Fidelity Cash Management a Year Later

[sengsational]

... I went ahead and placed a "mutual fund" trade to buy SPAXX with 100% of my FDIC account balance. ...

I did the exact same thing today. Said it would make that trade at the end of the day today.

... then what is a good way to test the behavior to verify that a Money Market in the CMA account will successfully cover overdrafts....

I also had this question, but then, based on all of the testimony here, I figured I'd trust that it would work seamlessly. I'm confident it will.

 

[DrRoy]

I got a cash award when I transferred in a large balance a few years ago, but no management account.

 

[jazz4cash]

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

Yes, this thread is really waking me up! I misspoke when I said my CMA core account was paying ~5%. Now I see the benefit to adding a MM account within CMA

The Cash Manager tool looks pretty fantastic. I do believe you must setup the overdraft feature. More details on how it works in this FAQ

https://www.fidelity.com/spend-save/faqs-cash-management-account

 

[gauss]

Thanks. It looks from your link that the Cash Manager Tool setup is reversible -- ie you can set it up and play with it, but then turn it off completely.

That is good to know.
-gauss

 

[Phroig]

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

They were offering $100 recently, but I’m going to wait and see if they have a better offer around Thanksgiving. I like the worldwide ATM fee reimbursements.

 

[jim584672]

I did a ACH pull (initiated from Fidelity) from Schwab to Fidelity this morning and the money arrived already, same day. They must be speeding up transfers or something.

 

[qwerty3656]

Just to pile on - I have used Fidelity CMA for years to pay bills. I keep a 0 balance and it automatically draws as needed (and only what's needed) from my brokerage account.

 

[l8_apex]

Just to pile on - I have used Fidelity CMA for years to pay bills. I keep a 0 balance and it automatically draws as needed (and only what's needed) from my brokerage account.

I do the same. And my brokerage account is setup with margin, so that if there isn't enough cash there, a margin loan is created to cover the exact amount needed. The margin loan's interest rate is high, 13% right now, but anytime I see margin, I put some money in there in a few days. So interest accrued any given month is usually a max of $5.

Fidelity's online transaction details for this cross-account overdraft protection seem straightforward to me, I'm not sure what would be confusing or difficult to understand.

 

[gauss]

I did a ACH pull (initiated from Fidelity) from Schwab to Fidelity this morning and the money arrived already, same day. They must be speeding up transfers or something.

Be careful. It might look the funds arrive very fast and you can likely trade with them, but note that you likely will not be able to withdrawal the funds until later.

Also if you buy securities with funds, that are not fully settled yet, and then later sell the securities before the settlement you will be subject to a trading violation.

The balances tab should give a breakdown of the status of all your funds.

-gauss

 

[sengsational]

... I'm not sure what would be confusing or difficult to understand.

I think I must have set it up wrong.

I went to a screen to set up automatic overdraft from my brokerage core account to my cash management core account. It asked for a couple of specific values. One was at what level do you want to initiate a transfer, and the second was how much do you want to transfer.

It sounds like the non-confusing way would be transfer "what's needed" when the balance is "$0", but the screen I was on didn't seem to enable the "what's needed" part. It's obviously possible, since several posters have it set up that way.

I had it transfer $4,500 when balance went below $300. So the confusing bit was when the balance was, say $400 and then a transfer of $1000 came through. The $400 would get transferred right away, and then the $600 the next day. Not impossible to understand, but a bit unsettling. And the weird thing with two checks getting written...one delivered, and one returned. Just the words "returned check" grate on my nerves, even though it had zero impact to my finances.

But now that I've taken 100% of my FDIC funds in the cash management core account and bought SPAXX, I think I'll not have any of those weird occurrences.

 

[RetiredAndLovingIt]

I did a ACH pull (initiated from Fidelity) from Schwab to Fidelity this morning and the money arrived already, same day. They must be speeding up transfers or something.

Same thing with me and it's been like that since I opened my account last year.
Fidelity pulls usually arrive within 4 hours usually from my credit unions even on a Sunday. Outbound are not so fast and nothing happens on the weekend.

 

[teej1985]

I have a token amount in the CMA in FDLXX. I have a bigger amount in the brokerage account, which I have auto payments scheduled for my rent. I keep the CMA for foreign ATM fee reimbursements should I travel abroad again. I like that the brokerage has the better sweep accounts, so I tend to transfer$$$ into there as it will be in SPAXX before i get around to manually buying FDLXX

 

[audreyh1]

FWIW you can transfer assets between Fidelity accounts including shares of mutual funds. So you can transfer shares of a MM fund into the CMA. I’ve only ever done this manually via the transfer mechanism.

