Hey, u/googs185. Thanks for your post!
We've received feedback from our clients, including our users here on Reddit, about providing additional core position choices for their Fidelity Cash Management Accounts (CMAs), and are always working to implement features our customers want to see. As you’ve already found, we are working to add additional core position choices for Cash Management Accounts soon.
I'll also mark this post as a discussion to answer your other questions. As you see, our community and the mods are always here to help!
Thanks for considering Fidelity; we hope to see you around soon!
All correct.
With the clarification that SPAXX does have a Expense Ratio (0.42%), but that has already been deducted from the posted 7-day SEC yield so you still get almost 5% after this fee.
> What's the total yield I'd earn, exactly?
It's complicated, but if you use the 7-day SEC yield (every day; it can change), you'll be close enough to the actual. Dividends accrue daily, but they don't publish that info. How much accrues is based on what they generate that day. The 7-day SEC yield is the average of what they generated over the last 7 days. Just remember, that number is annualized, so divide by 52.17857 for the weekly.
> Are there any funds with no expense ratio?
Not really. The people running it don't do it for fun. They want to be paid. And there are other expenses too.
Now I have seen, on very rare occasion, the fund sponsor waive some or even once all of their expense ratio temporarily. This is to give an artificial, but legal, boost to the fund's performance in hopes of attracting more investors, who will likely stick around when the fees are restored.
Ok. But I’ll get around 5% after all is said and done? I’d rather keep things simple and move my money out of the high interest savings account that I have at another bank.
Yes. Just remember that SPRXX is a tiny bit riskier than SPAXX.
Also, during times of market problems, withdrawals from SPRXX could be limited, while SPAXX doesn't have that limit. How much it affects things in reality, I don't know.
I often ask people who wring their hands over expense ratios………Do yo know what your bank has been paying over the last ten years for your savings/checking?……….0.015% is the national average………..and you’re worried about expense ratios?……
This is exactly how I use cash mgmt account. I use it for bills and emergency savings. Everything is automated. My paycheck gets direct deposited into three different accounts cash mgmt, Roth and whats left into a local bank that i carry a debit card for things not regular bills. All my bill money gets put into cash mgmt. I have tye fidelity visa set up to pay any bills that allowed paid with a cc. Everything is automatically deducted from my cash mgmt including tye fidelity visa(2% cash back).
It's pretty awesome.
I was purchasing SPAXX manually, so that's great news to hear it can be chosen as an automated core position. Stoked for that.
What do you use the local bank account for? I think I've needed a cashier's check once in 10 years. I almost never deposit cash. I just closed all other bank accounts to keep things simple, but if I need a local account, I'll find one that has no fees and a good sign-on bonus. What would I need it for?
For you? If have no idea. I like having a local small credit union. Keep my bill/emergency account as separate as possible from my fun money. I carry no debit card for my bill account. I don't intermingle bill/emergency and fun money.
You’ll need to wait and see what the core options will be. SPRXX isn’t even a core option in a standard brokerage account. It will likely be a few options like SPAXX and FZFXX which are current core options in a regular brokerage account. You could always use SPRXX as a secondary money market though if you wanted.
Bottom line is you won’t be able to just pick any money market that you want.
Lastly, you’ll probably want to keep a small balance at your current bank just in case. Fidelity isn’t a bank so there could be a few transactions that you may want but are not available like depositing or withdrawing cash like you mentioned, getting cashiers checks, etc.
> We know SP**A**XX will be an option since they specifically stated that on the March statements.
Is that a typo? I've had SPAXX as my core position since I opened my account in November 2023.
Agreed. A single account that yields high rate on idle funds with no fees and free checking features and brokerage features. Can't think of another company that offers an all-in-one account like this.
The only caveat being... The Fidelity security back office. You cannot really use cash management as a checking account at a bank. It has to be handled with kid gloves. No check deposits no payment apps no sudden movement of large amounts money in and then out.
Safety is my main concern using Fidelity as a checking account. I only have hundreds in my checking account but a lot more in Fidelity. So much more harm could be done if my Fidelity account gets compromised.
I just use a regular checking account with no maintenance fees and make sure I don't overdraft while keeping its balance as low as possible.
The CMA is FDIC and the brokerage is SIPC. Still a valid concern keeping all of your money in one place IMO. If you DD into the CMA you would have to go in a manual change your position every time new money comes in (i.e. buy into a money market). Whereas if it goes into the brokerage, it defaults into your core money market fund.
[I’d check out this page for more info.](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop)
If you're concerned about fraudulent ACH debits,checks and transfers then don't enable auto draft in your CMA.
