Reviews / Investing
6 min Read
Written by Joel Anderson
Edited by Emily Gadd
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Fidelity Bank
4.8
SCORE
GOBankingRates Best Banks 2023 scores and rankings are objectively determined by our research/editorial team. Our scoring formula weighs several factors that differ from category to category depending on what consumers want from varying products and banks.
- APY
4.0
- Features and functionality
5.0
- Access to funds
5.0
- Fees
5.0
How did we calculate this?
The Fidelity Cash Management Account can be a good, convenient option for Fidelity customers who need a parking place for their idle cash. While technically a brokerage account, the Fidelity Cash Management Account feels more like a checking account to most customers. As it is part of the Fidelity ecosystem, it makes it easy for customers to transfer money among accounts, including their primary brokerage account. But while the Fidelity Cash Management Account pays a good yield and provides a multitude of other beneficial services, it’s not perfect, and some customers may find it lacking in certain ways. Here’s a look at the pros and cons of the account, along with a review of who it’s best for and who may prefer other alternatives.
Although the Fidelity Cash Management Account has a few drawbacks, it’s a solid account with plenty to offer. Here’s a look at both sides of the coin:
Overall, the pros of the Fidelity Cash Management Account will outweigh the cons. This is particularly true when comparing the Fidelity CMA with a traditional checking account, which often pays no interest at all and may charge high fees for ATM withdrawals. However, those looking for the absolute maximum yield on their idle cash – or those who need a bank with a branch on every corner – may find better options elsewhere.
What Are the Features and Benefits?
The Fidelity Cash Management Account allows you to earn a relatively high APY on your idle cash while you are waiting to invest it in your brokerage account. But it also essentially acts like a full-featured checking account, with Bill Pay, a mobile app, a debit/ATM card, and integration with various payment apps. The account also comes with free standard checks if you prefer.
One thing to note is that there are two distinct options for where you can place your idle cash in the Fidelity Cash Management Account.
Deposit Sweep Program
The most-liquid, FDIC-insured offering is the aptly named FDIC-Insured Deposit Sweep Program. With this option, Fidelity deposits your cash at one or more program banks, each of which is FDIC insured, and you earn a blended yield that currently offers a 2.72% APY.
Government Money Market Fund
The second option is the Fidelity® Government Money Market Fund. This choice is an in-house money market mutual fund, meaning it doesn’t carry traditional FDIC insurance but is covered by the same SIPC insurance that applies to all brokerage accounts. The yield on this fund is a much higher 4.96%. However, you’ll have to transfer money out of the money market option before you can use it to access cash.
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The main highlights of the Fidelity Cash Management Account are that it has no fees or minimums and that it reimburses an unlimited number of global ATM withdrawals. While you can find competitor banks that have no fees or minimums, it’s very hard to find institutions that also provide unlimited ATM fee rebates. In fact, while advertising “no-fee ATM withdrawals,” most banks only provide this service for their contracted network of ATM terminals. In other words, most charge fees for ATM withdrawals out of their own networks, and this may be in addition to terminal fees charged by the ATMs themselves. But the Fidelity CMA reimburses any and all of those fees, making it particularly helpful for global travelers or those who want the convenience of using any ATM they choose.
Additional Fidelity Products and Services
When it comes to providing financial services, it’s tough to top Fidelity. While originally known primarily for its line of outperforming, no-load mutual funds, the firm now offers a full line of comprehensive financial products and services, including the following:
- 529 college savings plan
- Alternative investments
- Annuities
- Insurance
- Exchange-traded funds (ETFs)
- Mutual funds
- Domestic and international equities
- Fixed income and CDs
- New issues
- Syndicate offerings
- Individual and small business retirement offerings
- Health savings account (HSA)
- Cash management tools
- Lending
- Wealth management
- Personal trust services
- Corporate executive services
- Fidelity Charitable Giving Account
- Fidelity Go robo-advisory services
In short, Fidelity is likely to have a solution for your financial services needs, typically for a low cost as well.
Alternatives to Fidelity
Two of Fidelity’s biggest competitors in the cash management world include Betterment and Wealthfront, who were among the original innovators in the space. Here’s a quick overview of the differences between the accounts.
Betterment
Betterment, which was one of the original “robo-advisors,” has expanded its line of products and services over the years and now offers a wealth management account. Known as the Cash Reserve account, Betterment’s offering pays a much higher yield than the Fidelity CMA, currently offering a 5% APY. This account also has no fees or minimums, $2 million in FDIC insurance and no limit on withdrawals.
Wealthfront
Wealthfront was another pioneer in the field of robo-advisory services, and like Betterment, it too offers a cash management account that pays a 5% APY. This cash management account, simply dubbed the Cash Account, has no account fees or minimum balance requirements, offers unlimited transfers and same-day withdrawals, and carries up to $8 million in FDIC insurance.
The Bottom Line
The Fidelity Cash Management Account is an excellent option for Fidelity customers to maintain their cash balances while waiting to invest additional money into their brokerage accounts. However, even as a standalone account, it offers some amazing features and benefits that make it a standout in the space. From its lack of fees to its payment versatility to its relatively high APY options and unlimited ATM fee rebates, the Fidelity CMA offers far more than the average checking account and is worthy of consideration by nearly everyone.
FAQ
- What is the current interest rate on a Fidelity Cash Management Account?
- The standard, FDIC-insured account option in the Fidelity CMA currently pays a 2.72% APY. This can be boosted to a 4.96% APY if you choose the Fidelity® Government Money Market Fund.
- Can I withdraw money from a Fidelity Cash Management Account?
- Yes, you can withdraw money from the Fidelity Cash Management Account at any time, just like a regular checking account. The debit/ATM card that comes with the account allows access to any ATM terminal in the world and reimburses an unlimited number of ATM fees that you may be charged.
John Csiszar contributed to the reporting of this article.
The Fidelity Cash Management Account was reviewed based on material provided on Fidelity’s own website. Competitor information was also drawn from the sites of the financial institutions themselves. All information was accurate as of July 22, 2024.
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