What is a Cash Management Account?

March 8, 20236 min read
What is a Cash Management Account?
Share on facebookShare on TwitterShare on Linkedin

Key Takeaways

  • A cash management account (CMA) can protect large amounts of cash, pay interest, and streamline money management.
  • A CMA can offer benefits of a checking and savings account.
  • CMA providers are usually broker-dealers or investment advisory firms.

Investors looking to put a sizable amount of money in a protected place might want to consider a cash management account, which can help with money management. But just what is a cash management account? That is covered below, along with other ways to invest beyond common savings accounts.

What is a Cash Management Account (CMA)?

A nonbank account, generally favored by those seeking a safe, easily accessible place to keep a relatively large sum, is referred to as a cash management account. It also targets those who like having all their money in one place to more readily take advantage of investment opportunities.

Holders of a CMA need not switch among accounts or apps. The accounts can be used in place of, or in addition to, traditional checking and savings accounts, although many combine some elements of both.

Where are Cash Management Accounts Available?

One can commonly establish a cash management account through a Robo-advisor, mobile app, or online firm. While brokerage firms are frequently used for such accounts, an online savings account might offer higher rates. Investors should compare options.

How Does a CMA Differ from Other Accounts?

CMAs share features with other types of accounts, but with some key differences:

  • Checking accounts. Many CMAs provide the same services as a checking account, such as access to ATM cards, a checkbook, and account management. Unlike most checking accounts, cash management accounts generally earn high-yield interest and don’t charge fees.
  • Savings accounts. Traditional savings accounts generally pay less interest than cash management accounts. Also, unlike CMAs, savings accounts generally limit transactions.
  • Money market. Money market accounts usually have higher fees and minimums than CMAs.

Pros and Cons of Cash Management Accounts


  • FDIC insurance. The Federal Deposit Insurance Corporation insures balances of up to $1 million, once the funds arrive at partnering banking institutions.
  • Annual percentage yield and interest rates. Both are usually higher than offerings by traditional banks.
  • Potentially lower fees. There usually aren’t any fees directly associated with a cash management account, although some charge them.
  • Ease and accessibility. Banking and investment accounts are in one place.


  • Other opportunities with better rates. Rates might be lower than online banks’ high-yield savings accounts.
  • Can be online only. Some people like the option of a brick-and-mortar location.
  • Doesn’t fit everyone. Not everyone wants all of their cash in a single location.
  • Fees can differ. Many CMAs don’t charge fees, but it is best to ask.

How to Know if Cash Management is Right for You

While a near-perfect fit for some, a CMA does not work for everyone. For one thing, some people prefer to keep their bank accounts independent from their investments. Also, not everyone wants to do all their banking digitally, either online or through a mobile app.

Anyone considering opening a cash management account should ask themselves:

  • Do I bank mostly online? It helps to be comfortable with online-only banking.
  • Do I utilize tools such as peer-to-peer transfers or online bill pay? Because some CMAs do not offer such features, some people may be better off with a traditional checking account.
  • How much cash do I have? Cash management accounts work best for those who have large amounts to store. So, those who have big sums in checking and savings accounts might be attracted to the extra FDIC protection.

How Can a Cash Management Account Help Your Financial Future?

Because some brokers offer CMAs, which can be linked to a brokerage account, investors may be able to take advantage of opportunities more easily and quickly. Also, funds can be kept safe for as long as they are deposited.

How to Start with a Cash Management Account

What to look for in a CMA prospect:

  • FDIC insurance. Find out with which banks your CMA provider partners.
  • Annual Percentage Yield. Determine what APY the CMA offers. Make sure it is at least 1%.
  • Fees. What expenses, if any, are associated with the account?
  • Minimum balance. Some CMA providers require minimum balances to open an account.
  • Accessibility. The CMA should offer multiple ways to deposit and withdraw cash.
  • Mobile tools. Find out whether CMA mobile tools the provider offers are user friendly.

Those interested in opening a cash management account should shop around regarding all the above.

How to Apply for a Cash Management Account

Opening a CMA is like opening any other kind of online bank account. The process requires filling out an application, then funding the account, usually by electronically shifting funds from an existing bank account. If applicable, the investor will get a debit card and checks.

What are Ways to Invest Extra Cash?

Those who have extra cash to invest have options beyond cash management and high-yield savings accounts. They can, for example, add alternatives to their portfolio holdings. Essentially encompassing assets other than stocks or bonds, alternatives such as art and real estate are increasingly popular as ways to potentially guard against inflation and stock market volatility.

Consider the alternative investment platform Yieldstreet, which offers a private market Individual Retirement Account that can also help diversify holdings. The private market program offers a wide selection of alternatives as well as easy rollovers.

Invest in Alternative Assets

Get consistent returns in times of market volatility.

Alternative Investments and Portfolio Diversification

Traditional portfolio asset allocation envisages a 60% public stock and 40% fixed income allocation. However, a more balanced 60/20/20 or 50/30/20 split, incorporating alternative assets, may make a portfolio less sensitive to public market short-term swings.

Real estate, private equity, venture capital, digital assets, precious metals and collectibles are among the asset classes deemed “alternative investments.” Broadly speaking, such investments tend to be less connected to public equity, and thus offer potential for diversification. Of course, like traditional investments, it is important to remember that alternatives also entail a degree of risk.

In some cases, this risk can be greater than that of traditional investments.

This is why these asset classes were traditionally accessible only to an exclusive base of wealthy individuals and institutional investors buying in at very high minimums — often between $500,000 and $1 million. These people were considered to be more capable of weathering losses of that magnitude, should the investments underperform. However, that meant the potentially compelling gains these investments presented were also limited to these groups.

To democratize these opportunities, Yieldstreet has opened a number of carefully curated alternative investment strategies to all investors. While the risk is still there, the company offers help in capitalizing on areas such as real estate, legal finance, art finance and structured notes — as well as a wide range of other alternative investments.

Learn more about the ways Yieldstreet can help diversify and grow portfolios.


Depending on one’s financial situation, a cash management account might work as a safe, accessible place to deposit a relatively large amount of money.

And just as CMAs offer an alternative to traditional savings and checking accounts, private-market IRAs can serve as alternatives to stocks and bonds in modern investment portfolios. Incorporating such alternatives might be a smart way to diversify one’s holdings.

All securities involve risk and may result in significant losses. Alternative investments involve specific risks that may be greater than those associated with traditional investments; are not suitable for all clients; and intended for experienced and sophisticated investors who meet specific suitability requirements and are willing to bear the high economic risks of the investment. Investments of this type may engage in speculative investment practices; carry additional risk of loss, including possibility of partial or total loss of invested capital, due to the nature and volatility of the underlying investments; and are generally considered to be illiquid due to restrictive repurchase procedures. These investments may also involve different regulatory and reporting requirements, complex tax structures, and delays in distributing important tax information.