What is a cash management account?

If you run your own self-managed super fund (SMSF), invest in dividend-yielding shares, or receive income from an investment property, a cash management account (CMA) can help you keep your everyday spending separate from your investment money. 

A cash management account is a centralised hub used to store and monitor cash. Plus, CMAs often pay you interest with rates that rival some savings account interest rates.

Cash management accounts are usually slated as a ‘no-frills’ banking option and are therefore pretty straightforward. 

Each cash management account is different, but typical features may include:  

• Streamline your finances into one account
• Track your spending
• Earn interest as you store your cash 
• Unlimited withdrawals and deposits
• No, or low, account fees 
• Direct your dividends to your CMA
• Link your CMA to your share trading account

Deposits covered under the Financial Claims Scheme (up to $250,000).

Cash management accounts are ideally suited to those who invest and desire to keep their investing capital separate from their everyday bank account or savings account.

If you:

• Manage your own superannuation fund (i.e., an SMSF) and want a secure place to store your retirement funds.
• Invest in shares and want somewhere to store your capital away from your spending money, or a place to receive your dividends.
• Or if you own an investment property and want to receive your rental income in a bank account away from your other finances, a cash management account could be what you’re looking for.  

Ultimately, cash management accounts are a way to simplify your investment-related finances. They’re a good option for those who juggle multiple accounts at different banks but would rather have a ‘one-stop-shop’ for their banking needs.

Choosing between a cash management account or a savings account really comes down to what you want to do with your money. 

Are you squirrelling away your funds for retirement? You probably want an account with no fees and a strong interest rate. Both CMAs and savings accounts typically offer this. 

If you’re looking to streamline your investing in shares, then opting for a CMA that’s affiliated with your share trading platform can help with that. Banks that offer a CMA that you can link to their trading platforms include Westpac and Commonwealth Bank. 

Property investors looking to collect rent in a unified account may also benefit from either a CMA or a savings account.

But keep in mind, CMAs can sometimes come with minimum account balances that affect the savings interest rate. So, if you don't have enough cash to earn the product's highest interest rate, you may want to consider going with a high-interest savings account in the meantime.

Take AMP's Cash Manager bank account as one example. There's an attractive 4.20% p.a. interest rate, but you'll need a minimum $10,000 deposit to earn it. 

So, if you're still building up your funds, you might want to look into a savings account to help grow your wealth. Check out some of the featured savings interest rates below, or browse through some of the best savings accounts in 2023.