What Are the Different Types of Money Management Accounts?

Money management accounts represent financial options a financial services firm offers to its clients. Traditionally, these accounts are neither standard checking nor savings accounts, though money management accounts may have similar features. Their purpose, as an alternative to more traditional checking or savings plans, is to offer higher rates of interest. In some cases, a money management account may actually be defined as to whether it is more like a checking or savings account. The financial services firm can define its use per government regulations and whether the account is for personal or business use.

Most money management accounts are for individual clients only. The reason behind this comes from government regulations and the ability to provide personal account users an additional savings option. Personal accounts may have multiple users, however, so both individuals and married couples can use it. In some cases, a financial institution may offer these accounts to businesses. Rather than using it for everyday banking, a business will most likely use the account for saving money.

Checking money management accounts allow users to write a few checks each month. Account holders most likely have to maintain minimum balances in the accounts, however. The minimum balance ensures that both the financial services firm and client can maximize the benefits from the account. Most of these accounts also have a limited number of checks one can write. These may be as low as three to five checks each month the account is open.

Savings accounts that are defined as money management accounts typically restrict the use of funds each month. While the account holder can make as many deposits as desired, withdrawals may have limits. Additionally, check writing may be against the rules for a savings money management account. Again, the terms may vary by the regulations of the different banks offering this type of account. Savings accounts may pay slightly more in interest as account holders must maintain specific balances.

Money management accounts often have varying interest rates clients can achieve when using them as investments. For example, the interest rate may increase a few tenths of a point at specified thousand-dollar intervals. This provides more benefits to account holders who can amass cash over time. Typically a safe investment, money management accounts are also popular as they do not lose an individual’s principle balance.