What Is a Cash Management Account (CMA)?

Houman Davoudi, Senior Relationship Manager, First Republic Bank
April 20, 2022

  • A cash management account (CMA) allows you to manage investment and banking accounts in one place. 
  • CMAs offer some benefits, including seamless money management and competitive interest rates, but also have limited features and customer support options. 
  • There are several key differences between CMAs and other bank accounts, including checking, savings, money market and brokerage accounts. 

A cash management account (CMA) provides a combination of services similar to checking, savings and investment accounts. CMAs help individuals manage their money, make payments and invest funds with competitive interest rates and little-to-no overhead fees.

Cash management accounts are often offered by financial services institutions to facilitate easier money management, though they may not be the right choice for everyone. Here, we'll outline how CMAs work, how they differ from other types of bank accounts and factors to consider when deciding to open one. 

How do cash management accounts work?

Similar to a checking account, CMAs can be used in lieu of traditional banking for day-to-day transactions. However, they offer the added convenience to invest and manage money in one place. 

The purpose of a CMA is to serve as an “all-in-one” platform that allows users to manage banking and investment accounts, rather than managing separate accounts, for example, at a brokerage firm and a financial institution. As a result, they cater to individuals craving a more seamless money management experience.

CMAs may be an option at banks and are also offered by other nonbank financial services organizations, such as online investment firms and trading apps. 

Cash management account features and services

Opening a CMA grants you access to many of the benefits of a checking account. While the features and services associated with a CMA may differ depending on where you open your account, they often include: 

  • A linked debit card
  • Online bill pay
  • Mobile check deposit
  • Direct deposit
  • Online customer support

Deposits in a CMA are also usually covered by insurance, which protects your money in case of a bank failure. While non-bank financial institutions cannot directly offer FDIC insurance, their banking partners can. If your CMA is linked to multiple partner banks, it may be covered for more than the legal maximum of $250,000. 

Cash management account fees and rates

While the fees and rates associated with CMAs vary, depending on the financial institution and the details of each specific account type, CMAs are typically associated with minimal (or no) account fees or ATM fees. 

Funds deposited in a CMA usually also have the potential to earn interest. The interest rate — also called the annual percentage yield (APY) — may be higher than a standard checking account.

Pros and cons of a cash management account

Making an informed decision about whether to open a CMA requires understanding the potential benefits and drawbacks of each account, so you can gauge how well a CMA might align with your personal preferences and goals. 

Cash management account pros 

  • Money management: CMAs offer relatively seamless money management because users can manage their banking and investment accounts in one place. 
  • Competitive interest rates: Money deposited in a CMA earns interest. CMAs usually offer a higher APY than standard checking accounts and rates that are competitive with a savings account at an online bank. 
  • FDIC insurance: CMAs partner with member FDIC institutions, including banks, which offer FDIC insurance coverage. Because CMAs typically partner with multiple banks, each with the ability to extend coverage, the money in CMAs is usually covered beyond the legal limit. 

Cash management account cons

  • Limited customer service: Most CMAs don't come with local or face-to-face customer support and only offer remote support. 
  • Minimum balance requirements: Some CMAs have high minimum balances — sometimes hundreds or even thousands of dollars — compared to standard checking and savings accounts. 
  • No guarantee of a higher APY: While CMAs typically generate more interest than standard checking accounts, they may offer lower rates than savings accounts. 
  • Limited features: A CMA offers fewer services and less flexibility than traditional bank accounts. 

As you weigh the pros and cons of CMAs, consider, too, how they compare to other types of bank accounts. 

Cash management accounts vs. other account types

CMAs work differently than checking accounts and the types of savings accounts you’re likely familiar with. As you weigh whether a CMA might be a good option for you, consider these key differences:

  How It Differs From a CMA
Savings Account
  • Savings accounts, particularly high-yield savings accounts, typically offer higher interest rates than CMAs
  • Lower minimum balances than CMAs, on average
Checking Account
  • Usually no potential to earn interest on deposits 
  • Higher fees than most CMAs
  • Lower minimum balances 
Money Market Account
  • Usually offer higher APYs than CMAs
  • Option for in-person banking and support 
Brokerage Account
  • No linked debit card; cannot be used for day-to-day transactions 
  • Used solely as an investment account
  • May offer higher potential for returns than with CMAs

CMAs are unique in their offerings. If you crave the convenience they offer and don’t mind their limitations, they may be an option to explore. 

Is a cash management account right for you?

CMAs aren’t the ideal choice for everyone. However, those who enjoy online banking and prefer to manage their banking and investment accounts in one place may wish to consider opening one. On the other hand, those who prefer to bank in person, or require more flexibility about how to invest the money in the account, may be best served by traditional bank accounts. 

No matter what you choose, weighing the pros and cons of CMAs can help you make the most informed financial decisions and help ensure you’re opening accounts that will assist you in reaching your financial goals.

This information is governed by our Terms and Conditions of Use.