Fidelity Cash Management Account??

[audreyh1]

The Fidelity offerings are somewhat confusing.

CMA
o Only FDIC available as sweep (low APY), but you can buy a MMF (e.g. FZDXX).
o The MMF held in the CMA will be liquidated automatically to meet debits (you don't need to link or do anything).
o Any credit to CMA goes to the FDIC sweep -- you need to manually purchase the MMF if you want a higher APY.
o ATM fees are reimbursed.
o You can link a brokerage account to the CMA to provide additional funding possibilities.

Thanks Much - they certainly don't explain those bolded parts in the videos or FAQs.

I did verify that my cash management account would let me make a trade to buy shares of FDRXX. News to me.

I prefer not to link the CMA to another account in case something goes wrong with my ATM card. This is only an issue if I am traveling and usually only overseas, not the rest of the year because I don't normally carry it.

So, you are telling me that I don't even have to set up the Cash Manager Tool if I move funds to a MM fund inside of my Cash Management Account. That fund will be automatically withdrawn from if a bill exceeds my core position?

 

[catotx]

Thanks Much - they certainly don't explain those bolded parts in the videos or FAQs.

I did verify that my cash management account would let me make a trade to buy shares of FDRXX. News to me.

I prefer not to link the CMA to another account in case something goes wrong with my ATM card. This is only an issue if I am traveling and usually only overseas, not the rest of the year because I don't normally carry it.

So, you are telling me that I don't even have to set up the Cash Manager Tool if I move funds to a MM fund inside of my Cash Management Account. That fund will be automatically withdrawn from if a bill exceeds my core position?

Yes, that is how I have been using the CMA. There is $0 in the core; everything is in FZDXX. When there is a debit, FZDXX will automatically get sold at the end of the day to satisfy the debit.

The only negative about this arrangement is that you have to manually purchase FZDXX when you deposit money. And if you submit an ACH-in request, you can purchase FZDXX only on the next business day. So you have to remember to submit the purchase the next day. Otherwise it goes into "core" FDIC sweep which has a low APY.

 

[Cobra9777]

...So, you are telling me that I don't even have to set up the Cash Manager Tool if I move funds to a MM fund inside of my Cash Management Account. That fund will be automatically withdrawn from if a bill exceeds my core position?

This is correct. If you hold a MMF in a CMA, it will be used automatically to satisfy debits to your account if there are insufficient funds in the core account. This is also true for a brokerage account with cash-management features enabled. It pays from the core account first, then looks for a MMF, then margin, etc. It will even look for a MMF in another non-retirement account with same registration. Credits to your account always go to the core account.

If you wanted to keep the core at zero, you could use the automatic investment tool to buy the MMF as soon as there was money available to trade in the core.

Here's a link to the Fidelity customer agreement for the CMA. It's a pdf. Hit control-f and search for "debits to your account."

 

[Another Reader]

Thanks for the information! I just transferred the cash from the FDIC holding to the MMA.

 

[FANOFJESUS]

This is correct. If you hold a MMF in a CMA, it will be used automatically to satisfy debits to your account if there are insufficient funds in the core account. This is also true for a brokerage account with cash-management features enabled. It pays from the core account first, then looks for a MMF, then margin, etc. It will even look for a MMF in another non-retirement account with same registration. Credits to your account always go to the core account.

If you wanted to keep the core at zero, you could use the automatic investment tool to buy the MMF as soon as there was money available to trade in the core.

Here's a link to the Fidelity customer agreement for the CMA. It's a pdf. Hit control-f and search for "debits to your account."

I understand the CMA part but how to you set it up in the brokerage? I am having a hard time understanding this. Could someone give step by step.

 

[Huston55]

The Fidelity offerings are somewhat confusing. Basically you can use either the brokerage or CMA account for your daily day-to-day finances.

Comparison:

Brokerage
o Can use a MMF as sweep.
o MMF is purchased automatically when there is a credit in the account.
o As far as I know, ATM fees are not reimbursed unless you meet some balance requirement.

CMA
o Only FDIC available as sweep (low APY), but you can buy a MMF (e.g. FZDXX).
o The MMF held in the CMA will be liquidated automatically to meet debits (you don't need to link or do anything).
o Any credit to CMA goes to the FDIC sweep -- you need to manually purchase the MMF if you want a higher APY.
o ATM fees are reimbursed.
o Optional : You can link a brokerage account to the CMA to provide additional funding possibilities.

This is how we’re set up, including the linked brokerage account for overdraft protection via available margin (don’t expect to ever have to use this). Core acct is FDIC insured and MMF is SIPC insured.

 

[audreyh1]

This is correct. If you hold a MMF in a CMA, it will be used automatically to satisfy debits to your account if there are insufficient funds in the core account. This is also true for a brokerage account with cash-management features enabled. It pays from the core account first, then looks for a MMF, then margin, etc. It will even look for a MMF in another non-retirement account with same registration. Credits to your account always go to the core account.

If you wanted to keep the core at zero, you could use the automatic investment tool to buy the MMF as soon as there was money available to trade in the core.

