Fidelity apparently has a new policy where they are putting a 16 business day hold on all checks and external transfers.
I have used Fidelity for many years for my checking account (joint wros). I have direct deposit of my paycheck. I work for a huge company that uses them for benefits, and I have a lot of money in 401k in HSA. Tens of times more than the value of the checks they refuse to release.
None of this matters and Fidelity can basically lock down your money for nearly a month!
How can this be legal?
At the very least, I need to find a new checking account. Or, are all the online banks doing this now?
It added a serious delay my backdoor Roth IRA. At Vanguard, I could contribute to a traditional IRA one day and convert to Roth the next. At Fidelity, they won’t let me convert until the deposit clears (even though the funds won’t leave Fidelity). So it’s sitting uninvested for three weeks. Pretty lame. I was going to move accounts from Vanguard to Fidelity, but after this I probably won’t. Fidelity blamed it on new banking regulations, but I was still able to do the two-day process at Vanguard for my wife’s account this week.
My son uses Charles Schwab, and there was only a 5 business day hold for money he transferred from an external savings account into Schwab. Fidelity must want to get out of the checking business because there’s no way I’m waiting 16 business days to deposit a check, especially when I have 10s or 100s times that amount sitting invested in other Fidelity accounts. Fidelity’s new policy is basically stealing your money!
I have had their “cash management” account for the last year or so, and use it mostly to pay bills. FWIW, direct deposit funds from my work are still available immediately, both to invest and withdraw. I’ve also not seen the long holds on check deposits in that account.
However, my mother opened the identical kind of account in October 2024 and she HAS had check holds of over 16 business days. The funds are “available for investing”, but can’t be transferred out or used to pay bills. After reading a lot of complaints in an “official” Fidelity chat thread in Reddit, this appears to be the case with all new accounts. Really frustrating if you need to deposit physical checks, which in my case is so rare that it doesn’t affect me.
The worst part of this is that Fidelity refuses to say why they are doing this, other than vague statements about a recent check fraud scam which hit a lot of banks in 2024. And there was no warning about the long hold times when my mother set up her new account. This all makes Fidelity seem extremely untrustworthy. I’m staying with the company for now, since it is remarkably good other than this one sticking point.
Have you considered a local credit union that you can walk into in person? The idea of diversification can be applied to access as well as investment categories. A mix of on-line AND brick and mortar institutions has advantages, like how fast you can get your hands on your own cash.
I am a member of 2 credit unions. I definitely want to do online deposit. I like the idea of keeping extra cash in an account where it earns more than I imagine a credit union will pay.
I was using Ally for this purpose, but then the Ally account recently started getting rejects from money I tried to transfer out of Fidelity. I blamed Ally, but now I see it was on the Fidelity end with this new policy. It’s a dirty trick by Fidelity because there is no visible warning in their online banking app that the money displayed is not available. What, am I supposed to track a “real” balance on my own?
I had this idea to consolidate with Fidelity and move money in/out of a money market (FDLXX).
I believe my next step will be to move this to Charles Schwab. My son has no issue doing what I want to do with their checking account. He puts short term money in SNSXX to keep pace with inflation and transfers it to checking when needed.
IMO, this new policy is Fidelity saying they don’t want checking customers. They are intentionally driving these people away. I get the hint, so I will move on.
A less learned here: Always push money, don’t try to pull it. I don’t believe I have ever heard Clark talk about that, but that seems to be very key to moving money these days.
There are online banks paying higher interest on savings accounts than you will find in a money market. Clark puts out lists of them rather often, or you can just google best online savings rates to find them. I am considering going that route, though the difference is still around 0.5%, which is about 12% more than money market, so not quite worth the time for the limited amount of liquid capital I keep. This will change when rates eventually go down and a 0.5% interest difference means 50% more than than money market pays.
SNSXX[1] and FDLXX[2] both earned 4.9% last year and interest is mostly exempt from state taxes. Sure, these are not FDIC insured or guaranteed returns; but the highest rate on Clark’s list is 4.5%, has no checking account, and is entirely unknown to me.
I think another best practice would be to never deposit a check into a Fidelity checking account. Instead, deposit checks into your Fidelity brokerage account, where you can invest it in something like FDLXX during the 16-business day hold period (vs. the 2.1% you get while it’s sitting in Fidelity checking). Make it as expensive as possible for Fidelity to borrow your money.
The current 7-day yield on SNSXX & FDLXX are both 4.06%, since they are coming down as new T-bills do so, and one actually can do slightly better in a high-rate online savings account.
FWIW, the Fidelity “Cash Management” (CM) account we’ve been discussing actually IS a brokerage account, so you can certainly invest in practically anything with deposit funds prior to them being cleared for withdrawal. The only enhancements on the CM account I know of are the ability for it to mail checks and schedule ETF payments on your behalf, and that it has an optional debit card with reimbursement for ATM fees.
AFAICT, you can only invest from the linked investment account, so once you deposit a check into the joint wros checking account, it’s stuck there for 16 business days and subject to the joint wros interest rate of 2.21%. You’re not allowed to transfer it even to the linked investment account during the hold time.
I believe if I had selected the linked investment account when I did the mobile deposit, I could have invested it in anything during the 16 business-day hold. I will test that the next time I have a check.
Fidelity has had HUGE fraud committed against them recently after a TikToker or two described ways to deposit checks and access the cash rather quickly. An age old problem that reared its ugly head for them with lots of zeros on the end because people “lent” their cash management accounts out for a cut of fraudsters proceeds.
