Fidelity Cash Management a Year Later

[sengsational]

Fidelity was awarding $150 last year if you funded a new cash management account with at least $50. Here's the first post from that thread:

This offer expires on 12/2/2022 but it only takes a few clicks to take advantage of it so I figured some of you might want to earn free lunch money.

Cash Advantage account seems like a no brainer option: open-deposit $50 or more- wait 25days-collect $150.

At the time, I figured their motivation was to acquire the "banking business" that you'd do elsewhere, and that was probably some of it. But now that money market rates are more substantial, it's costing you some of your interest income; you could be getting 5% instead of 2.7%.

So I had been transferring big chunks to the cash management account, once or twice a year, just so I wouldn't have to deal with it very often. But because I didn't want to give up so much of the interest (an extra $10K in cash management vs money market is $20/month), I set up overdraft, and just let it kick in when needed. I set it up so it would kick in roughly every month. But it does very weird things with overdraft that work, but are unsettling. Like it issued two checks for a single bill pay item and so I got alerts for a returned check, as if it didn't get paid. And a cash transfer will happen in two pieces. So if a transfer would take the balance below zero, it transfers what's in the account one day, and transfers the rest another day. So the overdraft idea is working, but too much thrashing for my tastes.

So I figured I'd just go back to using the regular brokerage core account to pay bills and not have the complexity of another core account, even though it means setting-up all of my payees again. Unfortunately, I'm getting a "call Fidelity" message when I try to add billpay to my brokerage core account. It looks like they made this a one-way street.

Has anyone bailed on their Fidelity cash management account? Or maybe just opened it, collected $150, and didn't use it?

 

[daver]

I opened the CMA so I can withdraw cash when traveling abroad using the No Foreign Transaction Fee ATM Card. I keep the balance close to zero when not traveling and use Ally for bill pay. I need to verify if the brokerage account ATM card has the same features and if so might close the CMA...

 

[MarieIG]

Yes I opened it. I didn't bail but keep a base amount in cash management with extra funds in a linked brokerage account which will allow for an instantaneous transfer.

 

[Aerides]

Or maybe just opened it, collected $150, and didn't use it?

that's me

 

[audreyh1]

Fidelity was awarding $150 last year if you funded a new cash management account with at least $50. Here's the first post from that thread:


At the time, I figured their motivation was to acquire the "banking business" that you'd do elsewhere, and that was probably some of it. But now that money market rates are more substantial, it's costing you some of your interest income; you could be getting 5% instead of 2.7%.

So I had been transferring big chunks to the cash management account, once or twice a year, just so I wouldn't have to deal with it very often. But because I didn't want to give up so much of the interest (an extra $10K in cash management vs money market is $20/month), I set up overdraft, and just let it kick in when needed. I set it up so it would kick in roughly every month. But it does very weird things with overdraft that work, but are unsettling. Like it issued two checks for a single bill pay item and so I got alerts for a returned check, as if it didn't get paid. And a cash transfer will happen in two pieces. So if a transfer would take the balance below zero, it transfers what's in the account one day, and transfers the rest another day. So the overdraft idea is working, but too much thrashing for my tastes.

So I figured I'd just go back to using the regular brokerage core account to pay bills and not have the complexity of another core account, even though it means setting-up all of my payees again. Unfortunately, I'm getting a "call Fidelity" message when I try to add billpay to my brokerage core account. It looks like they made this a one-way street.

Has anyone bailed on their Fidelity cash management account? Or maybe just opened it, collected $150, and didn't use it?

The CMA is a full brokerage account. As a result you can buy other funds.

I simply buy more of a MM fund within my CMA whenever I transfer funds in. Easy peasy and Fidelity automatically pulls from that MM Fund when the core (bank) account is zero. The MM Fund is set up to reinvest dividends. I’m using Fidelity Govt Cash Reserves, currently yielding 5.02%.

I have had it for years, very handy, use it for some bill pay, receive Fidelity VISA cash rewards, and overseas free ATM use. No need to bail unless simplicity is a primary goal.

 

[COcheesehead]

Opened, got the bonus and bailed. My regular Fidelity accounts have all the same features as the CMA - Visa, Billpay, checking, etc. I made $150 for a few minutes work.

