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If you’ve reached a stage where a simple transaction or savings account is no longer the best way to manage your money, or if you’re want to simplify managing your savings and investments, it could be worth opening a cash management account. Most prominent financial institutions in Australia offer cash management accounts, but features can vary across institutions.
How does a cash management account work?
A cash management account is essentially a savings account, although some financial institutions classify them as investment accounts. These accounts tend to offer higher interest than standard savings accounts.
As an account holder, you'll have easy access to funds in your account, and some accounts can be linked to online trading platforms so you can easily manage your investments.
Some financial institutions allow customers to open cash management accounts using Self Managed Super Funds (SMSFs), and trusts can open such accounts as well. You may need to meet certain requirements in order to open an account, such as a minimum opening balance and ongoing balance requirements.
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How do I compare cash management accounts?
While some of the features are essentially the same, some others are not, so pay attention to the following if you plan to open a cash management account.
- Interest rate. Some cash management accounts offer the same interest rate no matter how much your account balance is, while others offer tiered interest rates. With accounts that follow tiered interest rates, balances higher than $500,000 tend to earn the highest rates.
- Access to funds. Depending on the account you choose, you can access money in your account through ATMs, EFTPOS, Internet banking, phone banking, cheque books, branch banking, and even BPAY.
- Online trading. If you trade shares online, or if you plan to in the future, consider opening a cash management account that you can link to an online trading account.
- Fees and charges. Cash management accounts don't usually attract ongoing account keeping or management fees. Some might not charge any transaction fees, and some others might offer a limited number of free transactions per month. You might have to pay fees for using cheques and for staff-assisted transactions. Online and phone transactions are generally free.
What can a cash management account do for you?
How it can help
- High interest rate. When compared to conventional savings accounts you can expect a cash management account to offer a better interest rate.
- Easy access to funds. With your cash management account you can access funds at ATMs, via online banking, and also use your money to pay bills via BPAY.
- Ideal for SMSFs. A cash management account gives you easy means to simplify your tax returns, super fund accounting and long term record keeping, given that all related transactions appear on a single statement.
Here are the risks
- Opening and ongoing balance requirements. Cash management accounts normally have minimum account opening balance requirements, which can be in between $5,000 and $10,000. While some have ongoing minimum balance requirements as well, some others don’t.
- Opportunity cost. If your risk profile and goals suit a more aggressive investment strategy, you could get better returns investing your money in a different asset class rather than stashing it in a cash management account.
Find out how to earn 4.01% p.a. on your capital
Potential interest earned on selected cash management accounts
The following table shows how much interest is earned with an initial deposit of $5000 and monthly deposits of $1000 over a 12-month period.
| Account | Maximum variable rate p.a. | Interest earned over 12 months |
|---|---|---|
| AMP Cash Manager | 0.1% p.a. | $158.36 |
| Macquarie Bank Cash Management Account | 0.25% p.a. | $147.75 |
| Bank of Queensland Cash Management Account | 0.1% p.a. | $153.06 |
| NAB Cash Manager | 0.05% p.a. | $105.38 |
| St.George Investment Cash Account | 0.01% p.a. Ongoing, conditions apply | $26.27 |
Find the answer to frequently asked questions below
Q. What eligibility criteria do I have to meet to apply for a cash management account?
You should meet the account’s minimum age requirement, which can be 16 years or 18 years. You also generally need to be a resident of Australia.
Q. Can I apply for a cash management account online?
Yes, many financial institutions give you the ability to apply online. As a new customer, you would have to go through a legally required identity verification process.
Q. Can I use a cash management account for direct debits and credits?
This depends on the account you choose, but know that this is possible. You can also use some such accounts to set up recurring payments.
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- Finder Earn
Finder Earn lets you get a return of up to 6.01% p.a. on your capital, compounded daily. Find out how it works and how to get it here.
- Finder Earn
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I will be receiving proceeds of sale of my home of about $1900000 and wish to invest it for about 2 months when I will be paying most of it as balance owing on a retirement unit I am buying. I want to maximise my interest for this period and seek advice.
Hi Mary,
Thanks for getting in touch with Finder.
You might want to consider storing your money in a high-interest savings account.
On that page, you will see a table that allows you to conveniently compare high-interest savings accounts. Click on the “Go to site” button when you finally found a product that fits your needs and preference. Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
Please advise which Bank will open a Cash Management account with cheque book facility and pay interest on total balance on my self managed super fund account
Hi Alexander,
Thank you for your inquiry.
While we cannot recommend what is best for you, we can offer you a general information. As per checking you are already on the right page where you can compare the banks that offers Cash Management account. You can follow the process provided below to optimize your comparison procedure.
I hope this information has helped.
Cheers,
Harold