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Banking 101: What Is the Durbin Amendment?The Best Cash Management Accounts
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 6/19/2019
| Account name | APY earned | Minimum balance | Monthly Maintenance Fee |
|---|---|---|---|
| SoFi Money | 2.25% APY on the entire balance | $0 | $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 |
| 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 |
| Radius Hybrid Checking Account | 1.20% APY on balances of $100,000 and greater; 1.0% APY on balances between $2,500 and $99,999.99 | $100,000 to earn the highest APY; $2,500 to earn 1.0% APY | $0 |
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 2.25% 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.
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?
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.
Radius Hybrid Checking Account
For customers who are interested in a cash management account, but also want to do business with a bank that offers more traditional products (like CDs and money market accounts), the Radius Hybrid Checking account is worth looking at. Unlike Simple and Aspiration, however, Radius’s cash management account is just a single checking account with a high APY. There’s no juggling between a savings and spending portion of the account, which may trip up some customers despite its simplicity.
This account does require depositors to jump through some additional financial hoops. For one, you need at least $100 to open this account, but in order to earn the 1.20% APY, you’ll need to maintain a balance of $100,000 — that’s a lot of zeros to see on a balance for even a cash management account. It’s tough to think of (legal) circumstances where you need regular and instant access to tens of thousands of dollars at a time, but the option exists if you need it.
This account does offer another tier of high interest — 1.00% APY — for balances between $2,500 and $99,999.99. But if your balance falls just a penny below $2,500 then you earn a soul-crushing 0% APY.
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.