 

[boog]

The CMA is a full brokerage account. As a result you can buy other funds.

I simply buy more of a MM fund within my CMA whenever I transfer funds in. Easy peasy and Fidelity automatically pulls from that MM Fund when the core (bank) account is zero. The MM Fund is set up to reinvest dividends. I’m using Fidelity Govt Cash Reserves, currently yielding 5.02%.

this, for me too.

 

[finnski1]

that's me

me too. Thinks it up to $157 now!

 

[DJRR]

For me I use it to pay bills. Balance is always $0 and funds are pulled from the settlement account SPAXX in another brokerage account via overdraft protection as needed so I don't lose MM intererst.

 

[jazz4cash]

But now that money market rates are more substantial, it's costing you some of your interest income; you could be getting 5% instead of 2.7%.

Where are you getting this? The cash in my CMA earns 4.99 (7day SEC yld). I would not have opened it just for $150. My plan was to buy short term Tbills timed to pay extraordinary expenses like property taxes. I am under the impression that CMA is the only account type with billpay. I just got around to authorizing a pull from CMA to pay taxes last month and it seemed to work great.

 

[audreyh1]

Where are you getting this? The cash in my CMA earns 4.99 (7day SEC yld). I would not have opened it just for $150. My plan was to buy short term Tbills timed to pay extraordinary expenses like property taxes. I am under the impression that CMA is the only account type with billpay. I just got around to authorizing a pull from CMA to pay taxes last month and it seemed to work great.

All taxable brokerage accounts can support bill pay and ATM cards.

 

[sengsational]

Where are you getting this? The cash in my CMA earns 4.99 (7day SEC yld). I would not have opened it just for $150. My plan was to buy short term Tbills timed to pay extraordinary expenses like property taxes. I am under the impression that CMA is the only account type with billpay. I just got around to authorizing a pull from CMA to pay taxes last month and it seemed to work great.

You probably have something that says "Brokerage: xxxxxx" (where xxxxxx is your account number), when you look at the associated "core position" account. Fidelity was offering something else, and it says "Cash Account: xxxxxxx" when you look at the associated "core position".


In the brokerage version, you can change your core position investment option. In the "Cash Account" you can't change your investment option...it's in a bank, and it's FDIC insured. And you get the reduced interest rate.

 

[sengsational]

I simply buy more of a MM fund within my CMA whenever I transfer funds in. Easy peasy and Fidelity automatically pulls from that MM Fund when the core (bank) account is zero. The MM Fund is set up to reinvest dividends. I’m using Fidelity Govt Cash Reserves, currently yielding 5.02%.

For me I use it to pay bills. Balance is always $0 and funds are pulled from the settlement account SPAXX in another brokerage account via overdraft protection as needed so I don't lose MM intererst.

I think you folks hit on the solution: buy the 5% money market inside the cash management core position.


My mistake was to set-up overdraft from the brokerage core position to the cash management core position. That's when all of the confusing transactions happen when it runs out of money. Given you can leave the balance of the cash management core position zero, then all of your billpay funds are earning the higher rate. Again, this forum continues to pay for itself.

 

[audreyh1]

I think you folks hit on the solution: buy the 5% money market inside the cash management core position.


My mistake was to set-up overdraft from the brokerage core position to the cash management core position. That's when all of the confusing transactions happen when it runs out of money. Given you can leave the balance of the cash management core position zero, then all of your billpay funds are earning the higher rate. Again, this forum continues to pay for itself.

It’s very straightforward.

The ability to draw from other MM funds when the core position goes to zero is a very handy feature of Fidelity brokerage accounts.

I explicitly turned off the overdraft feature because I keep the CMA isolated from my other brokerage accounts and wanted protection in case something went wrong with my ATM card. Highly unlikely these days, but I’ve left it that way.

 

[daver]

Just an FYI on FIDO ATM Cards....

 

[audreyh1]

Ah - good point!

Initially set up the CMA account for the international no transaction fee ATM withdrawals plus fees reimbursed. Don’t have ATM cards on other accounts but we do fall into the private client category anyway.

 

[jazz4cash]

All taxable brokerage accounts can support bill pay and ATM cards.

Ok thanks. Wasn’t sure. I think I can only pay property taxes from the county vendor’s website which requires an ABA routing #. I guess this payment is not billpay technically but I don’t know if other account types have a routing #.