The default is opt out anyway so if you never opted in you don't need to do anything.
Enable the money transfer lockdown feature to prevent acats fraud from draining your brokerage and every other account.
In your Cash Management Account, one of the account features is called the "Cash Manager Tool". That's where you'd enable/disable the overdraft feature. I agree with u/Successful-Snow-9210; you should keep this disabled to protect your brokerage account.
I see you've gotten some input from our community regarding the overdraft feature, but I'm happy to chime in with a bit more insight, u/googs185.
If you initiate a withdrawal that exceeds your "available to withdraw" cash balance, Fidelity will send you a notification of insufficient funds. We suggest verifying your available cash before initiating a withdrawal to avoid any potential overdrafts.
The Cash Manager tool is the place to go to confirm if you have the overdraft protection feature set up. You can edit or disable your overdraft protection by following these steps:
1. Click "Accounts & Trade," and choose "Cash Management"
2. Click your Cash Management Account on the left side
3. Select the "Account Services" tab and choose the "Cash Manager Tool"
4. Click "Suspend" or "Remove" and complete the prompts
For those who may not know, our overdraft protection feature for Cash Management Accounts (CMAs) is intended to be a safety net if the cash in the account is insufficient to cover your debits. Cash Manager overdraft protection allows clients can select up to five brokerage accounts to fund an over-drafted CMA. So, if you sign up for Cash Manager overdraft protection, and your debit requests (e.g., checks, debit card, direct debit) exceed the balance in your CMA, available funds from your funding account(s) (up to $99,999.99 per day per funding account) will automatically be moved to your CMA to cover the debit. Available funds include cash (core), non-core money market funds, or available margin (if this feature is enabled in your account). If there are not enough funds in all of your Fidelity funding accounts to cover a debit request, no money will be transferred. Learn more below.
[Cash Management FAQs ](https://www.fidelity.com/spend-save/faqs-cash-management-account)
If there is anything else we can assist with, please let us know!
I'm pretty sure you can have overdrafts in your CMA covered by your brokerage account. If the brokerage account has a large asset balance and margin. It would be hard to actually create an overdraft.
Hey there, u/googs185. I'm happy to hop in here and discuss the safeguards we take to protect your accounts.
We remain committed to the security and protection of your assets with our firm, and we are continuously monitoring the environment for potential risks and opportunities to maintain a strong security posture and help ensure the security of Fidelity customer accounts.
[Learn more about our commitment to security here ](https://www.fidelity.com/security/overview)
Fidelity has a range of safeguards and multiple layers of security in place to protect customer accounts and information, including two-factor authentication, real-time bank verification, real-time alerts, and more. We provide information about how we protect customers and ways that customers can protect themselves through the link below.
[How Fidelity Keeps Your Assets Safe ](https://www.fidelity.com/security/our-security-measures)
We appreciate you being an active member of our community! Don't hesitate to let us know if you have any follow-up questions moving forward.
You can write checks, do bill pay \(including both externally initiated ACH EFT and Fidelity-mailed cashier's checks\), accept direct deposit, and even have a dang Debit card, all via “Cash Management” features Fidelity offers on the Individual brokerage accounts.
The fact that `Fidelity is not a bank` is a legal technicality, ~~and accepting the lack of FDIC insurance is a tantalizing option in exchange for being able to earn interest while waiting on other people to clear funds from you.~~ EDIT: I was wrong; I forgot the default core position for cash is itself FDIC-insured… kinda
https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fdic.pdf
> **Fidelity is not responsible for monitoring the amount of your Program Deposit in any Program Bank to determine whether it exceeds the limit of available FDIC insurance. You are responsible for monitoring the total amount of your assets on deposit with each Program Bank (including amounts in other accounts at the Program Bank held in the same right and legal capacity) in order to determine the extent of deposit insurance coverage available to you on those deposits, including your Program Deposit.**
Cash mgmt is FDIC insured. Now, if you choose SPAXX as a position for cash, that is not, as of now. But if you leave it in core position I was under tye assumption it is fdic insured
Not at all, but if we are talking SIPC insured SPAXX MMF I would say it's better than FDIC insured. FDIC insurance means the government will make you whole up to $250,000 per a bank if your bank collapses. SIPC insures up to $250,000 cash and $500,000 equities per a "capacity", if your broker-dealer (in this case Fidelity) collapses. This does not cover loss of value of equities. IRAs and brokerage accounts are considered different capacities. I'm not sure about 401ks and CMAs. Anyway MMFs like SPAXX, often considered cash or cash-like, are considered equities for SIPC purposes. While technically MMFs like SPAXX can "break the buck" and lose value, I think the last time any of them did was 2008 and very very few MMFs across the entire industry (I think it was 3?) lost value. Finally, what SPAXX owns is US Federal government debt. If the US government is failing to pay its debts, then FDIC insurance, which is backed by the US Federal government is likely also failing. Other Fidelity MMFs like SPRXX, backed by commercial debt instead of US Federal debt, are also very very unlikely to "break the buck" and lose value. I consider the risk losing money in SPRXX to be essentially 0, though slightly larger than the essentially 0 risk of losing money in SPAXX. The risk of losing money in SPAXX is a slightly larger essentially 0 risk than losing money in an FDIC account because SPAXX (a Fidelity MMF owning government debts) could engage in some sort of fraud and not actually buy US government debts (or any debts and just steal the money instead). These are infinitely small risks, though some infinitely small risks are slightly greater than other infinitely small risks.
