Questions: Moving from bricks & mortar bank to Fidelity Cash Management

[gwraigty]

The only reasons I can think of why you would want to separate your CMA from your brokerage are:

Margin and float. If the timing of your trades is out of whack you could be drawing on non existent funds to pay your bills resulting in a margin debit.

Security. Do you really want a debit card tied to your brokerage account?

I had a debit card tied to a brokerage account at one time. Not now. I wonder though, how much would be at risk? I'd think just the cash in the settlement fund.

Some people keep large balances in their checking accounts. Same thing as far as debit card risk is concerned.

 

[COcheesehead]

I had a debit card tied to a brokerage account at one time. Not now. I wonder though, how much would be at risk? I'd think just the cash in the settlement fund.

Some people keep large balances in their checking accounts. Same thing as far as debit card risk is concerned.

I have heard stories of all someone's cash getting drained. Yes they get it back at some point, but with delays and hassle.

 

[Luck_Club]

Vote for Merrill Edge Bank of America combo
I have cash management at Schwab, fidelity, and Edge.

With a $100,000 combined balance, you get the highest reward level, which included free trades, 4 bank accounts, bonus interest rate, etc. Most importantly you can walk into a bank and cash a check anywhere in the world.

Rewards tier's and benefits
Gold
Platinum
Platinum Honors
Required balance

$20K to < $50K

three-month average combined balance

$50K to < $100K

three-month average combined balance

$100K+

three-month average combined balance

https://www.bankofamerica.com/preferred-rewards/benefits-of-preferred-rewards/

 

[OldShooter]

Re risk, Schwab flatly guarantees all accounts: "Schwab will cover 100% of any losses in any of your Schwab accounts due to unauthorized activity." Given the competitive nature of the business, I'd expect that Fido and most banks have similar guarantees.

Switch subjects to sweep accounts: A few months ago Schwab switched the automatic account sweep so it goes into a Schwab bank account with a few tens of basis points interest. Obviously they are trying to make a few bucks on lazy customers' float. With everyone in the business slitting each others' throats on fees, they probably need the money. But IMO one of two things will happen: (1) Schwab will back down. (2) Fido will copy Schwab. Probably the latter.

 

[gwraigty]

Most importantly you can walk into a bank and cash a check anywhere in the world.

Maybe if I wanted to drive more than 80 miles to a different state. They're not located everywhere. Just an important data point. Who needs to really cash a check in person anyway? Mobile deposit. ATM withdrawals with fees reimbursed. No problem.

Re risk, Schwab flatly guarantees all accounts: "Schwab will cover 100% of any losses in any of your Schwab accounts due to unauthorized activity." Given the competitive nature of the business, I'd expect that Fido and most banks have similar guarantees.

Switch subjects to sweep accounts: A few months ago Schwab switched the automatic account sweep so it goes into a Schwab bank account with a few tens of basis points interest. Obviously they are trying to make a few bucks on lazy customers' float. With everyone in the business slitting each others' throats on fees, they probably need the money. But IMO one of two things will happen: (1) Schwab will back down. (2) Fido will copy Schwab. Probably the latter.

Fidelity has been advertising their higher MMF rates on cash balances on TV lately. It would make them look stupid to not keep that feature going for awhile. Let's hope they realize that.

 

[OldShooter]

... Who needs to really cash a check in person anyway? Mobile deposit. ATM withdrawals with fees reimbursed. No problem. ...

Different folks have different needs. Once or twice a year I need $5K or more in new $100s to pay a tour operator on arrival. By offering and paying cash I can often get a small discount. DW keeps her megabank checking account for this purpose. Mine is at Schwab.

 

[COcheesehead]

Different folks have different needs. Once or twice a year I need $5K or more in new $100s to pay a tour operator on arrival. By offering and paying cash I can often get a small discount. DW keeps her megabank checking account for this purpose. Mine is at Schwab.

Venmo is just like cash. No fees. $5000 weekly limit. I have it tied to my Fido account.

 

[PointBreeze]

The only reasons I can think of why you would want to separate your CMA from your brokerage are:

Margin and float. If the timing of your trades is out of whack you could be drawing on non existent funds to pay your bills resulting in a margin debit.

Security. Do you really want a debit card tied to your brokerage account?

Exactly! Want to keep just a month or two’s worth of $$ in the CMA...

 

[braumeister]

Or use a 3-way hop if you have that already set up. i.e. Fido to Papal, to other bank.

I dunno. Over the years I've read some troubling things about the Vatican Bank.

 

[COcheesehead]

I dunno. Over the years I've read some troubling things about the Vatican Bank.

 

[tulak]

I use a Fidelity Brokerage account for all my cash management. I don’t see the benefit of the CMA.

It’s worked great. I have automatic deposits/withdrawals configured and autopay for all my bills pull money from this account. The balance is always invested in a MMF, so I’m getting ~2% on the balance.

However, I would not hold anything except the MMF in the account and I’d keep it separate from any other accounts at Fidelity. In my case, my after tax investments aren’t at Fidelity, so it’s not an issue.

 

[Scuba]

I have a cash management/checking account and a brokerage account at Fidelity. I tried a combined account but didn’t like mixing bills with investments. We also have a small bricks & mortar account so that we can get cash out exceeding ATM limits on rare occasions as well as have a safe deposit box and a free notary.

Benefits of the Fidelity cash management account are:
- Easy immediate movement between brokerage and cash management accounts
- Free wires
- Free ATM usage globally (at least it worked in Europe and the Caribbean)
- Monthly deposits for 2% cash back Elan VISA card
- Free other services when needed (checks, 24/7 phone support with native English speakers, etc)
- Easy to use app that made it a breeze to manage accounts during six week trip to Europe

 

[tulak]

Questions: Moving from bricks &amp; mortar bank to Fidelity Cash Management

I have a cash management/checking account and a brokerage account at Fidelity. I tried a combined account but didn’t like mixing bills with investments. We also have a small bricks & mortar account so that we can get cash out exceeding ATM limits on rare occasions as well as have a safe deposit box and a free notary.

Benefits of the Fidelity cash management account are:
- Easy immediate movement between brokerage and cash management accounts
- Free wires
- Free ATM usage globally (at least it worked in Europe and the Caribbean)
- Monthly deposits for 2% cash back Elan VISA card
- Free other services when needed (checks, 24/7 phone support with native English speakers, etc)
- Easy to use app that made it a breeze to manage accounts during six week trip to Europe

Doesn’t the brokerage account have the same benefits?

Just open a separate brokerage account for cash management only. This way you don’t have to mix your investments with cash/bills.

There’s a benefit over using a brokerage account vs cash management account: the cash balance is always investment in a money market fund yielding ~2%.

 

[COcheesehead]

Doesn’t the brokerage account have the same benefits?

Just open a separate brokerage account for cash management only. This way you don’t have to mix your investments with cash/bills.

There’s a benefit over using a brokerage account vs cash management account: the cash balance is always investment in a money market fund yielding ~2%.

If it matters, to me it doesn’t, but the cash in a CMA is FDIC insured.

 

[tulak]

If it matters, to me it doesn’t, but the cash in a CMA is FDIC insured.

True. This also doesn’t worry me.

 

[Archman]

I transferred a substantial amount from my Chase savings account to my Fidelity brokerage account's money market fund. I get about 200 times the interest rate that I got from Chase.