Vanguard Cash Plus is neither a traditional checking account nor a savings account—it's a money market account that combines features of both

Vanguard Cash Plus sits in a middle category. It gives you a debit card and check-writing ability like a checking account, but it earns interest on your balance like a savings account. The tradeoff is that it has a higher minimum balance requirement than most checking accounts, and the number of withdrawals you can make each month is limited by federal regulation.

If you're coming from a standard checking account, the main difference you'll notice is that your money actually earns something. If you're comparing it to a savings account, the main difference is that you can write checks and use a debit card without moving money around first.

Key Takeaways

  • Vanguard Cash Plus is a money market account, not a checking or savings account, but it includes features of both—a debit card and check-writing plus interest earnings.
  • The account requires a higher minimum balance than most checking accounts, typically $10,000 or more depending on the current terms Vanguard sets.
  • Federal rules limit you to six withdrawals per month (including checks, debit card use, and transfers out), though this limit has been relaxed in recent years.
  • Interest rates on money market accounts change with the Federal Reserve rate, so your earnings will fluctuate month to month.

How the checking features work on a money market account

Vanguard Cash Plus comes with a debit card and check-writing privileges, so you can access your money the same way you would from a checking account. You can swipe the card at a store, withdraw cash at an ATM, or write a check to pay a bill. There's no separate application or approval process for these features—they come with the account.

The catch is the withdrawal limit. Federal Regulation D historically capped money market accounts at six withdrawals per month. That rule was suspended during the pandemic but has since been reinstated. Each debit card transaction, check you write, and transfer you initiate counts toward that limit. Once you hit six, you cannot make any more withdrawals that month without penalty or the bank closing the account.

For most people who use a money market account as a primary checking account, six withdrawals per month is not realistic. If you write two checks a week or use your debit card multiple times daily, you'll exceed the limit quickly. This is why Vanguard Cash Plus works best as a secondary account—a place to park money you're not spending regularly.

The interest earnings and how they compare

Money market accounts earn interest, and Vanguard Cash Plus is no exception. The rate changes based on what the Federal Reserve does with its benchmark rate. When rates are high, you earn more; when rates drop, your earnings drop too. Vanguard publishes the current rate on its website, and you can see what you're earning in your monthly statement.

The interest rate on Vanguard Cash Plus is typically competitive with other money market accounts at major brokerages, but it's usually lower than what you'd find at online banks or credit unions that specialize in high-yield savings. If maximizing interest is your goal, compare the current rate at Vanguard against rates at other institutions before opening the account.

Interest compounds daily and is credited to your account monthly, so your balance grows slightly each month. The amount is small unless you have a large balance, but it's more than you'd earn in a traditional checking account, which usually pays zero interest.

Minimum balance requirements and fees

Vanguard Cash Plus requires a minimum opening deposit and a minimum balance to keep the account open. The exact amount varies and can change, but it's typically $10,000 or higher. If your balance falls below the minimum, Vanguard may charge a monthly fee or close the account.

There is no monthly maintenance fee as long as you meet the minimum balance requirement. Vanguard also does not charge overdraft fees on this account because you cannot overdraw it—once your balance reaches zero, transactions are declined.

If you need to withdraw money and temporarily dip below the minimum, contact Vanguard before it happens. Some customers have had fees waived or accounts kept open with a brief explanation, but there's no may provide.

When Vanguard Cash Plus makes sense versus a checking account

Use Vanguard Cash Plus if you have money you want to keep accessible but don't spend regularly, and you want it to earn interest. It works well as a secondary account where you park an emergency fund or money you're saving for a specific goal. You can write a check or use the debit card when you need the money, but most of the time it just sits there earning a small return.

Don't use it as your primary checking account if you spend money frequently or write more than a few checks per month. The six-withdrawal limit will frustrate you, and you'll end up paying fees or having transactions declined. For everyday spending, a traditional checking account with no withdrawal limits is a better fit.

If you're already a Vanguard customer with a brokerage account, opening Cash Plus is straightforward because the accounts link together. If you're not a Vanguard customer, you'll need to open a brokerage account first, then add the money market account to it.

How Vanguard Cash Plus differs from a savings account

A traditional savings account at a bank also earns interest, but it typically doesn't come with a debit card or check-writing. You access your money by transferring it to a checking account, visiting an ATM, or going to a branch. Savings accounts also have fewer restrictions on the number of withdrawals you can make, though some banks do impose limits.

Vanguard Cash Plus gives you direct access to your money through a debit card and checks, which a savings account usually doesn't. But it imposes the six-withdrawal limit, which a savings account might not. The interest rate on Vanguard Cash Plus is usually higher than a traditional bank savings account, but lower than a high-yield savings account at an online bank.

If you want the simplicity of a savings account with better interest and the ability to write checks, Vanguard Cash Plus delivers that. If you want unlimited withdrawals and the highest possible interest rate, a high-yield savings account at an online bank might be the better choice.

Frequently Asked Questions

Can I use Vanguard Cash Plus as my main checking account?

Technically yes, but it's not recommended. The six-withdrawal limit per month will restrict how often you can spend money, and you'll likely hit the limit if you use a debit card or write checks regularly. It works better as a secondary account for money you don't spend often.

What counts as a withdrawal on Vanguard Cash Plus?

Debit card transactions, checks you write, and transfers you initiate all count toward the six-withdrawal limit. ATM withdrawals also count. Deposits and transfers in do not count. Once you reach six in a calendar month, you cannot make additional withdrawals without penalty.

Does Vanguard Cash Plus have FDIC insurance?

No. Vanguard is a brokerage firm, not a bank, so accounts are not FDIC insured. However, Vanguard Cash Plus is held in a sweep program with partner banks that are FDIC insured, so your money is protected up to $250,000 per depositor per bank partner.

How often does the interest rate change on Vanguard Cash Plus?

The rate changes when the Federal Reserve adjusts its benchmark rate, which can happen several times per year or not at all, depending on economic conditions. Vanguard updates the rate on its website, and you'll see the new rate applied to your account the next month.

Can I write unlimited checks on Vanguard Cash Plus?

No. Each check you write counts as one of your six allowed withdrawals per month. After six total withdrawals (checks, debit card use, and transfers combined), you cannot write more checks that month without penalty or account closure.