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If you’re a savvy DepositAccounts.com reader, you may be a bit skeptical about the proliferation of online-only “cash management” accounts. Offering sky-high APYs with no strings attached, you may see them as just another flashy sales tactic deployed by upstart financial institutions eager to attract new customers.
But now might be the time to take a closer look at cash management accounts, or hybrid accounts, as they’re sometimes called. Cash management accounts offer big advantages: high interest rates coupled with the convenient liquidity of a checking account.
You may not want to use one of these accounts for longer-term saving goals, as certificates of deposit and even some high-yield checking accounts can offer better APYs. But if the low interest earned by your traditional checking account is getting you down, you should take a long, hard look at the cash management accounts below.
Cash management accounts vs traditional checking: What’s the difference?
In terms of how the customer uses them, there's very little difference between a cash management account and a traditional checking account. Customers use debit cards, ATMs and paper checks to access funds in cash management accounts, just like they would with a traditional checking account.
Behind the scenes, there are important differences between cash management accounts and traditional checking accounts. Cash management accounts are offered by non-traditional financial companies—fintech startups—that partner with a conventional bank (or banks) which has custody of your money. Deposits made into a cash management account are swept into accounts at the partner bank, where the funds earn high interest and gain coverage from FDIC insurance.
The companies offering cash management account disclose to you which bank or banks they partner with, as well as the details of where your money is actually deposited.
How we picked the best cash management accounts
In order to determine the best accounts in this category, we first had to define what constitutes a cash management account — not an easy task given that the term has also been used as a catch-all description for any account that lets customers to manage their money with a range of different financial institutions.
We’ve defined a cash management account as a hybrid of a high-yield savings account and a checking account, with the following features:
- A high APY with minimal fees or requirements: The accounts reviewed here all have higher APYs than the current average for standard checking accounts (0.191%) and in many cases higher than current average for high-yield, rewards checking (1.743%).
- Zero monthly maintenance fees: The whole purpose of these accounts is to earn a high APY while keeping your cash liquid. Any accounts requiring you to pay a monthly service or maintenance fee have been excluded, and in general we’ve steered away from accounts requiring a minimum deposit to open.
- A focus on personal banking, not investing: While brokerage accounts have been using the term “cash management account” to describe products where customers can place and access their money much like a checking account, they tend not to offer the high interest rates found with the cash management accounts associated with online banks, like Aspiration or Simple. We’ve excluded cash management accounts at brokerages, as they are different animals.
All rates are current as of 9/5/2019
| Account name | APY earned | Minimum balance | Monthly Maintenance Fee |
|---|---|---|---|
| Betterment Everyday Checking and Savings | 2.38% APY on the portion of your balance in Everyday Savings Account provided you sign up for Everyday Checking; 2.13% APY if you only sign up for Savings | $0 | $0 |
| Wealthfront Cash Account | 2.32% APY on the entire balance | $1 | $0 |
| Simple Protected Goals Account | 2.02% APY on the entire balance if requirements are met; otherwise 0.01% on the balance. | $2,000 in order to earn the 2.02% APY | $0 |
| SoFi Money | 2.00% APY on the entire balance | $0 | $0 |
| Aspiration Spend and Save | 2.00% APY on the entire balance | $10,000, but this requirement is avoided by depositing at least $1 a month into the account. | $0 |
| Empower Checking Account | 1.90% APY on the entire balance | $0 | $0 |
Betterment Everyday Checking and Savings
While Betterment eventually wants customers to use its Everyday Checking account and Everyday Savings account together as part of its new Everyday platform, the robo-advisor currently only has the Savings account ready for customers. However if you sign up for the Checking account waitlist when opening your Savings account, you get a promotional APY of 2.38% (the APY is 2.13% if you don't sign up for the waitlist).
Although the money in the Savings account is FDIC protected (up to $1 million because money is deposited at program banks), you aren't shackled by the normal "six times a month" limit typical of savings accounts. You can make unlimited transfers between your Savings account and the deposit account of your choosing at another institution, though it typically takes 1-2 business days for the funds to clear.