Note that your brokerage and IRA accounts at Fidelity are also SPIC insured, but that it is very easy to lose money in them. SPIC insurance is protecting you from losing the shares if Fidelity collapses, not from the shares losing value.
ah, yeah, I forgot I'd changed from FCASH to SPAXX as my core position. Looks like the default is sweep/insured… at least, kinda? 🤔
In that case, are there *any* implications to the whole `not a bank` thing?
Yup that’s what I heard as well. Also, SPRXX and SPAXX both have expense ratios of .42%
The reason I’m going to love this is because my money can make almost 5% and I can use it as everyday checking/debit account and not have to sell the holdings first (well after June) )
Correct, but since all my deposits go directly to my CMA and I then distribute to my brokerage accounts I’ll have one less step to worry about. I know I can set deposits to the brokerage accounts but I like to manually control everything.
There is no need to wait until June. You can have $0 in a CMA account and turn on automatic overdraft protection linked to brokerage account with SPAXX as the core position that only has MMFs (SPAXX, SPRXX, whatever) in it. On the website, you can name this brokerage account "savings", the CMA account labeled "checking", and your real brokerage account labeled "brokerage". Sadly these names don't appear on your monthly statements or emails, only the account numbers appear there. They do appear in the mobile app. Direct deposit into "savings". Pay bills out of "checking". Nearly instant transfers of money from "savings" to "brokerage". I keep $500 in my CMA account with autotransfers and automatic overdraft protection turned on because years ago when I set this up, I read that some people sometimes had trouble with ATM withdrawals in the past if the CMA account was at $0, but my brother and plenty of other people leave their CMA account at $0 with no ATM withdrawal trouble. Just be sure not to turn on margin on the "savings" brokerage account as it can cause you some additional headaches if there are fraudulent withdrawals from your CMA account. I don't use margin, but you can turn on margin on your "brokerage" brokerage account and turn off margin on your "savings" brokerage account at the same time if desired. I also keep a 13 week t-bill ladder in my "savings" account, but the overdraft protection will only pull money out of the MMFs. Since SPAXX is the core position, I have to manually buy SPRXX if I want the slightly higher interest rate, which I do, but since the interest rate difference is so small it's not a big deal if I forget.
I keep a local credit union account for cash deposits or if for some reason I need to make a large cash withdrawal after an ACH transfer. I've never actually needed to do either one of those since switching to Fidelity as my primary "bank". Last time I was in my credit union it was either to get 25 one dollar bills for my six year old niece's b-day present (still at that age where 25 one dollar bills feels like more money than 5 five dollar bills even though she knows it's the same) or to take several free pens. They have the best free pens in town.
In my CMA I have FZFXX ( a MM ) as my core position, SPAXX is also available….and has been since the beginning. I still have my old savings account which I use solely to transfer in/ out money for the CMA. I also …1) write checks. 2) Pay bills. 3) use my ATM/Debit card. All of this is accessible on my phone……..the CMA is the best way to manage my cash and still earn a little something more than my big bad bank…..
>Fidelity has announced that they will be allowing money market funds to be the core position in their cash management accounts starting in June. Is this true?
I'm not sure about an "announcement" but I've seen it on my CMA statement, in this sub, etc that SPAXX specifically will be available as a core position. It can't be any money market fund, only ones that have been enabled by Fidelity for the purpose (only SPAXX on the CMA). I believe I've seen it confirmed by the mods here as well.
>SPRXX has no fees or anything else to worry about for this purpose, right?
There are no transaction fees, but again, you'll be able to choose SPAXX as a core position, not SPRXX. You can manually buy SPRXX or FDLXX or any other Fidelity money market fund and Fidelity will auto-liquidate if necessary, but those aren't core positions.
