Who provides better Cash management? - Fidelity vs Schwab vs X

[audreyh1]

Fidelity does indeed refund international ATM fees.

Fidelity refunds ATM fees within a few days. Schwab bunches ATM fees then refunds them monthly. Minor difference.

My Fidelity daily ATM limit is above $1000 I believe. I certainly have pulled more than €600 which is above $600. So that has not been a constraint.

We have both ATM cards and we use both cards when traveling. We like to have a backup account.

 

[brewer12345]

I am lazy and only want to deal with one brokerage as much as possible. So I stick with Schwab and other than a brief period in the run up to the dot com peak they have steadily improved their offerings over the years to stay in line with the competition. I don't think that there is a hill of beans worth of difference between the aggregate of what Schwab and Fido offer. With Schwab, any cash that will be lying around for a few months at a time I move over to SWVXX. For longer periods, I generally do better shoveling the cash elsewhere. If rates end up sliding back toward zero, all of this will make less and less difference.

 

[Cobra9777]

Another reason not to commingle investments and checking in one Fidelity account

You don’t need a separate Cash Management account at Fidelity since the standard brokerage account can provide all the same features. I just prefer to separate checking, bill pay and ATM use from my longer term investments. Plus if something goes wrong in the cash management account (compromised ATM card, forged checks, etc), it’s cordoned off from my far larger investment accounts. We don’t have bill pay or checking enabled on our larger investment accounts...

I originally did cash management (checking, bill pay, ATM) from the same brokerage account at Fidelity that held our taxable investments. But I had issues related to cash availability. In one instance, I had a cash balance ("cash available to withdraw") of $10K with a large bill-pay scheduled for year-end property tax. Then, in the same account, I sold one stock for around $50K and purchased another for $50K (year-end tax-loss harvesting). I still had a cash balance of $10K, but now it was reclassified to "cash available to trade", instead of "cash available to withdraw."

When you buy stock, Fidelity's system consumes cash in order of liquidity. So when I purchased the 2nd stock, it first used up the $10K "cash available to withdraw", then used "cash available to trade" for the remaining $40K, leaving me with $10K of "cash available to trade."

I called Fidelity and they confirmed that is how their system works, but assured me that bill-pays and checks would be paid on time despite the classification of cash. They did not however provide a clear answer as to whether an ATM withdrawal would be honored until after settlement.

Anyway, the easy solution was to set up a separate brokerage account to hold investments and use the original account only for cash management functions. We do not have any cash management functions enabled for the brokerage that holds investments.

 

[OldShooter]

... I don't think that there is a hill of beans worth of difference between the aggregate of what Schwab and Fido offer. ...

+1

The business is so competitive these days that each is watching the other for good ideas to emulate, because they are basically going after the same market.

Once you have eliminated the outliers like Fast Eddie and those for whom serving investors is a sideline, like big banks and insurance companies, I think it boils down to the specific individual one is dealing with. I happen to use Schwab but I'm pretty sure I could find a good person at Fido as well.

 

[audreyh1]

I originally did cash management (checking, bill pay, ATM) from the same brokerage account at Fidelity that held our taxable investments. But I had issues related to cash availability. In one instance, I had a cash balance ("cash available to withdraw") of $10K with a large bill-pay scheduled for year-end property tax. Then, in the same account, I sold one stock for around $50K and purchased another for $50K (year-end tax-loss harvesting). I still had a cash balance of $10K, but now it was reclassified to "cash available to trade", instead of "cash available to withdraw."

When you buy stock, Fidelity's system consumes cash in order of liquidity. So when I purchased the 2nd stock, it first used up the $10K "cash available to withdraw", then used "cash available to trade" for the remaining $40K, leaving me with $10K of "cash available to trade."

I called Fidelity and they confirmed that is how their system works, but assured me that bill-pays and checks would be paid on time despite the classification of cash. They did not however provide a clear answer as to whether an ATM withdrawal would be honored until after settlement.

Anyway, the easy solution was to set up a separate brokerage account to hold investments and use the original account only for cash management functions. We do not have any cash management functions enabled for the brokerage that holds investments.

I remember you relating that experience before - potential conflicts between cash available to trade, and cash to pay bills.

I personally find it easier to operate segregating my short term cash from my long-term investments. Especially considering my annual withdrawal method.

 

[BeachOrCity]

FWIW TD Ameritrade has absolutely the worst cash management around. Over the years I have come to realize they focus on traders. Not buy and hold investors.

 

[tulak]

I remember you relating that experience before - potential conflicts between cash available to trade, and cash to pay bills.

I personally find it easier to operate segregating my short term cash from my long-term investments. Especially considering my annual withdrawal method.

Yep. That’s why it’s best to have two separate accounts. Makes life easier.

 

[Cobra9777]

I remember you relating that experience before - potential conflicts between cash available to trade, and cash to pay bills.

I personally find it easier to operate segregating my short term cash from my long-term investments. Especially considering my annual withdrawal method.

Same here, although we don't use an annual withdrawal method. At the time everything was combined, I liked the convenience of dividends hitting the core account where we immediately used them for spending via checking, bill pay, etc. Now with two separate accounts, I set up a rule in Fidelity's automatic withdrawal tool that automatically transfers dividends received in the brokerage account to the CMA.

I recently changed my account to use FIDELITY TREASURY MONEY MARKET FUND (FZFXX). Prior to that it was in CASH yielding 0.37% in my March statement.

FZFXX is 2.05% right now, SPAXX 2.03%.

There are perhaps 20 money market options available but most of them require enormous balances.

I also changed my CMA core account to FZFXX about a year ago. The most current 7-day yield is 2.01%. I could do a little better with some MMFs but I don't have $100K cash sitting around to get it started. I know I could reduce it later. But I'm just not going to jump through those hoops for a few basis points. I also don't have to worry about moving large deposits over to the MMF as audreyh1 described earlier. We still have some cash over at Ally as well earning 2.10% currently.

 

[tulak]

I keep my short term cash in VMMXX, which is at 2.27%. Dang, it’s gone down since last time I checked.

I look at the Fidelity account as something better than a checking account. My average balance is small, but enough to pay the bills every month and get some interest.

I took a quick look, I got $8.11 last month and $6.61 the month before. This really is scraping the bottom of the barrel, but it does pay for a happy hour every month. Well, almost.