Cash management accounts, offered by nonbank financial services providers, are meant to help people spend and save their money. Until recently, many highlighted a high interest rate and lacked certain checking-related, consumer-friendly features, like debit cards and ATM access. Customers often had to use online transfers to move their money around.
Since interest rates dropped across the board for CMAs in early 2020 — part of the financial repercussions of the coronavirus pandemic — these accounts have had to evolve to keep customers interested. Here are some of the new checking-related options that CMAs are offering to entice customers.
Checking features for cash management accounts
Some cash management accounts have just begun to offer a greater variety of checking-style features, while others have offered them from early on. Here are some of the primary checking features that are more widely available now:
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Debit cards (usually with digital wallet capabilities). Some CMAs now offer debit cards that allow customers to make purchases as well as withdraw or deposit cash into their accounts. These debit cards can usually be linked to payment apps — such as Apple Pay, Google Pay, Venmo and Cash App — and be used to send money to friends and family.
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Free ATM use or fee reimbursements. Since most CMA providers don’t have brick-and-mortar branches or their own ATMs, they tend to have partnerships with ATM networks that allow customers to use them for free, or they offer ATM fee reimbursements.
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Mobile check deposit. This feature has been generally slow to roll out, but CMAs are starting to offer check deposits via their mobile apps as a way for customers to fund their accounts.
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Check writing. Though not all CMAs offer paper checks, Aspiration, Fidelity Cash Management and SoFi Money are three that give customers the option of writing checks from their accounts.
Basic cash management account features
If you aren’t already familiar with CMAs, here are some of the main benefits they tend to offer:
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Solid, if not stellar, APY. A new wave of CMAs that launched in 2019 came with annual percentage yields that rivaled those of high-yield savings accounts, with some offering 2.00% or more. But in 2020 the rates of many financial products have dropped significantly. CMAs still tend to offer higher rates than those of savings accounts at traditional banks, but they’re markedly lower than before.
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The ability to keep investments and cash under the same roof. If you have an investment account, opening a cash management account with the same firm can make it easier to transfer funds between accounts. Plus, you can get customer service for multiple financial products at once.
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FDIC insurance through partner banks. CMA providers work with third-party banks to provide FDIC insurance to customers by sweeping their funds into bank accounts behind the scenes.
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Investment advisor services may be available. Since CMAs are primarily offered through investment firms, these accounts sometimes include feedback and advice from financial advisors. In the case of Personal Capital Cash, advisory clients even earn a higher APY (0.10%) than customers who aren’t advisory clients (0.05%).
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Sometimes they offer cash back. SoFi Money, for example, offers cash back on rotating bonus categories, and Aspiration offers cash back on purchases from certain socially conscious companies.