Fidelity CMA + MMF vs. online credit union

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squidfather
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Fidelity CMA + MMF vs. online credit union

Post by squidfather » Wed May 16, 2018 8:20 am

My current banking situation is a bit of a mess and I'm looking to simplify things. Wanted to see if others have taken a similar approach and how it is working out.

Currently we have checking accounts at BofA (wife single, and a joint) and Alliant Credit Union (my single), with savings at Alliant. We had been using the joint BofA account for auto-debit of rent and daycare bills, and the Alliant savings to hold liquid funds for a home purchase, which we are completing in the next month. Most of our other expenses go on credit cards (to maximize rewards) and then we each pay our cards out of our individual checking accounts.

I currently have some of my retirement accounts at Fidelity (also at Vanguard and TIAA), along with 529s and a cash management. The CMA mostly sits empty unless we are going overseas, then I drop some cash in there for no-fee foreign ATM use. In an effort to simplify things, I was considering making the CMA a joint account and we'd just run all our checking needs through there, including direct deposit of all paychecks, billpay for the mortgage, etc.

My plan would be to open a brokerage at fidelity to hold emergency funds in a muni money market fund and set this as the overdraft backup for the CMA (although I can't remember the last time I had an overdraft). Rates on Alliant savings (1.5%) and MMF yield are close enough that I don't care about the difference. We don't have a taxable retirement account, but when we do I would just open a separate brokerage not linked to the CMA so those funds wouldn't be at risk from debit card loss, fraud, etc. Could do something simliar for other intermediate term savings needs that I don't want to link to the CMA.

As I see it, the pros are: Consolidate retirement, 529s, checking, e-fund at Fidelity, reducing financial institutions by 2. Will also be opening a solo 401k for the first time this year and could hold that there as well. Cons are the strangeness with Fidelity using sweep banks rather than being an actual bank, and lack of some in-branch services (although I never deposit cash, and have many local Fidelity branches if I need to deposit a large check).

Has anyone done something similar with CMA + multiple brokerage accounts? Any gotchas I might be missing?

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Re: Fidelity CMA + MMF vs. online credit union

Post by livesoft » Wed May 16, 2018 8:22 am

So you are opening yet another set of accounts? Doesn't sound like simplification to me.

Simplification would be to put everything at Bank of America and use the Merrill Edge investment thing.
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Re: Fidelity CMA + MMF vs. online credit union

Post by indexfundfan » Wed May 16, 2018 8:27 am

I think OP is planning to close Alliant. OP already has account at Fidelity.

I used the Fidelity CMA/brokerage combo for daily checking when it first came out many years ago. My recollection is that the CMA can overdraft automatically from the brokerage side with no fees. So I believe you can put the money in a muni MMF (or any other MMF) on the brokerage side and it gets redeemed automatically when needed to pay for a debit on the CMA side.
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squidfather
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Re: Fidelity CMA + MMF vs. online credit union

Post by squidfather » Wed May 16, 2018 8:30 am

indexfundfan wrote:
Wed May 16, 2018 8:27 am
I think OP is planning to close Alliant. OP already has account at Fidelity.
Correct, I already have fidelity and I'm tied there through work retirement accounts and Massachusetts 529s. The plan would be to close the BofA and Alliant accounts.

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Re: Fidelity CMA + MMF vs. online credit union

Post by indexfundfan » Wed May 16, 2018 8:32 am

squidfather wrote:
Wed May 16, 2018 8:30 am
indexfundfan wrote:
Wed May 16, 2018 8:27 am
I think OP is planning to close Alliant. OP already has account at Fidelity.
Correct, I already have fidelity and I'm tied there through work retirement accounts and Massachusetts 529s. The plan would be to close the BofA and Alliant accounts.
Closing Alliant is fine. But sometimes having a brick and mortar bank account is useful. Do you have a local Fidelity office?
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squidfather
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Re: Fidelity CMA + MMF vs. online credit union

Post by squidfather » Wed May 16, 2018 8:39 am

indexfundfan wrote:
Wed May 16, 2018 8:27 am

Closing Alliant is fine. But sometimes having a brick and mortar bank account is useful. Do you have a local Fidelity office?
I'm in Boston, so there are many local Fidelity offices, including closer to work than BofA, and just down the road from the new place. I know they don't have as many services as a typical branch, and that has given me some pause. But, in the last several years, I've only been in a BofA branch 3 times. Once for a notary, which I now have access to through work; once to get a cashier's check, which they charged me a ridiculous fee for; and once recently to deposit a 5-figure check, which was beyond the mobile banking $2500 deposit limit. And when presented with the check, BofA asked if we'd like to sit down to discuss how to best manage our finances. No thanks.

