I logged into my Fidelity account and it's listed as a brokerage account. I didn't realize there was a difference. I guess all these years I've been using my brokerage account also as my cash management account. I looked at Fidelity's FAQs on CMAs - not clear to me what the advantage is to break out a separate account when it looks like one can do the same thing in the brokerage account. Am I missing something?
It is confusing. The ‘fidelity account’ is the brokerage and the ‘fidelity cash managment acount’ is the equivalent of a checking account sort of, though it is actually a brokerage account, yes confusing.
From this table
https://www.fidelity.com/cash-management/features-by-account
In the cma deposits are fdic insured up to 250k and the cash manager tool for overdrafts. One cannot invest in funds, stocks, etc in the cma, one has to transfer money to the brokerage accoint and then purchase funds, etfs, stocks, etc.
This is from one of the many footnotes
“1. The Fidelity Cash Management Account is a brokerage account designed for spending and cash management. It is not intended to serve as your main account for securities trading. Customers interested in securities trading should consider a Fidelity Account”
From the FAQ
“The Fidelity® Cash Management Account is intended to complement, not replace, your existing brokerage account. It lets you separate your spending activity from your investment activity.”
Though one can do the same thing in both, bill pay, checkwriting, etc, it was explained to me when we opened it is that the cma is for tracking and use of daily purchases and bills and the ‘fidelity account’ for investments.
I find it burdensome and use the ‘fidelity account’ for direct deposit, check writing, billpay, atm, all non retirement investments, etc, and only keep several hundred $ in the cma since its there.
If you have both on the atm cards and on the checks they are designated and labeled as such.