Universal account a versatile performer, but it isn't for everyone

A multibillion-dollar success story finally has a name - maybe two.

After several years of having to be called ''a version of Merrill Lynch's Cash Management Account,'' one of the biggest innovations in personal money management is starting to be referred to as a ''universal account.'' It has also been called an ''asset-management account,'' but for simplicity, we'll use the shorter term here.

Universal accounts bring together a money fund, charge card, brokerage account, and bank checking account into a single account. They permit a customer to place excess cash reserves in a money-market fund, then use a credit card to draw against it.

With the help of a computer to keep track of everything, all the assets in the versatile account are consolidated to keep money earning interest at all times.

Merrill Lynch pioneered its Cash Management Account in 1977 and now has over every day.

Merrill Lynch's success with the CMA has finally pushed other major brokerages, some smaller firms, and a few independent money-market funds to offer universal accounts of their own. At the same time, banks trying to plug the drain of money from their coffers are also opening universal accounts.

The new entrants include E. F. Hutton, Dean Witter, Shearson/American Express , Citibank, and Chase Manhattan Bank. It is expected that by the end of the year , there will be perhaps a dozen new universal accounts.

For the investor, this proliferation of universal accounts means there is finally a choice and people can select the account that suits them best best, considering such factors as minimum initial investment, minimum balances, investment styles, and credit cards.

There are four basic elements to the universal account.

* The first is the money-market fund. This can include a choice of a general-purpose fund, a government-only fund investing in Treasury certificates and notes issued by US government agencies, and a tax-free money fund.

* The second part is a checking account. But unlike checking accounts from the usual money funds, these come from a regular bank, and usually do not have a minimum. The smallest check you can write on most ordinary money fund accounts is $500.

* The third element is a charge card, credit card, or debit card, usually Visa's debit card or the American Express Gold card.

* Finally, there is a brokerage account, which can be either a discount or full-service account you can use to trade stocks, bonds, or other investments.

The computer gives the companies the ability to manage customers' money in the most advantageous way. Charges on your credit cards are automatically paid from your money fund, for instance. If the fund is exhausted, automatic margin loans can be written on the collateral of any securities in your account.

Or, if one of those stocks pays a dividend, the money is automatically swept into the money fund, to start building interest. The money fund can also be used for automatic deposits of your paycheck or social security check. As you buy and sell stocks or bonds, the computer figures out the proceeds and sweeps any profits into the money fund, or uses the fund to pay any balance.

While there is now a variety of universal accounts, they do have something in common: They all require a large initial invest

ment. Merrill Lynch asks for $20,000; Shearson/American Express wants $25,000 ; and Dean Witter requires $10,000 in cash or $20,000 in securities.

Another variation is the annual fee, which ranges from zero to $100. The major brokers generally charge at least $30.

For many people, even those with a lot of money, this expense may be unnecessary. If you do not use a credit card frequently or do not actively buy and sell stocks or bonds, you'd be better off sticking with a money fund and paying your bills at home, from your personal checkbook.

If you would like a question considered for publication in this column, please send it to Moneywise, The Christian Science Monitor, One Norway Street, Boston, Mass. 02115. No personal replies can be given by mail or phone. References to investments are not an endorsement or recommendation by this newspaper.

Features of leading universal accounts Minimum Minimmum Sponsor initail balance card Account investment required provided Brokerage Money funds Merrill Lynch $20,000 $10,000 Visa Full CMA Money Cash Manage- (debit) service CMA Govt. ment Account CMA Tax Free E.F. Hutton $10,000 $5,000 American Full AMA Cash Asset Manage- or $20,000 Express service ment Account in securities Gold Dean Witter $20,000 $10,000 Visa Full Active Assets Active Assets (debit) service Money Trust, Account Govt., Tax Free Shearson/ $25,000 $10,000 American Full FMA Cash American Express Service FMA Govt. Express Gold FMA Muni. Financial Management Account Various banks Varies Varies Master Discount Money Money Manager Card II Manager Account (debit)

Free Corporate Annual Where to Sponsor checks accounts fee call for Account annually accepted information Merrill Lynch No limit No $50 800-526-3030 Cash Manage- N.J. 800- ment Account 742-2900 E.F. Hutton 150 Yes $100 800-221-9459 Asset Manage- N.Y. 800- ment Account 522-1882 Dean Witter No limit No $30 800-221-3778 Active Assets N.Y. 800- Account 522-5444 Shearson/ No limit No $100 800-221-3636 American N.Y. 800- Express 552-5249 Financial Management Account Various banks Varies Yes Varies Any bank or Money Manger thrift in Account program Source: Institute for Econometric Research