Put simply, a cash management account is a transaction account used by investors to receive cash from investments such as dividends or proceeds of sales, and to purchase new investments. This aside, cash management accounts serve a similar purpose to an everyday transaction or savings account, allowing you to earn interest over time on your savings.

Who do cash management accounts benefit?

Cash management accounts are tailored to investors with diversified portfolios consisting of multiple investment streams. These accounts are used in most cases by those with self-managed super funds (SMSFs) as a hub to facilitate cash inflows and outflows. These will typically include superannuation payments, asset trades and dividends.

Comparing cash management accounts

Interest rate

Whether it be your mortgage, savings account or cash management account, the interest rate is a key factor to consider when choosing the right product for you. Some banks will offer cash management account interest rates that are tiered to account balances, while others will offer the same interest rate irrespective of account balance.

Access to funds

The bank and its product offerings will determine how you can access your money. Cash management accounts will generally allow you to access money through ATMs, EFTPOS, Internet banking, phone banking, cheque books, branch banking, and even BPAY.

Fees and charges

In similar fashion to everyday transaction or savings accounts, cash management accounts are generally free from account or management fees. Online and phone transactions are usually free, however, it’s up to the financial institution as to whether or not they charge transaction fees, or use cheques and staff assisted transactions.

If you are looking for a competitive rate on a cash management account to manage your investment streams, check out InfoChoice’s comparison of over 30 cash management accounts.

Cash management account eligibility

Cash management accounts can now opened online, subject to meeting appropriate identification requirements which include:

  • Australian citizen or resident aged 18 years of age or over.

Some banks will require a minimum opening balance to be met when opening a cash management account. There may also be a minimum ongoing balance required to achieve an ongoing interest rate or to keep the account open.

Savings.com.au’s two cents

Cash management accounts can provide investors with a seamless place to store both cash inflows and outflows from all investments rather than having to juggle multiple accounts. This increased visibility can allow investors to understand their current cash flow position and implement further strategies to reach broader financial goals. Before signing up to a cash management account, it’s important to consider the interest rates on offer, as well as the features and requirements to open an account.

In the interest of full disclosure, Savings.com.au and InfoChoice operate under the Savings Media Group associated with the Firstmac Group.

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