A cash management account is a cash account that’s offered by nonbank financial services. It will normally come with an interest rate that’s higher than your normal traditional bank. It’s still new to the platform, and there are several restrictions on it. Plus, the FDIC will not come from the CMA provider.
The high-yield savings account that gives interest rates that are better than a traditional savings account. They are normally offered at online banks since they don’t have the business that brick-and-mortar banks have. Below, I will go over all of the similarities and differences between these two accounts.
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Pick Which Account is Best for You
There are lots of things to consider before you decide to open either account. It’s a great idea to do some research on both accounts and which bank you want to open it with. Savings and cash management accounts have different ways of withdrawing and depositing money. Remember, savings accounts do have some withdrawal limitations placed on them as well.
Like every other account, they will come with some features and perks that you’ll be able to benefit from. With cash management accounts, debit cards and check-writing isn’t always standard. An account that gives their customers cash back for spending money at social businesses would be the Aspiration’s Spend & Save account. This account is great for earning cash rewards.
If you own a high-yield savings account, you can most likely open a checking account with that same bank. It will make transferring money fast and simple. There are several cash management account providers that will let you connect your brokerage or investment accounts with the same institute.
What Do They Have in Common?
A cash management account and a high yield savings account do have several things in common with one another. They both offer higher interest rates when you compare it with a traditional bank. Normally, their funds are federally insured for your protection since these banks are online.
Not to mention, both accounts have account opening requirements that are quite similar. Opening requirements will include fees, minimum balances, ATM access, or the option to connect different accounts. Plus, their rates can be subject to change without notice.
Differences Between Both Accounts
Normally, cash management accounts are provided by a nonbank financial service. Meanwhile, a high yield savings account are regulated with restrictions on withdrawals. A cash management account doesn’t have a limitation on the amount of withdrawals a customer can have.
Some cash management accounts have check-writing features while others don’t. The high-yield savings account have some of these features, but have more limitations on them. There are different ways these accounts can be FDIC insured. A cash management account can also be connected with different accounts with the same bank provider. While the high yield savings doesn’t have this feature.
Conclusion
There are many pros and cons that come with opening a CMA or high yield savings account. Looking for the best account is easier when you know what makes them different from one another. Once you’ve done your research, you’ll be able to weigh out which account would benefit you the most.
