Budgeting Spreadsheet : Cash Management Accounts (CMAs) are like personal cheque accounts but give access to money market rates. CMAs give the average investor the advantage of high money market rates, usually available to large investors, plus the flexibility of having funds at call.
The banks will invest the CMAs’ funds in government, semi-government and bank backed securities and bank loans which yield higher interest returns.
Unlike the bank saving accounts and investment accounts, CMAs require larger opening balances and have larger minimum deposits and withdrawals which are suitable for businesses.
Because the CMAs’ funds are so closely attuned to the volatile money markets, the interest rates are reviewed periodically (once a week or longer) or the sponsor will reserve the right to change rates without notice. The historical interest rates will provide an idea what various financial institutions were paying customers around the same time. Interest on such accounts is usually paid on the full balance.
Pitfalls to watch out for include accounts that require you to leave funds in for 7 days before you earn anything.
While minimum for additional deposits can be as high as $5,000, this may be waived for direct payments such as dividends or salaries which are for smaller amounts.
You might be able to choose between a CMA with or without cheque facility. If you choose the cheque option you can make payments by cheque and draw cash from your branch.
If you avoid the cheque facility, you also avoid the Bank Account Debit Tax, but will probably be able to withdraw funds only at the branch which oversees the account.
For some customers who make frequent deposits, such as commercial customers, some banks allow a more favorable calculation of government charges on deposits. However, this advantage only accrues over a fixed minimum balance.
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