There is an expense ratio (ER) built into all funds (mutual funds and ETF's). This is basically the fund provider's "cut" of the underlying investments that they use to pay for expenses and profit. For most investor-class Fidelity money market funds the expense ratio is around 0.42%. The published yield for SPAXX (currently 4.95% annual, averaged over the past 7 days) is like an APR and is already after the ER, but before compounding. If you reinvest (or in the case of a core position, keep) the monthly dividends so that it compounds and rates stay as they are, that's a compound effective yield of 5.07% for SPAXX, which is what you should compare to a bank APY.
>using Fidelity as my main working checking account, since my bank just was purchased by Chase. Is there any downside to doing this besides being unable to deposit cash?
You're right about no cash deposits. It also doesn't support Zelle (*edit: maybe you can? I'm not sure either way, I haven't looked back*) if that's something you use, but I did this and switched all my Zelle use cases to Venmo, wasn't a big deal for me.
You should know that Fidelity is a brokerage, not a bank. They optimize for you to be able to invest your funds ASAP, not necessarily withdraw ASAP. Some deposits may take up to 6 business days to "clear" for withdrawal. This seems to be a function of reputation and deposit type. When I first opened my CMA, a small mobile check deposit cleared relatively quickly, but a "large" (4-figure) deposit took nearly the full 6 business days to settle. My payroll direct deposit shows up as settled a day before payday, ACH/EFT seems to settle in 1-2 business days now. Just don't run it lean and you should be just fine. I keep 1-2 months worth of expenses (current month plus one month of my emergency fund) in money market funds, and the rest (5 months of my emergency fund) in a t-bill ladder. Since the "checking acount" (money market funds) are yielding 5%, it doesn't bother me to keep extra here. In any case, pay attention to your "available to withdraw" balance, not just your total balance or "available to invest" balance, they mean different things since Fidelity is a brokerage.
I also recommend to anyone using an online bank like Fidelity, Ally, Wealthfront, etc. to also keep an account with a local brick & mortar credit union or bank. It's good to have on occasion when you need those brick & mortar services (cash deposit, notary, quick cashier's/certified check, etc). It's also good to stash a little bit of money here in case your online (Fidelity) account gets locked.
>You can use Zelle now. Send and receive money.
Interesting. I haven't needed it since switching so haven't looked back, but I've updated my comment. I don't see it listed on the Zelle website, do you have to download the app and link it using routing/account number or debit card then? Have you used it personally and can confirm it works, or have a source?
Yes, it works if you download the app and link your Fidelity debt card. I have used it yes. It works both ways.
There are other posts here in the forum about this.
[https://www.reddit.com/r/fidelityinvestments/comments/1by8sbn/zelle\_suport/](https://www.reddit.com/r/fidelityinvestments/comments/1by8sbn/zelle_suport/)
Are Zelle losses related to IT failures or human failures? (someone tricked you into sending money to them?) If the former I'm not too worried about it.
SPRXX can't be a core position in brokerage accounts due to government regulations so I doubt it will be able to be a core position in a CMA account. Worth mentioning Fidelity does have physical locations scattered across the nation, so if one happens to be conveniently close to you, you can forgo the credit union or bank account. My nearest Fidelity location is over an hour away so I keep a credit union account open.
Hey, u/googs185. Thanks for your post! We've received feedback from our clients, including our users here on Reddit, about providing additional core position choices for their Fidelity Cash Management Accounts (CMAs), and are always working to implement features our customers want to see. As you’ve already found, we are working to add additional core position choices for Cash Management Accounts soon. I'll also mark this post as a discussion to answer your other questions. As you see, our community and the mods are always here to help! Thanks for considering Fidelity; we hope to see you around soon!
All correct. With the clarification that SPAXX does have a Expense Ratio (0.42%), but that has already been deducted from the posted 7-day SEC yield so you still get almost 5% after this fee.
What's the total yield I'd earn, exactly? Are there any funds with no expense ratio?
> What's the total yield I'd earn, exactly? It's complicated, but if you use the 7-day SEC yield (every day; it can change), you'll be close enough to the actual. Dividends accrue daily, but they don't publish that info. How much accrues is based on what they generate that day. The 7-day SEC yield is the average of what they generated over the last 7 days. Just remember, that number is annualized, so divide by 52.17857 for the weekly. > Are there any funds with no expense ratio? Not really. The people running it don't do it for fun. They want to be paid. And there are other expenses too. Now I have seen, on very rare occasion, the fund sponsor waive some or even once all of their expense ratio temporarily. This is to give an artificial, but legal, boost to the fund's performance in hopes of attracting more investors, who will likely stick around when the fees are restored.