Here's a link to the Fidelity customer agreement for the CMA. It's a pdf. Hit control-f and search for "debits to your account."

Thanks much for the reference:

To help ensure the proper discharge of debits, it is our policy (unless we agree to do otherwise) to turn to the following sources, in this order, when settling debits against your account:
• the Intra-day Free Credit Balance
• the core account
• any shares of a Fidelity money market fund held in the account that maintain a stable (i.e., $1.00/share) net asset value and are not subject to a liquidity fee or a similar fee or assessment
• if you have a margin account, any margin credit available
In addition to the foregoing, we may turn to the following sources:
• any shares of a Fidelity money market fund held in another nonretirement account with the same registration (which you authorize us to sell for this purpose when you sign the application)
• any securities in any other account at Fidelity in which you have an interest
If you want to opt out of the foregoing, please contact Fidelity for more information.
In the event that your account does not contain sufficient cash, Fidelity may liquidate securities to satisfy a court order, levy, or any other legal process payment. For more information on your Cash Balance, please refer to the Fidelity Cash Management Account FDIC-Insured Deposit Sweep Program Disclosures document.

 

[audreyh1]

Yes, that is how I have been using the CMA. There is $0 in the core; everything is in FZDXX. When there is a debit, FZDXX will automatically get sold at the end of the day to satisfy the debit.

The only negative about this arrangement is that you have to manually purchase FZDXX when you deposit money. And if you submit an ACH-in request, you can purchase FZDXX only on the next business day. So you have to remember to submit the purchase the next day. Otherwise it goes into "core" FDIC sweep which has a low APY.

Thanks much. The redepositing of funds is pretty minor.

 

[FANOFJESUS]

Right now in brokerage I have SPAXX as the core. I bought some SPRXX. How do I get it to pull SPRXX once SPAXX is out?

 

[audreyh1]

One thing worth mentioning on the Fidelity ATM Card is that I get a message the instant the card is used. So I would know immediately if unauthorized access occurred. The Schwartz debit/ATM card does not.

The Fidelity VISA also gives me instant transaction notification. A couple of months ago I had a COPA Air purchase ping on my watch and called in immediately to notify Elan Fraud Dept that I had not made that purchase.

 

[catotx]

Right now in brokerage I have SPAXX as the core. I bought some SPRXX. How do I get it to pull SPRXX once SPAXX is out?

If the brokerage account behave the same as the CMA, it should pull from SPRXX automatically once SPAXX is out.

 

[catotx]

One thing worth mentioning on the Fidelity ATM Card is that I get a message the instant the card is used. So I would know immediately if unauthorized access occurred. The Schwartz debit/ATM card does not.

The Fidelity VISA also gives me instant transaction notification. A couple of months ago I had a COPA Air purchase ping on my watch and called in immediately to notify Elan Fraud Dept that I had not made that purchase.

Thanks, that's good to know. I hardly use the ATM card.

 

[audreyh1]

Thanks, that's good to know. I hardly use the ATM card.

My main use for the ATM/debit Card is overseas ATM withdrawals with no foreign transaction fee plus ATM fees reimbursed.

 

[rayvt]

My main use for the ATM/debit Card is overseas ATM withdrawals with no foreign transaction fee plus ATM fees reimbursed.

No, it says "For each foreign transaction, there is a foreign transaction fee (currently, 1 percent)"

All this is confusing, these banks tend to make it difficult to know exactly what fees there are and are not.

On a boglehead board, somebody said,
"I actually called the issuing bank for Fido's Visa debit card. They said that a foreign ATM withdrawal is NOT a foreign transaction and thus not subject to the 1% FT fee.
However, if one uses the card at a foreign merchant (i.e. making a purchase with the card), then it is a foreign transaction and the 1% FT fee will apply."

 

[FANOFJESUS]

Right now in brokerage I have SPAXX as the core. I bought some SPRXX. How do I get it to pull SPRXX once SPAXX is out?

If the brokerage account behave the same as the CMA, it should pull from SPRXX automatically once SPAXX is out.

I just wanted to make sure before I tried it. Does anybody know for sure? Does something need to be set up in the brokerage before that will happen? Would hate to bonce checks to find out.

 

[audreyh1]

No, it says "For each foreign transaction, there is a foreign transaction fee (currently, 1 percent)"

All this is confusing, these banks tend to make it difficult to know exactly what fees there are and are not.

On a boglehead board, somebody said,
"I actually called the issuing bank for Fido's Visa debit card. They said that a foreign ATM withdrawal is NOT a foreign transaction and thus not subject to the 1% FT fee.
However, if one uses the card at a foreign merchant (i.e. making a purchase with the card), then it is a foreign transaction and the 1% FT fee will apply."

I have used this card for several years. I know exactly what they charged. I have verified against the VISA exchange rate.

For an ATM withdrawal, there is no foreign transaction fee. It will match the VISA exchange rate for that day with 0% fee.

I have done many foreign ATM withdrawals.

