Fidelity Cash Management Account (CMA) Review

Even the most aggressive stock market investors keep some cash on the sidelines. That balance helps offset market volatility and cover end-of-year tax payments on capital gains. It’s there when you’re ready to put more money in the market too.

Many brokerages hold cash in basic, boring accounts that pay little or no interest and have no real features of their own. Others, like Fidelity, offer more appealing cash management accounts with much higher yields and checking-like features.

There’s no contest. True cash management accounts are better. And the Fidelity Cash Management account is among the best of the bunch. Even if you’re not a current Fidelity brokerage customer, it’s worth checking out. Just make sure you understand how it works — and its limitations — before you apply.

What Is the Fidelity Cash Management Account?

The Fidelity Cash Management account is an FDIC-insured cash management account with no maintenance fees and competitive interest rates on eligible balances.

You can open a Fidelity cash management account without an existing Fidelity brokerage account. Once open, you can keep the entire balance in cash or use a portion of it to purchase stocks, ETFs, or mutual funds. You don’t need to apply for a separate brokerage account.

Fidelity cash management account balances up to $5 million earn 2.72% APY. Interest is variable above that threshold. Other notable features include a secure debit card compatible with major digital wallets, global ATM fee reimbursement, mobile check deposit, and online bill payments. 

Unlike a traditional bank account, funds deposited into the Fidelity cash management account may be distributed among a network of partner banks rather than held with Fidelity. This enables much higher FDIC insurance coverage because more than one FDIC-insured bank is involved. It also offers the possibility (though not the guarantee) of higher yields because each bank sets their own interest rates.

What Sets the Fidelity Cash Management Account Apart?

The Fidelity cash management account stands out for several reasons:

• Comes with a Visa debit card that works worldwide. This account comes with a Visa debit card accepted by millions of merchants worldwide. As a payment method, it’s as good as any other Visa debit card or credit card.
• No limits or geographical restrictions on ATM reimbursements. Fidelity reimburses ATM fees worldwide. There’s no monetary limit to this privilege either.
• FDIC insurance many times the standard limit. Although the exact limit is subject to change based on how Fidelity allocates the funds in your cash management account, Fidelity advertises up to $5 million in FDIC coverage. That’s 20 times the standard limit of $250,000.
• Impressive mobile features. This account holds its own against any mobile-friendly checking account. It has a full lineup of mobile features in an easy-to-use app.

Key Features of the Fidelity Cash Management Account

Before you open a Fidelity cash management account, take some time to understand its core features and capabilities. 

Account Yield & Requirements

This account yields 2.72% APY on the first $5 million. Fidelity allocates this portion of your balance among its FDIC-insured partner banks, but for all practical purposes, it’s held with Fidelity.

Any portion of your balance above $5 million goes into a Fidelity money market fund, which holds a mix of government securities. The interest rate on this portion is variable but generally lower than the rate on the partner bank portion. Importantly, there’s no FDIC coverage on balances held in money market funds.

Account Fees & Minimums

This account has no monthly or annual maintenance fee. There’s no minimum or ongoing balance requirement either.

Secure Debit Card

This account comes with a secure Visa debit card accepted by millions of merchants worldwide. The card itself has no additional maintenance fee, though fees may apply for foreign transactions or overdrafts.

ATM Access

This account’s debit card works at tens of thousands of machines worldwide: any with the Visa, Plus, or Star logos. Fidelity charges no ATM fees of its own and reimburses any fees charged by third parties, like other banks or ATM owners.

Mobile Features

This account has a user-friendly mobile app and a responsive web interface that works well on small screens. It has a full feature lineup:

• Mobile check deposit
• Digital bill payments
• Digital wallet integration
• Real-time spending view
• Fast internal and external funds transfers

Deposit Insurance

This account has FDIC insurance on balances up to $5 million. Balances above that amount are held in a money market fund that has no FDIC coverage and can lose value due to market volatility.

Access to Stocks & Other Asset Classes

True to its name, the Fidelity cash management account is first and foremost a cash account. You can use it as you would any other checking account. 

But because it’s associated with a major investment company, it’s also easy to use some or all of the balance to fund your investing activities. You can buy stocks, ETFs, and mutual funds directly out of your cash management account balance. If you want to trade in riskier asset types, such as options contracts, you need to apply for those privileges separately.

Pros & Cons

The Fidelity cash management account has plenty of upsides and a few notable downsides too.

Pros

The Fidelity cash management account is a well-rounded cash account with enough firepower for higher-asset users.

• Visa debit card accepted worldwide. This account comes with a Visa debit card that’s accepted by millions of merchants worldwide. Functionally, it’s as good as any checking account debit card.
• No limit on ATM fee reimbursements. Fidelity is unusually generous when it comes to ATM fee reimbursements. No matter how many withdrawals you make, Fidelity covers the associated fees.
• Lots of checking-like features. This account isn’t quite as good as a checking account, but it’s pretty close, and you might not need a checking account if your financial life is otherwise simple. 
• Very high FDIC insurance limit. Your Fidelity cash management account balance has FDIC insurance up to $5 million, many times the standard limit and high enough not to be an issue for the vast majority of users.
• Integrates seamlessly with Fidelity brokerage account. Your Fidelity cash management account integrates seamlessly with your Fidelity brokerage account. That is, if you want it to. It functions perfectly fine as a standalone cash-only account too.

Cons

The Fidelity cash management account is stingier than some other cash management accounts and could tempt less sophisticated users with potentially risky investments.

• Yield can’t match top cash management or savings accounts. Though variable, the Fidelity cash management account’s yield tends lower than the leading high-yield savings accounts and interest checking accounts. If your top priority is to maximize your return on cash balances, this isn’t the best account for you.
• Direct access to stocks and ETFs could threaten users’ emergency savings. Traditional checking and savings accounts aren’t linked to online brokerage accounts, which means they don’t carry the temptation to invest FDIC-insured emergency savings (or any other cash balances) in stocks and ETFs that can lose value.
• Some missing checking features. This account has important checking features like online billpay and mobile check deposit, but it’s not quite a full-service checking account. 

How the Fidelity Cash Management Account Stacks Up

The Fidelity cash management account shares the spotlight with several other high-yield accounts tied to brokerage platforms. One of its top competitors is the Wealthfront Cash Account. Before applying for either, compare them head to head.

The Fidelity cash management account is clearly better for folks planning to use it more like a checking account, thanks in particular to unlimited ATM fee reimbursements. But Wealthfront has a significantly higher yield, which is a key consideration for many investors.

Final Word

The Fidelity Cash Management account is a checking-like deposit account with a much higher yield than most checking accounts and direct access to a low-cost digital brokerage. It has sky-high FDIC insurance limits and unlimited ATM fee reimbursements too, making it appropriate for high rollers.

It’s not perfect though. Its yield is lower than many competing cash management accounts, not to mention high-yield savings accounts, and it’s not quite a full-service checking account. Before you apply, make sure it’s the best choice for your cash management needs.