What is a cash management account?
If you're an investor looking to streamline your finances, a cash management account might be the solution you need. Whether you're managing your own super fund, investing in shares, or collecting rental income from an investment property, a cash management account (SMA) can help. In short, it keeps your investment money separate from your everyday spending while still earning competitive interest rates.
Let’s take a closer look.
What are the main features of cash management accounts?
Here are some of the features that make cash management accounts stand out:
- Centralised financial hub: CMAs allow you to consolidate your investment-related finances into one account, simplifying tracking and management.
- Competitive interest rates: Many cash management accounts offer rates that rival or even surpass those of traditional savings accounts.
- Flexible transactions: Most cash management accounts allow unlimited withdrawals and deposits, giving you easy access to your funds.
- Low or no fees: Many cash management accounts come with low or no account maintenance fees.
- Integration with investment accounts: You can often link your CMA directly to your share trading account, streamlining the process of funding your investments.
- Dividend management: CMAs provide a dedicated place for receiving and managing dividend payments from your investments.
- Financial protection: Like other bank accounts, deposits in cash management accounts offered by an authorised deposit taking institution are covered under the Financial Claims Scheme (up to $250,000).
Who are cash management accounts for?
Cash management accounts are best suited those who invest and want to keep their investing capital separate from their everyday bank account or savings account. Cash management accounts can be useful if you hold some of the following:
- Self-Managed Super Fund (SMSF): trustees looking for a secure way to manage retirement savings
- Share trading account holders: who need a separate account for dividends and investment capital
- Property investors: seeking to manage rental income apart from personal finances
If you fall into one of these categories, a CMA could streamline your financial management. But how do you choose the right one?
Cash management accounts vs savings accounts
When deciding between a cash management account and a savings account, consider your financial goals and needs. Here's a comparison of the key factors:
| Savings Account | CMA | |
| Interest rates: | Generally have high interest rates in categories like bonus and introductory rates. | Interest rates can be good, but not as high as the highest savings account rates. |
| Investment integration: | Usually need to deposit investment income into a transaction account before depositing into savings account. | CMAs often provide better integration with investment platforms, which can be valuable for active investors. |
| Minimum balance requirements: | Generally no deposit required to open an account. | Some providers require a minimum opening balance. |
| Flexibility: | Can withdraw and deposit as you please. However, depending on bonus rate conditions, you may be lowered to a smaller base rate. | May provide unlimited transactions depending on the device you use (phone, ATMs etc.) |
| Fees: | Many of both types offer low or no fees, but it's always worth checking the fine print. | |
Comparing cash management accounts
When comparing CMAs, make sure that the account matches your investment strategy and financial habits. Look at interest rates, but don't forget to check any conditions attached to the best rates or any fee waivers that may be present.
You can compare the full range of bank accounts and savings we track on our database on our bank account comparison hub page.
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