For a point-of-sale transaction (purchase) such as at a shop or at an automated ticket machine, there is a 1% foreign transaction fee built into the exchange rate.

It’s not often that I use the card in an overseas automated ticket machine, but occasionally I have needed it when credit cards weren’t accepted, and the exchange rate has cost 1% more. Fortunately it’s usually a very low dollar amount so that 1% fee is negligible.

The Fidelity documentation never spells this out.

 

[audreyh1]

Right now in brokerage I have SPAXX as the core. I bought some SPRXX. How do I get it to pull SPRXX once SPAXX is out?



I just wanted to make sure before I tried it. Does anybody know for sure? Does something need to be set up in the brokerage before that will happen? Would hate to bonce checks to find out.

Hopefully Fidelity can answer this question? I think you should call before trying.

The “Fidelity account agreement” does seem to have similar language to the CMA agreement.

To help ensure the proper discharge of debits, it is our policy (unless we agree to do otherwise) to turn to the following sources, in this order, when settling debits against your account:
• the Intra-day Free Credit Balance
• the core account
• any shares of a Fidelity money market fund held in the account that maintain a stable (i.e., $1.00/share) net asset value and are not sub- ject to a liquidity fee or a similar fee or assessment
• if you have a margin account, any margin credit available
In addition to the foregoing, we may turn to the following sources:
• any shares of a Fidelity money market fund held in another nonretirement account with the same registration (which you authorize us to sell for this purpose when you sign the application)
• any securities in any other account at Fidelity in which you have an interest
If you want to opt out of the foregoing, please contact Fidelity for more information.
In the event that your account does not contain sufficient cash, Fidelity may liquidate securities to satisfy a court order, levy, or any removal of the position as a taxable distribution and any reinstatement of the position will not be reported as a contribution

https://www.fidelity.com/bin-public...ents/brokerage-account-customer-agreement.pdf

 

[catotx]

Right now in brokerage I have SPAXX as the core. I bought some SPRXX. How do I get it to pull SPRXX once SPAXX is out?



I just wanted to make sure before I tried it. Does anybody know for sure? Does something need to be set up in the brokerage before that will happen? Would hate to bonce checks to find out.

Unfortunately my experience is with the CMA and I don't have direct experience with the brokerage account. Maybe you can try with a billpay (no bouncing of checks) which will give you some confidence. Hopefully someone will come along and share the experience.

 

[Cobra9777]

Right now in brokerage I have SPAXX as the core. I bought some SPRXX. How do I get it to pull SPRXX once SPAXX is out?

I just wanted to make sure before I tried it. Does anybody know for sure? Does something need to be set up in the brokerage before that will happen? Would hate to bonce checks to find out.

Hopefully Fidelity can answer this question?

WRT how debits to the account are handled, the customer service agreement for the Fidelity brokerage account is identical to what audreyh1 posted earlier (post#57) for the CMA. Nothing needs to be set up. If there's no money in the core, it automatically sells from the MMF to satisfy the debit. Same as a CMA.

Here's a link to the customer agreement document if you want to be sure. Again, hit control-f and search for "debits to your account." You'll see identical language as what's in the CMA document.

 

[FANOFJESUS]

Thanks everybody. I am new to Fidelity.

 

[foxfirev5]

WRT how debits to the account are handled, the customer service agreement for the Fidelity brokerage account is identical to what audreyh1 posted earlier (post#57) for the CMA. Nothing needs to be set up. If there's no money in the core, it automatically sells from the MMF to satisfy the debit. Same as a CMA.

Here's a link to the customer agreement document if you want to be sure. Again, hit control-f and search for "debits to your account." You'll see identical language as what's in the CMA document.

I use both Fido brokerage and cash mngmt. In the brokerage acct I manually transfer idle cash to SPRXX. When I purchase a T Bill it first drains my core FZFXX, then automatically uses SPRXX funds. Nothing to do in my part
I curious if I can hold SPRXX in the cash management acct as well.

 

[catotx]

I use both Fido brokerage and cash mngmt. In the brokerage acct I manually transfer idle cash to SPRXX. When I purchase a T Bill it first drains my core FZFXX, then automatically uses SPRXX funds. Nothing to do in my part
I curious if I can hold SPRXX in the cash management acct as well.

You should be able to use SPRXX by purchasing it manually. I use FZDXX in the CMA.

 

[foxfirev5]

Thx. I'll give a try

 

[audreyh1]

Thx. I'll give a try

I placed an order to buy some FDRXX in my cash management account today. Never knew that was possible before!

 

[audreyh1]

Many thanks to all the contributors here!

I called Fidelity today just to verify the debit mechanism plus a few other details on my Fidelity Cash Management account (such as no other accounts linked to cover overdraws).

I'm moving the funds to a MM fund inside the account, and because I can do that, I am pulling a few more funds into the account from other accounts.

I notice that the Fidelity MM fund rates are moving up sharply!
https://fundresearch.fidelity.com/m...g-yields#Prime (General Purpose) Money Market