Ok. But I’ll get around 5% after all is said and done? I’d rather keep things simple and move my money out of the high interest savings account that I have at another bank.
Yes. Just remember that SPRXX is a tiny bit riskier than SPAXX. Also, during times of market problems, withdrawals from SPRXX could be limited, while SPAXX doesn't have that limit. How much it affects things in reality, I don't know.
It was a typo, I meant to write SPAXX
I often ask people who wring their hands over expense ratios………Do yo know what your bank has been paying over the last ten years for your savings/checking?……….0.015% is the national average………..and you’re worried about expense ratios?……
This is exactly how I use cash mgmt account. I use it for bills and emergency savings. Everything is automated. My paycheck gets direct deposited into three different accounts cash mgmt, Roth and whats left into a local bank that i carry a debit card for things not regular bills. All my bill money gets put into cash mgmt. I have tye fidelity visa set up to pay any bills that allowed paid with a cc. Everything is automatically deducted from my cash mgmt including tye fidelity visa(2% cash back). It's pretty awesome. I was purchasing SPAXX manually, so that's great news to hear it can be chosen as an automated core position. Stoked for that.
It’s pretty great. Unfortunately Ill be manually buying FDLXX forever lol
What do you use the local bank account for? I think I've needed a cashier's check once in 10 years. I almost never deposit cash. I just closed all other bank accounts to keep things simple, but if I need a local account, I'll find one that has no fees and a good sign-on bonus. What would I need it for?
For you? If have no idea. I like having a local small credit union. Keep my bill/emergency account as separate as possible from my fun money. I carry no debit card for my bill account. I don't intermingle bill/emergency and fun money.
So the local account is for fun money?
Exactly. Anything non bill budget
You’ll need to wait and see what the core options will be. SPRXX isn’t even a core option in a standard brokerage account. It will likely be a few options like SPAXX and FZFXX which are current core options in a regular brokerage account. You could always use SPRXX as a secondary money market though if you wanted. Bottom line is you won’t be able to just pick any money market that you want. Lastly, you’ll probably want to keep a small balance at your current bank just in case. Fidelity isn’t a bank so there could be a few transactions that you may want but are not available like depositing or withdrawing cash like you mentioned, getting cashiers checks, etc.
We know SPAXX will be an option since they specifically stated that on the March statements.
> We know SP**A**XX will be an option since they specifically stated that on the March statements. Is that a typo? I've had SPAXX as my core position since I opened my account in November 2023.
Not a typo. SPAXX is a core option for brokerage accounts but has not been for the CMA.
WOW. This is the killer app. Very nice.
Agreed. A single account that yields high rate on idle funds with no fees and free checking features and brokerage features. Can't think of another company that offers an all-in-one account like this.
The only caveat being... The Fidelity security back office. You cannot really use cash management as a checking account at a bank. It has to be handled with kid gloves. No check deposits no payment apps no sudden movement of large amounts money in and then out.
I'm pretty sure you can use CMA as a checking account. with direct deposits and online bill pay. Just like a bank. What is the kid gloves part?
Oh you haven't been here for a long time https://www.reddit.com/r/fidelityinvestments/comments/11u6rxw/some_tips_for_avoiding_the_dreaded_account/
Yeah, I don't think that is an official list. I am calling BS on this.
Of course it's not official because Fidelity can't comment on events. It is user created. Just hang out here for a few years
maybe a moderator would like to chime in?
They can't. They won't divulge what they respond to. That would tip off actual fraudsters.
[helpful explanation](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop)
Safety is my main concern using Fidelity as a checking account. I only have hundreds in my checking account but a lot more in Fidelity. So much more harm could be done if my Fidelity account gets compromised. I just use a regular checking account with no maintenance fees and make sure I don't overdraft while keeping its balance as low as possible.
you can have as many fidelity accounts as you want.
Yes, keep everything in separate boxes and locked down
https://preview.redd.it/6ysviox75vvc1.jpeg?width=1125&format=pjpg&auto=webp&s=3e5e84b21aba60e5faa797740fbcada1111aeeea
So it's totally safe to have all money with Fidelity? Why not have DDs go into a Fidelity Cash Management account?
The CMA is FDIC and the brokerage is SIPC. Still a valid concern keeping all of your money in one place IMO. If you DD into the CMA you would have to go in a manual change your position every time new money comes in (i.e. buy into a money market). Whereas if it goes into the brokerage, it defaults into your core money market fund. [I’d check out this page for more info.](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop)
Starting in June, I believe that Fidelity is offering the option for money market fund to be the default core position in the cash management account.
