Here's what you need to know about cash management accounts versus high-yield savings accounts. (via CNBCMakeIt)
. Your funds are held by the institutions, which provide FDIC insurance and interest and, typically, in-person customer service . Some banks only offer higher yields on high balances, so that is something to research before opening an account.
The distinction between the two might seem minimal, but it's important, Matthew Goldberg, analyst at Bankrate.com, told. Savers need to be aware of which partner bank is holding their money, and monitor their assets. While Robinhood says cash up to $1.25 million, cumulatively, is insured, FDIC only provides insurance up to $250,000 per institution, meaning if you have more cash than that you'll want it held at more than one bank.
It's doubly important to understand that it may take a day or two for your money to be insured, as it's transferred to the partner banks, Goldberg said. If you deposit cash into one of the accounts, it's wise to check in with Robinhood, Wealthfront or whichever company you use to ensure the money was properly transferred.for you to be able to withdraw your money from the accounts, unlike with a traditional savings account, because it will need to be transferred from the partner bank.
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