So if I'm ok not having a physical bank, any other concerns I should be aware of?

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Re: Fidelity CMA + MMF vs. online credit union

Post by marcopolo » Wed May 16, 2018 8:47 am

indexfundfan wrote:
Wed May 16, 2018 8:32 am
Closing Alliant is fine. But sometimes having a brick and mortar bank account is useful. Do you have a local Fidelity office?
I have used Fidelity CMA as my main account for a few years. Kept an old Wells Fargo (free) checking account open just for the access to brick and mortar store front. But, i found i was never using it. Closed it about a year ago, and have not had a single instance where i would have needed it.

What are the scenarios in which this would be needed? The only thing i can think of that i can't do is to deposit cash, but i can't recall the last time i had a need to do that.
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Re: Fidelity CMA + MMF vs. online credit union

Post by indexfundfan » Wed May 16, 2018 8:50 am

squidfather wrote:
Wed May 16, 2018 8:39 am
I'm in Boston, so there are many local Fidelity offices, including closer to work than BofA, and just down the road from the new place. I know they don't have as many services as a typical branch, and that has given me some pause. But, in the last several years, I've only been in a BofA branch 3 times. Once for a notary, which I now have access to through work; once to get a cashier's check, which they charged me a ridiculous fee for; and once recently to deposit a 5-figure check, which was beyond the mobile banking $2500 deposit limit. And when presented with the check, BofA asked if we'd like to sit down to discuss how to best manage our finances. No thanks.

So if I'm ok not having a physical bank, any other concerns I should be aware of?
I assume you plan to use the automatic free overdraft feature? Have you clarified with Fidelity if your understanding of how it works is correct?

I can't think of any other gotchas. The CMA account is pretty nice, with free checks, billpay, ATM usage. The only thing is the low APY, but this can be fixed with the automatic free overdraft.
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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Wed May 16, 2018 10:52 am

I'm doing this, there are three options. I've tested these approaches:

1. Fidelity CMA with cash position and MM fund (SPAXX or SPRXX). When the cash position is depleted, Fidelity automatically liquidates shares from the MM funds to cover transactions. It's a simple "all in one" checking + emergency savings.

2. Fidelity CMA + Fidelity Brokerage. Your money sits in the brokerage account which has a MM fund core position, the CMA account stays empty. Turn on "self funded overdraft protection" in Cash Management settings. When a debit occurs on the CMA account, Fidelity automatically draws from the brokerage account to cover the transaction. A little more complicated, but all of your money is earning interest.

3. Fidelity Brokerage. The brokerage has a routing number and a MM fund as a core position, just use it as a checking account. Downsides are it doesn't refund ATM fees and aggregators like Mint and Personal Capital won't properly categorize the transactions because they classify everything as a brokerage transaction.
Last edited by arf30 on Wed May 16, 2018 3:06 pm, edited 2 times in total.

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Re: Fidelity CMA + MMF vs. online credit union

Post by indexfundfan » Wed May 16, 2018 12:02 pm

arf30 wrote:
Wed May 16, 2018 10:52 am
I'm doing this, there are two options. I've tested both of these approaches:

1. Fidelity CMA with cash position and MM fund (SPAXX or SPRXX). When the cash position is depleted, Fidelity automatically liquidates shares from the MM funds to cover transactions. It's a simple "all in one" checking + emergency savings.

2. Fidelity CMA + Fidelity Brokerage. Your money sits in the brokerage account which has a MM fund core position, the CMA account stays empty. Turn on "self funded overdraft protection" in Cash Management settings. When a debit occurs on the CMA account, Fidelity automatically draws from the brokerage account to cover the transaction. A little more complicated, but all of your money is earning interest.
Option 1 looks interesting. SPRXX is yielding 1.7%.

Do you need to maintain a cash position at all? Would this account behave similarly to a 1.7% checking account?

I think the only difference with a true checking account is that you need to manually buy SPRXX. Liquidation of SPRXX to cover debits appears to be automatic.
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squidfather
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Re: Fidelity CMA + MMF vs. online credit union

Post by squidfather » Wed May 16, 2018 12:14 pm

arf30 wrote:
Wed May 16, 2018 10:52 am
I'm doing this, there are two options. I've tested both of these approaches:

1. Fidelity CMA with cash position and MM fund (SPAXX or SPRXX). When the cash position is depleted, Fidelity automatically liquidates shares from the MM funds to cover transactions. It's a simple "all in one" checking + emergency savings.