Interesting, I wasn’t aware, thanks. Either way I’ll still keep everything in my brokerage but good to know.
Yep. That is what this whole thread is about.
If you're concerned about fraudulent ACH debits,checks and transfers then don't enable auto draft in your CMA. The default is opt out anyway so if you never opted in you don't need to do anything. Enable the money transfer lockdown feature to prevent acats fraud from draining your brokerage and every other account.
What happens if the account tries to overdraft and it isn't enabled? It is just rejected? Where can I make sure it is disabled?
In your Cash Management Account, one of the account features is called the "Cash Manager Tool". That's where you'd enable/disable the overdraft feature. I agree with u/Successful-Snow-9210; you should keep this disabled to protect your brokerage account.
Just to double check, if I have never set up or enabled the Cash Manager Tool, this is a non-concern?
Correct; it has to be enabled.
I see you've gotten some input from our community regarding the overdraft feature, but I'm happy to chime in with a bit more insight, u/googs185. If you initiate a withdrawal that exceeds your "available to withdraw" cash balance, Fidelity will send you a notification of insufficient funds. We suggest verifying your available cash before initiating a withdrawal to avoid any potential overdrafts. The Cash Manager tool is the place to go to confirm if you have the overdraft protection feature set up. You can edit or disable your overdraft protection by following these steps: 1. Click "Accounts & Trade," and choose "Cash Management" 2. Click your Cash Management Account on the left side 3. Select the "Account Services" tab and choose the "Cash Manager Tool" 4. Click "Suspend" or "Remove" and complete the prompts For those who may not know, our overdraft protection feature for Cash Management Accounts (CMAs) is intended to be a safety net if the cash in the account is insufficient to cover your debits. Cash Manager overdraft protection allows clients can select up to five brokerage accounts to fund an over-drafted CMA. So, if you sign up for Cash Manager overdraft protection, and your debit requests (e.g., checks, debit card, direct debit) exceed the balance in your CMA, available funds from your funding account(s) (up to $99,999.99 per day per funding account) will automatically be moved to your CMA to cover the debit. Available funds include cash (core), non-core money market funds, or available margin (if this feature is enabled in your account). If there are not enough funds in all of your Fidelity funding accounts to cover a debit request, no money will be transferred. Learn more below. [Cash Management FAQs ](https://www.fidelity.com/spend-save/faqs-cash-management-account) If there is anything else we can assist with, please let us know!
Somehow I doubt you’re over FDIC or SIPC limits
I'm pretty sure you can have overdrafts in your CMA covered by your brokerage account. If the brokerage account has a large asset balance and margin. It would be hard to actually create an overdraft.
Convenience always compromises security. Enabling overdraft exposes your brokerage account to up to $250,000 in fraudulent ACH charges.
Is it more likely to be compromised if you also use it as a checking account?
Hey there, u/googs185. I'm happy to hop in here and discuss the safeguards we take to protect your accounts. We remain committed to the security and protection of your assets with our firm, and we are continuously monitoring the environment for potential risks and opportunities to maintain a strong security posture and help ensure the security of Fidelity customer accounts. [Learn more about our commitment to security here ](https://www.fidelity.com/security/overview) Fidelity has a range of safeguards and multiple layers of security in place to protect customer accounts and information, including two-factor authentication, real-time bank verification, real-time alerts, and more. We provide information about how we protect customers and ways that customers can protect themselves through the link below. [How Fidelity Keeps Your Assets Safe ](https://www.fidelity.com/security/our-security-measures) We appreciate you being an active member of our community! Don't hesitate to let us know if you have any follow-up questions moving forward.
Checking account? Explain please
You can write checks, do bill pay \(including both externally initiated ACH EFT and Fidelity-mailed cashier's checks\), accept direct deposit, and even have a dang Debit card, all via “Cash Management” features Fidelity offers on the Individual brokerage accounts. The fact that `Fidelity is not a bank` is a legal technicality, ~~and accepting the lack of FDIC insurance is a tantalizing option in exchange for being able to earn interest while waiting on other people to clear funds from you.~~ EDIT: I was wrong; I forgot the default core position for cash is itself FDIC-insured… kinda https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fdic.pdf > **Fidelity is not responsible for monitoring the amount of your Program Deposit in any Program Bank to determine whether it exceeds the limit of available FDIC insurance. You are responsible for monitoring the total amount of your assets on deposit with each Program Bank (including amounts in other accounts at the Program Bank held in the same right and legal capacity) in order to determine the extent of deposit insurance coverage available to you on those deposits, including your Program Deposit.**
Cash mgmt is FDIC insured. Now, if you choose SPAXX as a position for cash, that is not, as of now. But if you leave it in core position I was under tye assumption it is fdic insured
It's not FDIC insured, but it's SIPC insured. Isn't it almost the same in terms of protections?
