occasion, not being able to reach customer support when you need them could be more than stressful. 

Another issue you may encounter with this type of cash management is the lack of joint and trust accounts. People who rely on these types of accounts will have to look elsewhere, as CMAs don’t support them.

The last thing to remember is that the APY offered by a typical CMA is higher than what’s on offer with many saving accounts. However, it is still nowhere near some other savings products with high yield out there. If saving a lot of money through high interest rates is your primary goal, there are much better investment options than getting a CMA.

Looking into alternatives is also advisable for another reason. CMA management accounts usually have a high minimum balance requirement. 

Is CMA the Right Solution for You?

Now that we’ve covered its pros and cons, it’s up to you to decide. Whether or not this type of account will be what you need depends entirely on your preferences.

Most of these can meet anything already offered by traditional banks. However, it is not the rule. Some people are willing to compromise good deals to have all their funds and financials in one place. Others like to hunt for the best options and accounts with rewards with several companies.

Then, there is also the question of whether or not you are comfortable managing all your finances through online banking. A CMA account is, after all, a fully online cash management account. They usually don’t have physical branches, meaning you cannot talk to bank representatives in person.

There is also the question of whether you would like to have your investment account tied up with your checking and savings accounts. It is a good deal for experienced investors and those who are comfortable tying up those accounts together. However, those who are yet to master the world of investing and don’t know what things to invest in might be better off by creating an account at one of the online brokerages. The other option to consider is installing a trading application to help manage your investment portfolios. 

What Should You Look For When Selecting Your Cash Management Account?

As always, it is vital to shop around and compare your options when selecting your account. Here are some things to keep in mind.

Compare APY Rates 

As long as you have money in an account, you should be receiving interest for it. APY rates can be, and often are, the critical factor when selecting your savings account. Look for the offer with the highest APY, as these are often the best for investments.


As mentioned before, the costs of operating an online financial institution are much lower with cash management, meaning that you can count on lower fees, or sometimes none at all. However, this is not a rule. Often, there will be ATM fees or fees on the linked broker account. Therefore, make sure to read the fine print for any hidden fees.

Services Offered

If you have a set of priorities regarding the services you would like to have, you should compare the available offers against them. If you need check-writing or a vast ATM network, you should look for a solution that offers those things. Keep in mind that online-only banks won’t have their own ATMs but might reimburse ATM fees or partner up with brick-and-mortar banks to allow fee-free ATM usage to their customers.

Good Customer Service

Since customer service is solely remote with this type of accounts management, so look for a solution that offers as many ways to contact it as possible. As with any other financial institution, you need to be able to contact customer support easily and get help quickly.

Investment Options

One of the main reasons that drive people toward this type of account is the opportunity to link the account to a brokerage or robo-advisor powered account. It is a very handy option but may not be ideal for people who are still getting comfortable with their investment accounts and learning the ins and outs of investment banking. Either way, being able to directly finance and profit from your investments in one place without switching accounts is a great reason to consider CMAs.

Final Thoughts

With any account, there are some benefits mixed in with certain downsides. So, what is a cash management account good for? It is an excellent solution for those looking to consolidate several bank accounts within a single one. It also allows handling of all of your accounts from the same online dashboard or app, streamlining it further. Most of these unified accounts are very competitive with what other banks have to offer. You likely won’t compromise much when it comes to features or APY, while you will undoubtedly save a lot on fees.


What is the difference between a brokerage and a cash management account?


The main differences lie in the liquidity, and what you can use the money for once it is in the account. With an account at a brokerage, the use of your funds is directly tied to investing. You can only use the money for buying and selling stocks, funds, bonds, and other available securities. On the other hand, if you choose CMA as your account of choice, you typically also get a debit card and sometimes even checks. With such an account, you can effortlessly direct your funds elsewhere, make purchases, pay bills or withdraw your funds at the nearest ATM. 

Are cash management accounts safe?


In short, yes. Since these accounts are not issued by a chartered bank, users often worry about the safety of their money.  In terms of insurance, the funds are FDIC-insured through partnerships with other, 3rd party, chartered banks. In other words, the funds are typically just as safe as in any brick-and-mortar bank.

From a technical standpoint, all CMA providers use secure technologies. They employ the latest encryption methods, authenticated logins, and other security protocols, ensuring that your private data is always well-protected.

What is a cash management account?


Most of these accounts are a combination of checking, savings, and investment accounts. This type of account is typically provided by online banks or other online financial institutions

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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