 

[jazz4cash]

You probably have something that says "Brokerage: xxxxxx" (where xxxxxx is your account number), when you look at the associated "core position" account. Fidelity was offering something else, and it says "Cash Account: xxxxxxx" when you look at the associated "core position".


In the brokerage version, you can change your core position investment option. In the "Cash Account" you can't change your investment option...it's in a bank, and it's FDIC insured. And you get the reduced interest rate.

More confused than before. I thought you were saying that a CMA sticks you with a core account paying only 2.7% but my CMA core account (FDIC at Mellon Bank) seems to be paying a rate that is competitive with MMs used in my other accounts.

 

[gauss]

This is very timely discussion for me in that, just today, I reviewed the interest payable on my CMA acct <3% vs what is available in my other Fidelity brokerage accounts > 5%.

The question that I still have is do I need to setup the CMA Cash Manger Tool in order for it to pull from a Money Market acct (if the FDIC account is insufficient to cover a payment) IN THE SAME CMA account or does it do this automatically? I am not trying to overdraft from an external bank account or a separaete Fidelity account.

If the answer is NO (ie no Cash Manager Tool setup is necessary), then what is a good way to test the behavior to verify that a Money Market in the CMA account will successfully cover overdrafts.

Thank you in advance, and thank you for this timely thread.

-gauss

 

[G-Man]

Wondering if Fidelity will have the $150 promotion for opening a Cash Management account this year?

 

[audreyh1]

This is very timely discussion for me in that, just today, I reviewed the interest payable on my CMA acct <3% vs what is available in my other Fidelity brokerage accounts > 5%.

The question that I still have is do I need to setup the CMA Cash Manger Tool in order for it to pull from a Money Market acct (if the FDIC account is insufficient to cover a payment) IN THE SAME CMA account or does it do this automatically? I am not trying to overdraft from an external bank account or a separaete Fidelity account.

If the answer is NO (ie no Cash Manager Tool setup is necessary), then what is a good way to test the behavior to verify that a Money Market in the CMA account will successfully cover overdrafts.

Thank you in advance, and thank you for this timely thread.

-gauss

No, no tool necessary. All you do is buy FDRXX or whatever in your CMA account when you transfer in new funds. Funds will automatically be pulled from the MM Fund when your core goes to zero. It’s deliciously simple.

I can just tell you it works. It’s not considered an overdraft. It’s something that Fidelity handles seamlessly.

 

[G-Man]

No, no tool necessary. All you do is buy FDRXX or whatever in your CMA account when you transfer in new funds. Funds will automatically be pulled from the MM Fund when your core goes to zero. It’s deliciously simple.

Yep. That is how I have my cash management account setup. I'm buying SPRXX.

 

[ut2sua]

No, no tool necessary. All you do is buy FDRXX or whatever in your CMA account when you transfer in new funds. Funds will automatically be pulled from the MM Fund when your core goes to zero. It’s deliciously simple.

I can just tell you it works. It’s not considered an overdraft. It’s something that Fidelity handles seamlessly.

As mentioned above, the only manual step I had to do was to purchase SPAXX (or whatever MM fund one chooses) whenever I have new $ coming to the CMA account. Fido will always get the needed fund from any MMF in your account. I am pretty happy with CMA to date.

 

[G-Man]

As mentioned above, the only manual step I had to do was to purchase SPAXX (or whatever MM fund one chooses) whenever I have new $ coming to the CMA account. Fido will always get the needed fund from any MMF in your account. I am pretty happy with CMA to date.

Me too.

 

[gauss]

No, no tool necessary. All you do is buy FDRXX or whatever in your CMA account when you transfer in new funds. Funds will automatically be pulled from the MM Fund when your core goes to zero. It’s deliciously simple.

I can just tell you it works. It’s not considered an overdraft. It’s something that Fidelity handles seamlessly.

Great Thank you all (audreyh1, ut2sua, G-man)for the confirmation of this.

I went ahead and placed a "mutual fund" trade to buy SPAXX with 100% of my FDIC account balance. I have a monthly $3000 automatic (push) withdrawal plan to my credit union account so it will be interesting to see this in action.

Thanks again!

-gauss