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Should you shift to a cash management account?
Financial tips for millennials
Haley Sacks, known as ‘Mrs. Dow Jones,’ gives tips for millennials and money management.
High-yield cash management accounts are popping up at brokerages nationwide, promising customers much better returns and higher insurance limits than they can get from traditional banks.
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The accounts are a twist on the sweep accounts brokerages have long offered their customers, where idle cash is swept into a money market account or affiliated bank account so it can earn interest while waiting to be reinvested.
By contrast, the new cash management accounts are designed as savings or checking account alternatives. Many pay interest rates of more than 1 percent and some offer debit cards and check-writing privileges. The accounts don’t typically have the fees, account balance minimums and withdrawal restrictions banks impose.
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The financial technology companies fueling the trend say people have had few options to get meaningful returns while still having ready access to their cash.