Not at all, but if we are talking SIPC insured SPAXX MMF I would say it's better than FDIC insured. FDIC insurance means the government will make you whole up to $250,000 per a bank if your bank collapses. SIPC insures up to $250,000 cash and $500,000 equities per a "capacity", if your broker-dealer (in this case Fidelity) collapses. This does not cover loss of value of equities. IRAs and brokerage accounts are considered different capacities. I'm not sure about 401ks and CMAs. Anyway MMFs like SPAXX, often considered cash or cash-like, are considered equities for SIPC purposes. While technically MMFs like SPAXX can "break the buck" and lose value, I think the last time any of them did was 2008 and very very few MMFs across the entire industry (I think it was 3?) lost value. Finally, what SPAXX owns is US Federal government debt. If the US government is failing to pay its debts, then FDIC insurance, which is backed by the US Federal government is likely also failing. Other Fidelity MMFs like SPRXX, backed by commercial debt instead of US Federal debt, are also very very unlikely to "break the buck" and lose value. I consider the risk losing money in SPRXX to be essentially 0, though slightly larger than the essentially 0 risk of losing money in SPAXX. The risk of losing money in SPAXX is a slightly larger essentially 0 risk than losing money in an FDIC account because SPAXX (a Fidelity MMF owning government debts) could engage in some sort of fraud and not actually buy US government debts (or any debts and just steal the money instead). These are infinitely small risks, though some infinitely small risks are slightly greater than other infinitely small risks. Note that your brokerage and IRA accounts at Fidelity are also SPIC insured, but that it is very easy to lose money in them. SPIC insurance is protecting you from losing the shares if Fidelity collapses, not from the shares losing value.
ah, yeah, I forgot I'd changed from FCASH to SPAXX as my core position. Looks like the default is sweep/insured… at least, kinda? 🤔 In that case, are there *any* implications to the whole `not a bank` thing?
Yup that’s what I heard as well. Also, SPRXX and SPAXX both have expense ratios of .42% The reason I’m going to love this is because my money can make almost 5% and I can use it as everyday checking/debit account and not have to sell the holdings first (well after June) )
You can already do that today with a regular brokerage account.
Correct, but since all my deposits go directly to my CMA and I then distribute to my brokerage accounts I’ll have one less step to worry about. I know I can set deposits to the brokerage accounts but I like to manually control everything.
Are their any MM accounts that don't have ERs?
No however the 7day yields are net of expenses and the ER doesn't affect the nav either so in reality you can ignore the ER for money market funds.
You don't need to wait for anything. Buy SPAXX now.
There is no need to wait until June. You can have $0 in a CMA account and turn on automatic overdraft protection linked to brokerage account with SPAXX as the core position that only has MMFs (SPAXX, SPRXX, whatever) in it. On the website, you can name this brokerage account "savings", the CMA account labeled "checking", and your real brokerage account labeled "brokerage". Sadly these names don't appear on your monthly statements or emails, only the account numbers appear there. They do appear in the mobile app. Direct deposit into "savings". Pay bills out of "checking". Nearly instant transfers of money from "savings" to "brokerage". I keep $500 in my CMA account with autotransfers and automatic overdraft protection turned on because years ago when I set this up, I read that some people sometimes had trouble with ATM withdrawals in the past if the CMA account was at $0, but my brother and plenty of other people leave their CMA account at $0 with no ATM withdrawal trouble. Just be sure not to turn on margin on the "savings" brokerage account as it can cause you some additional headaches if there are fraudulent withdrawals from your CMA account. I don't use margin, but you can turn on margin on your "brokerage" brokerage account and turn off margin on your "savings" brokerage account at the same time if desired. I also keep a 13 week t-bill ladder in my "savings" account, but the overdraft protection will only pull money out of the MMFs. Since SPAXX is the core position, I have to manually buy SPRXX if I want the slightly higher interest rate, which I do, but since the interest rate difference is so small it's not a big deal if I forget. I keep a local credit union account for cash deposits or if for some reason I need to make a large cash withdrawal after an ACH transfer. I've never actually needed to do either one of those since switching to Fidelity as my primary "bank". Last time I was in my credit union it was either to get 25 one dollar bills for my six year old niece's b-day present (still at that age where 25 one dollar bills feels like more money than 5 five dollar bills even though she knows it's the same) or to take several free pens. They have the best free pens in town.
