What is a cash management account?

A cash management account is an account that is typically available from non-bank financial service providers. It allows you to manage all your transactions through one online portal, combining services that are similar to checking, savings, and investment account products.

Cash management accounts can make it easier to handle your finances, as it allows you to make deposits, write checks, and trade securities from a single account. They also tend to offer high interest rates, competitive annual percentage yields (APYs), and low or no fees.

What are the advantages of a cash management account?

One of the biggest benefits of a cash management account is that it simplifies the management of finances. You can conduct all your transactions from a single account instead of using separate accounts for different banking functions.

Common features include a debit card, checkbook, money transfers, bill payments, and overdraft programs. They can also include FDIC insurance, which is often available through a third-party bank, as well as a credit line that attaches to your investment securities.

All this eliminates the need to transfer money between a checking account and a savings account. It also makes it easier to monitor all your finances in one place, saving you time and improving the efficiency of your cash management.

Cash management accounts benefit from lower overheads and operational costs as they are online-exclusive banking services rather than accounts from traditional banks and financial institutions. This means the financial service provider can offer customers low or no account fees, including on Automated Clearing House and wire transfers. They also tend to come with high interest rates.

What additional features can I expect from a cash management account?

Some providers will also offer extra features alongside the ability to manage various transaction types from your cash management account. These can include links to any other external bank accounts you may wish to maintain, making it easier to move your money around.

Some cash management accounts also come with generous ATM rebates and mobile check deposit functions, letting you deposit and withdraw funds with ease. FDIC insurance from a third-party bank can give you protection against the loss of insured deposits. Alerts from mobile apps can also keep you up-to-date with transactions and upcoming payments.

Considerations when opening a cash management account

As cash management services are online-exclusive, this means they are often unable to deliver face-to-face customer service. Customers can access virtual support, and the lower operational costs mean that customers often benefit from low fees and high interest rates. If you prefer to be able to visit a branch in-person, this type of banking product probably isn’t right for you.

Although many cash management accounts advertise competitive interest rates, it’s always important to shop around to ensure you are getting the best deal. Some other financial products may be able to offer better rates. Take all the account features, fees, and interest rates into consideration to make sure you are choosing the banking product that is the best fit for you and your financial objectives.

Find out about cash management with the Brex business account.