 

[njhowie]

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

Here are the current offers - deposit $50, get $100:
https://www.fidelity.com/go/special-offer

 

[qwerty3656]

Here are the current offers - deposit $50, get $100:
https://www.fidelity.com/go/special-offer

So I already have a Fidelity Brokerage Account and Cash Management Account. It looks like they will give you $100 for Fidelity Bloom (which seems to be an app - plus some savings accounts and a debit card).

Anyone think of a downside to opening a Bloom account?

 

[jazz4cash]

Hi

I think I must have set it up wrong.

I went to a screen to set up automatic overdraft from my brokerage core account to my cash management core account. It asked for a couple of specific values. One was at what level do you want to initiate a transfer, and the second was how much do you want to transfer.

It sounds like the non-confusing way would be transfer "what's needed" when the balance is "$0", but the screen I was on didn't seem to enable the "what's needed" part. It's obviously possible, since several posters have it set up that way.

I had it transfer $4,500 when balance went below $300. So the confusing bit was when the balance was, say $400 and then a transfer of $1000 came through. The $400 would get transferred right away, and then the $600 the next day. Not impossible to understand, but a bit unsettling. And the weird thing with two checks getting written...one delivered, and one returned. Just the words "returned check" grate on my nerves, even though it had zero impact to my finances.

But now that I've taken 100% of my FDIC funds in the cash management core account and bought SPAXX, I think I'll not have any of those weird occurrences.

There seem to be TWO features in the CMA setup tool. One is automatic overdraft protection which some more knowledgable users are saying does not need to be set up. The other is a balance maintenance tool. It automatically transfers fund when your low balance threshold is met. You can designate the low threshold and transfer amounts. You can also designate a high balance threshold that triggers notification so you can transfer excess funds to another account.

 

[teej1985]

FWIW you can transfer assets between Fidelity accounts including shares of mutual funds. So you can transfer shares of a MM fund into the CMA. I’ve only ever done this manually via the transfer mechanism.

What would be the point?

 

[COcheesehead]

What would be the point?

Billpay would be one.

 

[teej1985]

Billpay would be one.

You can bill pay out of the brokerage account.

 

[audreyh1]

What would be the point?

Oh, you could transfer some shares of a higher paying but high initial minimum MM fund like FZDXX.

You could save a step by transferring MM fund shares directly to the CMA rather than transfer cash and then buy the MM fund in the CMA.

 

[COcheesehead]

You can bill pay out of the brokerage account.

Right…unless you use Billpay out of your CMA. Then you’ll need to transfer funds.

 

[stephenson]

Hi All,

This is an interesting topic

My sense is that this didn't matter so much when the differential between money market accounts and FDIC bank accounts was negligible … the difference now = 4.99-2.70 is no longer negligible!

Certainly a First World Problem ...

This new differential does create a new circumstance, as noted, though … and, that is how “best” to ensure the largest amount of money (when not needed) is in the 4.99 vs 2.7 … so, here are some options, pros and cons to each ...

1. Change incoming funds destination to the main brokerage SPAXX account, and then just let the overdraft function pull from it for ACH or debits, or

2. Leave the incoming funds going to the CMA, and then buy SPAXX with the extra every month, leaving it to build up in CMA, or

3. Leave the incoming funds going to the CMA, and then transfer extra each month to the main brokerage account

4. Switch everything back to the main brokerage account (dropping the CMA entirely) and write the few checks needed out of there - this may be too simple as spouse is the “account manager” for the CMA, and I am account manager for the main account

Frankly, item 4 is a handy process between spouse and I. But, continuing means more work for me to monitor "her" CMA.

Thoughts?

 

[sengsational]

^ I think my setup is like "1", but I might be thinking about this differently.

I've segregated "investment accounts" from "spending accounts". This way, all the machinations that occur in the investment accounts can be ignored when it comes to looking at money out the door (spent, not invested) and money in the door (income, not earnings on assets and not gains on assets). So for this reason, the Cash Management split makes sense. You can get a handle on expenses by looking at money in the door, money out the door, and anything that traverses the border between an investment account and a spending account. No spending out of investment accounts. For most of my history with Fidelity, all accounts there I'd consider investment accounts, transferring to the bank first, before spending. Now, I've called the CM account a spending account, and moved as much of the spending as possible. It's on my wife's phone, so she can pay any bill she wants to (but still "lets me do it").

 

[orbops]

I opened the CMA so I can withdraw cash when traveling abroad using the No Foreign Transaction Fee ATM Card.

On Fidelity's webpage in the small print it says, "Your account will automatically be reimbursed for all ATM fees charged by other institutions while using a Fidelity® Debit Card linked to your Fidelity Cash Management Account at any ATM displaying the Visa®, Plus®, or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited from the account. Please note that there may be a foreign transaction fee of 1% that is not waived, which will be included in the amount charged to your account."

I called them, and confirmed that they charge 1% on all foreign ATM transactions.

 

[braumeister]

Please note that there may be a foreign transaction fee of 1% that is not waived

Not applicable to ATM transactions.