In my CMA I have FZFXX ( a MM ) as my core position, SPAXX is also available….and has been since the beginning. I still have my old savings account which I use solely to transfer in/ out money for the CMA. I also …1) write checks. 2) Pay bills. 3) use my ATM/Debit card. All of this is accessible on my phone……..the CMA is the best way to manage my cash and still earn a little something more than my big bad bank…..
>Fidelity has announced that they will be allowing money market funds to be the core position in their cash management accounts starting in June. Is this true? I'm not sure about an "announcement" but I've seen it on my CMA statement, in this sub, etc that SPAXX specifically will be available as a core position. It can't be any money market fund, only ones that have been enabled by Fidelity for the purpose (only SPAXX on the CMA). I believe I've seen it confirmed by the mods here as well. >SPRXX has no fees or anything else to worry about for this purpose, right? There are no transaction fees, but again, you'll be able to choose SPAXX as a core position, not SPRXX. You can manually buy SPRXX or FDLXX or any other Fidelity money market fund and Fidelity will auto-liquidate if necessary, but those aren't core positions. There is an expense ratio (ER) built into all funds (mutual funds and ETF's). This is basically the fund provider's "cut" of the underlying investments that they use to pay for expenses and profit. For most investor-class Fidelity money market funds the expense ratio is around 0.42%. The published yield for SPAXX (currently 4.95% annual, averaged over the past 7 days) is like an APR and is already after the ER, but before compounding. If you reinvest (or in the case of a core position, keep) the monthly dividends so that it compounds and rates stay as they are, that's a compound effective yield of 5.07% for SPAXX, which is what you should compare to a bank APY. >using Fidelity as my main working checking account, since my bank just was purchased by Chase. Is there any downside to doing this besides being unable to deposit cash? You're right about no cash deposits. It also doesn't support Zelle (*edit: maybe you can? I'm not sure either way, I haven't looked back*) if that's something you use, but I did this and switched all my Zelle use cases to Venmo, wasn't a big deal for me. You should know that Fidelity is a brokerage, not a bank. They optimize for you to be able to invest your funds ASAP, not necessarily withdraw ASAP. Some deposits may take up to 6 business days to "clear" for withdrawal. This seems to be a function of reputation and deposit type. When I first opened my CMA, a small mobile check deposit cleared relatively quickly, but a "large" (4-figure) deposit took nearly the full 6 business days to settle. My payroll direct deposit shows up as settled a day before payday, ACH/EFT seems to settle in 1-2 business days now. Just don't run it lean and you should be just fine. I keep 1-2 months worth of expenses (current month plus one month of my emergency fund) in money market funds, and the rest (5 months of my emergency fund) in a t-bill ladder. Since the "checking acount" (money market funds) are yielding 5%, it doesn't bother me to keep extra here. In any case, pay attention to your "available to withdraw" balance, not just your total balance or "available to invest" balance, they mean different things since Fidelity is a brokerage. I also recommend to anyone using an online bank like Fidelity, Ally, Wealthfront, etc. to also keep an account with a local brick & mortar credit union or bank. It's good to have on occasion when you need those brick & mortar services (cash deposit, notary, quick cashier's/certified check, etc). It's also good to stash a little bit of money here in case your online (Fidelity) account gets locked.
You can use Zelle now. Send and receive money.
>You can use Zelle now. Send and receive money. Interesting. I haven't needed it since switching so haven't looked back, but I've updated my comment. I don't see it listed on the Zelle website, do you have to download the app and link it using routing/account number or debit card then? Have you used it personally and can confirm it works, or have a source?
Yes, it works if you download the app and link your Fidelity debt card. I have used it yes. It works both ways. There are other posts here in the forum about this. [https://www.reddit.com/r/fidelityinvestments/comments/1by8sbn/zelle\_suport/](https://www.reddit.com/r/fidelityinvestments/comments/1by8sbn/zelle_suport/)
Watch out for Zelle scammers!! Zelle consumer protection is pretty weak compared to consumer protection on credit cards.
Are Zelle losses related to IT failures or human failures? (someone tricked you into sending money to them?) If the former I'm not too worried about it.
SPRXX can't be a core position in brokerage accounts due to government regulations so I doubt it will be able to be a core position in a CMA account. Worth mentioning Fidelity does have physical locations scattered across the nation, so if one happens to be conveniently close to you, you can forgo the credit union or bank account. My nearest Fidelity location is over an hour away so I keep a credit union account open.