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What is a Cash Management Account?
A cash management account is an account that offers services and features similar to savings, investment, and checking accounts under one product. CMA accounts are provided by nonbank financial service providers. The best cash management account can offer reasonable or no fees, high interest rates, checking account features such as paper checks, a debit card with FDIC insurance, and savings accounts.
Who Can Consider Cash Management Accounts in the USA?
Speaking of the USA Cash Management Account, they are best for consumers with huge cash balances that exceed the limit of FDIC insurance. Similarly, a cash management account might be a great choice if you hold a large amount of money in your savings and checking accounts for easy access and security.
Investment firms, robo-advisors, and mobile trading apps offer cash management accounts that include big names such as Fidelity, Vanguard, and Betterment.
Pros and Cons of USA Cash Management Account
Pros
Cash management accounts always come with manifold benefits, and some of them are:
1. Flexibility: With the help of the best cash management account in USA, it’s easy to withdraw funds. Some offer debit cards to make purchases or withdraw cash at ATMs, while some allow check writing.
2. FDIC Protection: CMAs make it easy to secure your money by providing FDIC insurance on balances up to $1 million or more. During the interim period, funds may be secured with the help of Securities Investor Protection Corp. (SIPC).
3. Easy Investment: CMAs are offered by brokerage firms, making it easy to invest money. It’ll be a huge benefit if you quickly buy and sell securities.
4. Above-average Interest Rates: Most CMAs pay higher annual percentage yields (APYs) as compared to savings accounts and traditional checking accounts at various banks. While you may see higher rates at some banks, CMAs offer flexibility in checking accounts, which usually do not pay interest.
5. Earn Interest on Your Checking Account Balance: Several checking bank accounts need to earn interest. If you maintain a good checking account balance, it makes sense to earn interest on it.
Cons
After learning about the benefits of CMA, it’s time to throw some light on its drawbacks also, which are:
1. Fees and Minimum Balances: Companies that provide CMAs often charge monthly fees or need high minimum balances.
2. Only be Available Online: CMAs are only provided by online institutions. There may be better options than a CMA if you prefer in-person banking.
3. Lack of Certain Features: Most banks cater features such as bill pay to checking account customers. CMAs do not have some beneficial features, so they may not be the appropriate traditional checking account replacement.
4. Not Important for Some People: A prominent feature of a CMA is its capability to ensure funds over the Federal Deposit Insurance Corporation’s $250,000. However, most consumers only have a little cash in hand, making it unimportant.
5. No Separation for Savings: If you keep funds in a separate savings account, you may be less likely to spend them. It’ll also be easier to watch your savings increase.
6 Best Cash Management Accounts in the USA
1. Fidelity Cash Management Account
The Fidelity Cash Management Account is an account that helps fulfill your banking needs. With competitive rates, minimum deposit, or no account fees to open an account, it has never been easier to save and spend like never before.
Why choose it?
The various reasons to choose a Fidelity money management account are given below:
- Digital wallet compatible
- ATM fees are reimbursed globally
- Secure debit card
- FDIC insurance on cash balances
- Competitive rates
- No monthly account fees
Pros
- Good for short-term goals or a rainy-day fund
- Offer higher rates on deposit
- Several investment options
- Mobile check deposit
- Get a real-time view of your spending
Cons
- Lower returns
- Daily spending limit
For Whom is it?
The Fidelity CMA is a brokerage account explicitly meant for cash management, investing, and spending.
2. Vanguard Cash Management Account
Why choose it?
The various reasons to choose Vanguard as the best cash management account are:
- No minimum deposit
- Features a bank sweep insured by FDIC
- Diversify portfolio
- Easy online transactions
- Offers a holistic view of investment and cash
- Life stage planning tools
- Portfolio update reports and analysis
Pros
- No monthly fees
- Offers competitive yield
- $1.25 million FDIC coverage
- Five optional money market funds
- Focus on catering buy and hold investors
Cons
- There is no way to deposit cash or withdraw the amount
- No check writing
- Limited customization options
- No 24*7 customer support
- Lengthy onboarding process
For Whom is it?
Vanguard CMA is a brokerage account that manages investments and cash in one place.
3. Merrill Lynch Cash Management Account
Why choose it?
The various reasons to choose Merrill Lynch as the best cash management account are:
- Earns a competitive yield
- Support long-term investment goals
- Brokered certificate of deposit
Pros
- Direct deposit and withdrawal via ATM
- Transfer funds between linked accounts
- Protected by SIPC
Cons
- It doesn’t offer negative balance protection.
For Whom is it?
The Merrill CMA account allows you to manage your daily finances and long-term investments.
4. Merrill Edge Cash Management Account
Why choose it?
The reasons to choose Merrill Edge Cash Management Account are:
- Intuitive trade experience
- Customization tools
- 24*7 customer support
- Dedicated investor education programs
Pros
- Simple and quick usability
- Smart order router capabilities
- Full portfolio breakdown visibility
- High-risk trade authorization security
Cons
- No fractional share trading
- Limited variety of offerings
- Costly fees
For Whom is it?
With a joint or individual brokerage account from Merrill, you can buy and sell various investments, such as MFs, ETFs, bonds, and stocks, more easily.
5. Betterment Cash Management Account
Why choose it?
The various reasons to choose Betterment CMA are:
- It lets you earn interest during volatile times.
- Multiple portfolio options like customization
- Low minimum deposit
Pros
- No minimum balance
- Unlimited withdrawals
- $2 million FDIC insured
Cons
- Cannot choose your investment options
- No direct indexing
For Whom is it?
Cash Reserve is available only to Betterment LLC clients, and it isn’t a cash and bank transfer to program banks.
6. Schwab Cash Management Account
Why choose it?
The reasons to choose Schwab as the best cash management account are:
- Mobile check deposit
- No foreign transaction fees
- Competitive yield
Pros
- No monthly fees and minimum balance required
- Easy transfer to your brokerage and Schwab bank
- Unlimited ATM fee rebates
- FDIC insured up to $250,000/depositor
Cons
- The low interest rate on the uninvested amount
For Whom is it?
The Schwab CMA allows your clients full security access and competitive cash solutions to fulfill their short and long-term goals.
Comparison of 6 Cash Management Accountsxx
To provide you all with a better vision of cash management accounts, we have prepared a comparison table, so let’s look into it:
| Account | APY (%) | Minimum Deposit | Monthly Fees |
| Fidelity | 2.72% | $0 | None |
| Vanguard | 4.60% | $0 | None |
| Merrill Edge | 4.24% | $0 | None |
| Betterment | 5.00% | $10 | None |
| Schwab | 0.48% | $0 | None |
*Important Note: Merrill Lynch does not have an APY and monthly fees.
The Bottom Line
The best cash management accounts allow for higher FDIC insurance limits as compared to a standard savings account. That’s why they are an excellent choice for those with more than $250,000 in their savings account.
Your savings always pay when you compare a CMA with standard checking and savings accounts to find the highest APY account with all the features you’re seeking. Now we think it sounds good to you, right?
So, go and grab the right one!
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Happy Savings!
