“With no account fees and no account minimums to open, the Fidelity Cash Management Account CAN BE a smarter digital alternative to traditional banks. Spend and withdraw with a debit card—without the fees to slow you down. Your cash balance can earn a competitive rate of return automatically every month, while your account is covered against unauthorized activity by our Customer Protection Guarantee.”
I love the use of “CAN BE”. It CAN BE a smarter digital alternative to traditional banks, it also CAN BE a way to shoot youself in the foot. Their lawyers told them not to use “IS”. I surprised the lawyer didn’t tell them to use COULD BE.
At any rate… I do use Fidelity Cash Manangement! But this is how I use it. Payroll in… I let my credit cards and utilities and insurance people ACH debit from that account.
Any Zelle, PayPal, paper checks in or out, rando EFTs which are not regularly scheduled monthly things I do out of Schwab Bank, Ally Bank, or my Credit Union.
Why do I have so many accounts? I usually don’t close an account once I have opened it. If there is some chance I might need it in the future I keep it alive with $5 in it.
The Fidelity Cash Management is very helpful because the payroll checks clear immediately, and they have no reason to suspect my behaviors since my interactions with them are so plain Jane boring and transparent. So I earn money on the money I have to keep around to pay my large bills, and I don’t have to micromanage moving funds in and out of savings.
But I did move my big coin (IRAs) back to Schwab because I don’t want those accounts to ever get locked up by Fidelity’s big bad security back-office team. I have discussed all of that in another post.
When I retire soon, I’m going to do an annual wire transfer from Schwab IRA to Fidelity Cash Management… a big slug of cash… and the ability to just let that cash sit in Fidelity’s default cash sweep of SPAXX (current 7-day yield 4.14%) is really going to shine. I had just fiddling with cash and pushing it around. It’s totally wasted time and energy.
I was in the process of setting up a CMA With Fidelity when I read about the 16 BUSINESS DAY HOLD here.
Sure enough the slug of cash that I EFTd over there from Navy Fed. on 07JAN ,according to my account status , is not available until 30JAN. I called and the nice agent told me it was because of the TicToc fiasco and they were “hoping” they wouldn’t have to do this for very long.”
He also informed me I COULD NOT set up automatic deposits into the account and by default any ACHs out of the account until after 30JAN when the hold was done.
He specifically told me though that after 30JAN Auto deposit from Pension or SS WOULD NOT be subject to the 16 Business Day hold which goes directly counter to what you were told.
I asked why none of this information was available on the website or at least reported to me as I was applying for the account. Didn’t know.
I don’t know anything about the TicTok scam but I always thought that taking a picture of a Check and depositing it that way was a really stupid idea.
I guess I was not clear on this. I was told it would not affect direct deposit. We’ll see later this week if that’s true or not. Regardless, they could change this any time because they say “We’re not a bank.”
All of this is at the expense of the customer for their benefit. Instead of fixing their systems and processes, they are taking it out on customers. I imagine they are also making a lot of money of this. They have completely lost my trust.
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.
I was wrong about this. It doesn’t matter how you try to fund your CMA, they will put a hold on it.
I think I finally understand. You have changed your CMA core account from the default “FDIC-INSURED DEPOSIT SWEEP” to SPAXX. This allows you to earn the (near) equivalent of an online savings account without the hassles of moving money around chasing rates, and you have instant access to all your funds (assuming Fidelity’s blessing).
I like FDLXX better, because I live in a high income tax state. But you lose a day’s access to the money when you invest it outside of the core account, and afaict FDIC and SPAXX are the only core account options. I think I agree w/ you, that SPAXX is close enough, not worth chasing more return.
But Texas has taxes! Huge property taxes and HOA fees (the HOA assumes many government functions). Don’t let anyone tell you it’s a low tax State. It’s not.
States have to get their revenue from somewhere. That can be from consumers (sales tax), property owners (advalorum tax), income tax, estate tax and a few others. What matters is the total tax burden. Texas still belongs in the “low tax” category:
I believe a few weeks ago, my Fidelity account had one line item: “Balance”. Now there are 3: “Cash available to trade”, “Cash available to withdraw”, and “Pending deposit”.
Today the 16-business day hold ends for MY money that I transferred into my individual investment account, and the full amount is not available, only 80%! And it mysterious drained my CMA account from ~$1k to $0!
I called for an explanation, and it’s a bug they apparently introduced into their systems trying to catch us 25 year customer fraudsters! They are working to fix it, and I can only hope they will make good on any rejected transactions (which hasn’t happened prior).
They claim their hold is now down to 10 business days. Gee, that’s generous.
Even if you haven’t been hit by this yet, you should be afraid how callously and carelessly they change their policies.
I have no choice but to slow walk away, as it will take additional weeks to unravel this, but if you are considering Fidelity for the 1st time, I would run, not walk away!
Do not put the money that you use to pay daily expenses at a financial institution that is not a real bank. It’s not worth a couple bucks of month of interest trying to maximize the interest rate for what should be relatively small amounts of money.
@mgm That’s really depressing. I was right to move 90% of my assets back to Schwab. I’m still exposed to whatever the %cuss% Fidelity pulls because I use Cash Management only for a couple billpays and the rest ACH pulls, but I’m sure going to watch it carefully.
I am going to WIRE money to Fidelity. I can wire from Schwab for free. I tested it with $1 and it was fine.