5 Best Cash Management Accounts of June 2024

Get started with the best cash management account from Wealthfront to earn a 5% Annual percentage yield (APY).

What is a cash management account? Cash management accounts are a unique financial product that offers a combination of features typically found in both traditional bank accounts and investment accounts. It’s not a bank account, but it is reminiscent of one. You can hold your funds in these accounts, use them for direct deposit, earn interest on the funds, and pay your bills directly from the account. These accounts offer some great benefits, including fee-free ATMs and no overdraft fees. You won’t find these accounts with traditional banks or credit unions. Instead, talk to your broker or robo-advisor provider or read on to see a listing of your best options.

Quick Look: The Best Cash Management Accounts

• Best for High APY: Wealthfront
• Best for Account to Go with a Brokerage Account: Fidelity
• Best for Robo-advisor Account: Betterment
• Best for Unlimited Monthly Transfers: Empower
• Best for Earning Interest on Large Sums: Interactive Brokers

The 5 Best Cash Management Accounts

Find the best cash management account providers and learn about their pros and cons and key features.

1. Best for High APY: Wealthfront

With a higher-than-average APY, you’ll get 5% on your balance with Wealthfront. Plus, you’ll enjoy the normal benefits these types of accounts provide alongside no monthly fees. When you have a high net worth to protect, you can enjoy FDIC insurance for up to $8 million, which is higher than the average checking or savings account that comes with coverage for up to $250,000 per depositor.

Why We Love It: We love Wealthfront cash management account because of its high APY of 5.00%, with no required minimum or maximum balance. This means that your money will work harder for you, earning more interest over time compared to traditional savings accounts. Plus, the $8 million insurance coverage added security and protection on your investments.

2. Best for Account to Go with a Brokerage Account: Fidelity

Fidelity is well known for being a premier brokerage provider. If you already have a brokerage account with Fidelity or are considering one, the combination of brokerage and cash management is an attractive combo. The interest rate on these accounts is lower than competitors, but the ease of managing alongside other accounts still makes it attractive.

Why We Love It: We love Fidelity cash management because of the convenience it offers in terms of managing your finances. This account allows you to easily transfer funds between your brokerage account and your cash management account, providing seamless access to your funds when you need them.

3. Best for Robo-advisor Account: Betterment

Combine your cash management account with a leading robo-advisor investment account with Betterment. You’ll find many outstanding features, including mobile check deposit, simple bill pay, and check-writing privileges. The account also comes with no monthly fees or foreign transaction fees and unlimited withdrawals without penalties. Enjoy FDIC insurance on up to $2 million held in the account. 

Why We Love It: We love Betterment cash management because of its robo-advisor services, which eliminate the need for constant monitoring and manual adjustments. This feature allows you to automatically invest your excess cash in a diversified portfolio of low-cost ETFs, helping you to potentially earn higher returns while also keeping your money readily accessible.

4. Best for Unlimited Monthly Transfers: Empower

Empower has one of the highest APY rates at 4.7%. Plus, you’ll enjoy FDIC insurance on up to $5 million held in the account, which is more than most competitors that only have coverage for up to $2 million. Customers rave about the Empower dashboard, saying it is easy to understand and aids in their financial planning. You can complete an investment checkup or use the retirement planner to review progress toward goals. 

Why We Love It: We love Betterment cash management because of its unlimited monthly transfer feature. Whether you need to move money between accounts, pay bills, or send funds to friends and family, you can do so without any limitations. This flexibility allows you to manage your finances efficiently and effectively, without the stress of constantly monitoring your transfer limits.

5. Best for Earning Interest on Large Sums: Interactive Brokers

You’ll need $10,000 to earn the best APY of 4.83% when you open a cash management account with Interactive Brokers. But if you have the funds, it’s one of the best interest rates you’ll find for these types of accounts. It comes with no monthly fees, no maximum transactions and FDIC insurance of up to $2.5 million.

Why We Love It: We love Interactive Brokers cash management because it allows users to earn interest on their idle cash balances, which are funds that are not currently invested in securities. This is a great feature for investors who may have a significant amount of cash sitting in their accounts waiting to be invested or used for other purposes.

How Does a Cash Management Account Work?

A cash management account is an online location where you can hold your cash while earning larger interest rates compared to traditional bank accounts. These accounts offer the freedom to withdraw the funds as needed, which varies from other financial tools like certificates of deposit (CDs) where you pay penalties for early withdrawals.

Banks do not offer these accounts. Instead, you’ll find them with advisory firms, brokerages and robo-advisors. 

Most accounts come with standard features you’re used to with a traditional bank account, including check writing, a debit card, direct deposit, simple connectivity to transfer funds between accounts, etc. However, you’ll want to ask specific questions about the features that matter to you because not all accounts have all these features.

Pros and Cons of Cash Management Accounts

As you evaluate cash management accounts, consider the pros and cons that this type of account comes with.

Pros

• Invest savings with ease: transfer funds between your cash management account and brokerage/robo-advisor account with ease
• Higher interest rates: most savings accounts offer less than 1% APY whereas cash management accounts offer 2-5%. 
• FDIC insurance for larger balances: when you have a large amount of money to protect that is greater than the standard $250,000 of FDIC insurance, you want to place the funds in a cash management account where you can get coverage on $2-$8 million.

Cons

• Might find better interest elsewhere: some high-yield savings accounts offer better interest rates if you only have a small amount of money you want to hold in the account.
• Exclusively offered online: you can’t visit a bank in person to access a cash management account. Instead, these accounts are exclusively online since they are only offered by brokerages and robo-advisors.
• Potential for minimum deposit and balance: some accounts require that you deposit a certain value to open the account. Others require you to maintain a certain balance to keep the account active.

How to Choose the Best Cash Management Account

As you look for the best place to hold your extra cash, review these items to look for in the best cash management account for you.

• Check account features: while many accounts offer standard features you’ll find with traditional bank accounts, others do not, which can make it more challenging to add to the account and access its funds. Make sure you have a debit card, fee-free ATMs, no foreign transaction fees, simple direct deposit, etc. for the greatest ease of management.
• Learn about the fees: review the account fees and when you might lose some of that high interest you’ve earned just to do everyday transactions in your account.
• Evaluate interest rate: the interest rate you can earn on these accounts will vary greatly. Look into various accounts to find the best interest rates with the features that matter to you.
• Review FDIC insurance maximum: when you have large sums to protect in an account, look for an account with greater FDIC insurance to protect those funds.

Cash Management Accounts vs. Other Accounts

Still not sure whether a cash management account is right for you? Review how it stacks up with other places you can hold your funds.

• Cash management account vs. checking account: cash management accounts have far higher interest rates compared to checking accounts but you might have less access to the funds depending on the features in your account. Checking accounts provide the greatest access to your funds with a debit card and check-writing capabilities but with the lowest interest rate of any account type.
• Cash management account vs. savings account: cash management accounts offer greater interest rates but because they aren’t held at banks, transferring funds between accounts might take several days instead of being immediate like when you have a savings and check account at the same institution.
• Cash management account vs. money market account: most cash management accounts come with greater transaction freedom than a money market account. Most money market accounts have stringent limits on what you can move in and out of the account.

High Interest and FDIC Insurance on Larger Balances

The greatest benefits that cash management accounts provide are high interest rates and FDIC insurance on large balances held in the accounts. While the access to your funds is not as great as it is with a traditional bank account, these accounts present a good option for those looking to protect their emergency fund and earn greater interest on the money.

Frequently Asked Questions