An innovation in deposit accounts introduced in the 1980s is the asset management account, also known to some as the central asset account.
This type of account combines into one account many features of financial institutions, and often some investment and additional bookkeeping features.
These include checking, savings, credit and debit cards, ATM access, lines of credit, and even brokerage services.
Conveniences of asset management accounts
Asset management accounts are meant to make money management easy.
Want to transfer funds from savings into your mutual fund, or borrow money and deposit it into your checking account?
One phone call or perhaps one online visit can take care of any transaction. Consolidated statements track and perhaps even categorize all of the accounts' financial transactions, from checks to IRA deposits.
When it is time to prepare tax returns, the extra features and consolidated statements of the accounts can be a real boon.
The sweep feature
Another popular feature of asset management accounts is called a sweep. Periodically, as often as daily, unallocated funds above a certain amount in the account are automatically transferred—swept—into an interest- or dividend-bearing money market account.
The sweep feature helps make sure your account funds are earning more quickly in a money market account and not languishing in a zero-rate checking account, for instance.
While you pay a fee for all these services, asset management accounts typically charge only $50 to $150 per year. You may need from $5,000 to $25,000 to start an asset management account, however, and will need to maintain a relatively high minimum balance to maintain the account.
Dive deeper: Deposit accounts: Everything you need to know
This content was created in partnership with the Financial Fitness Group, a leading e-learning provider of FINRA compliant financial wellness solutions that help improve financial literacy.