Wealthfront Cash Account
Robo-advisor Wealthfront offers a cash management account appropriately named the Cash Account. It earns an APY of 2.32% and functions essentially like an online savings account, lacking any method to directly spend from the account like with some of the other products on this list.. Wealthfront is able to protect up to $1 million of the money in the Cash Account via FDIC insurance, thanks to its decision to deposit your money with several partner banks. Although Wealthfront's website indicates the company plans on providing customers with a debit card allowing them to use the Cash Account like a checking account, that feature does not exist at the time of this writing. However, you can transfer funds to either an account at another bank or institution (or to an internal Wealthfront investment account) for free.
Simple Protected Goals Account
Like many things self-described as simple, the way this online account works is in fact a bit complicated. However, if you’re looking for a non-traditional online bank experience that integrates budgeting tools and savings goals with how you access your cash, you’re in luck.
Users have one main Simple product into which they deposit money, and they can set up sub-accounts that earmark a portion of their funds for different savings goals. This series of sub-accounts, called Protected Goals, comprises one big savings account. You earn 2.02% APY on the entire balance in a Protected Goal account, so long as you maintain a combined balance of at least $2,000.
So why does Simple qualify as a cash management account? Because you can effortlessly and instantaneously transfer money from your Protected Goal account to your spending account (marketed as the Safe to Spend account) as many times as you want. Because the Safe to Spend account earns just 0.01% APY, you’ll want to make sure the majority of your cash is in a Protected Goals accounts, with a total balance of at least $2,000, in order to earn the highest APY. It’s simple, right?
SoFi Money
This online-only financial institution, based in San Francisco, may be better known for providing a variety of loan products, but its SoFi Money account ranks as the best cash management account currently on the market. The 2.00% APY is not only the highest of the accounts reviewed, it also applies to the entire balance and doesn’t require you to maintain a minimum balance.
Globetrotters should also consider opening a SoFi Money account, as one of the benefits it offers is unfettered access to any ATM on the planet that accepts Visa. SoFi doesn’t charge any fees itself for ATM use and will provide unlimited reimbursement on third-party fees, with the exception of the 1% foreign transaction fee levied by Visa itself.
Aspiration Spend and Save
Aspiration has garnered a great deal of attention thanks to its “pay what you want” fee structure, which includes a promise that 10% of whatever amount you elect to pay will go to charity. But you don’t have to be a do-gooder to appreciate the 2.00% APY this bank’s Spend and Save account offers customers.
Similar to Simple, Aspiration’s cash management account works by linking a savings account with a checking account — marketed here as a Spend account — between which the user can instantly transfer funds. The savings account is what actually earns the 2.00% APY, so users wanting to max out the interest they earn should keep the vast majority of their deposit in the savings account portion of this product.
Aspiration requires its customers to meet one of two qualifications to earn this APY — either make a deposit of at least $1 into this account (or any other Aspiration account), or maintain a balance of $10,000.
Empower Checking Account
Empower is a fintech company that offers a very attractive yield on its checking account, plus fee-free access to the 25,000 ATMs of the MoneyPass network. Empower’s app also includes a suite of budget management tools that aims to help you better manage your financial life. Empower partners with Evolve Bank & Trust to hold your cash in FDIC-insured accounts.
Unlike Simple and Aspiration, Empower’s account comprises a single checking account with a high 1.90% APY, so there’s no juggling between a savings and spending portion of the account. With the Empower account, there are no additional fees and no minimum balance to earn the high APY. In addition, the company offers cashback spending rewards and referral bonuses. You earn 1% cash back on the first $1,000 you spend using your debit card each month, and it doubles your APY for 30 days for every successful referral you make.
Empower began as a budget management app, as a place where you could link and monitor multiple different bank accounts, credit cards and brokerage accounts. Those features remain and are well developed, and should help you keep on top of all the extra funds yielded by this attractive cash management account.
Cash management account vs. high-yield checking: Which is right for you?
As high as the APY can be for cash management accounts, a customer could earn more interest with a high-yield checking account which, like these accounts, provides unfettered access to your funds. So why would anyone choose these cash management accounts over high-yield checking?
High-yield checking accounts also almost uniformly require customers to spend money or bank in a certain manner in order to earn the high APY. A typical set of requirements from the bank might be a certain amount of PIN debit card transactions a month, coupled with enrolling in eStatements and logging into its online banking platform. That’s not too difficult to achieve, but some customers may not like feeling under the gun each month with how they spend their money.