2. Fidelity CMA + Fidelity Brokerage. Your money sits in the brokerage account which has a MM fund core position, the CMA account stays empty. Turn on "self funded overdraft protection" in Cash Management settings. When a debit occurs on the CMA account, Fidelity automatically draws from the brokerage account to cover the transaction. A little more complicated, but all of your money is earning interest.
Thank you, that is very helpful. I'll probably go with option 2, as I tend to keep very little cash, and most savings are automated into retirement accounts. I'll probably just manually move any extra savings over the brokerage after paying bills each month. Given no fees for the brokerage, I like the mental distinction of having 2 accounts.

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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Wed May 16, 2018 12:51 pm

indexfundfan wrote:
Wed May 16, 2018 12:02 pm
Option 1 looks interesting. SPRXX is yielding 1.7%.

Do you need to maintain a cash position at all? Would this account behave similarly to a 1.7% checking account?

I think the only difference with a true checking account is that you need to manually buy SPRXX. Liquidation of SPRXX to cover debits appears to be automatic.
You don't need to hold any cash with either option, but you do have to manually buy into the MM fund with option 1, and if you don't the cash position tends to pile up in my experience.

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Re: Fidelity CMA + MMF vs. online credit union

Post by eg1 » Wed May 16, 2018 1:02 pm

arf30 wrote:
Wed May 16, 2018 12:51 pm
indexfundfan wrote:
Wed May 16, 2018 12:02 pm
Option 1 looks interesting. SPRXX is yielding 1.7%.

Do you need to maintain a cash position at all? Would this account behave similarly to a 1.7% checking account?

I think the only difference with a true checking account is that you need to manually buy SPRXX. Liquidation of SPRXX to cover debits appears to be automatic.
You don't need to hold any cash with either option, but you do have to manually buy into the MM fund with option 1, and if you don't the cash position tends to pile up in my experience.
Does option 2 get really cumbersome during tax time to figure out all the cost basis with all the buys and sells?

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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Wed May 16, 2018 1:14 pm

eg1 wrote:
Wed May 16, 2018 1:02 pm
Does option 2 get really cumbersome during tax time to figure out all the cost basis with all the buys and sells?
They'll send a consolidated 1099 like Vanguard does so you only report one number, but if you're concerned you can minimize it by using the "maintain minimum balance" option in the cash manager - it will just top off the CMA every once in a while when balance falls below the threshold you set.

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Re: Fidelity CMA + MMF vs. online credit union

Post by indexfundfan » Thu May 17, 2018 11:28 am

arf30, how long is the hold when you submit an ACH pull using the Fidelity website?
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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Thu May 17, 2018 12:10 pm

1-2 days, but I've read conflicting reports on this forum, I think it might vary by the source bank.

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Re: Fidelity CMA + MMF vs. online credit union

Post by Cash » Sat May 19, 2018 8:05 am

We also used to have accounts at BOA, Alliant, and Fidelity, and consolidated all at Fidelity. I think it's a nice, one-stop setup. We also have a checking account at TD Bank in case we need a physical branch for anything (once in the past two years). I also write all checks from that account, where I keep only a small amount of money, and not the Fidelity account to avoid the issue I had at Alliant.

I keep cash in FTEXX (muni money market) in the CMA to avoid taxable interest income.

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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Sat May 19, 2018 10:42 am

Cash wrote:
Sat May 19, 2018 8:05 am
We also used to have accounts at BOA, Alliant, and Fidelity, and consolidated all at Fidelity. I think it's a nice, one-stop setup. We also have a checking account at TD Bank in case we need a physical branch for anything (once in the past two years). I also write all checks from that account, where I keep only a small amount of money, and not the Fidelity account to avoid the issue I had at Alliant.

I keep cash in FTEXX (muni money market) in the CMA to avoid taxable interest income.
You can have multiple CMAs in the same Fidelity account - lots of people spin up a second CMA solely for ATM/debit/checkwriting and keep a small amount of money in it (using the cash manager). It does seem crazy that banks don't ask you to log in and approve/deny new ACH requests.

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Re: Fidelity CMA + MMF vs. online credit union

Post by whodidntante » Sat May 19, 2018 11:13 am

arf30 wrote:
Thu May 17, 2018 12:10 pm
1-2 days, but I've read conflicting reports on this forum, I think it might vary by the source bank.
3-4 business days for me. I pull from multiple banks. Maybe I make Fidelity nervous? :P

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Re: Fidelity CMA + MMF vs. online credit union

Post by whodidntante » Sat May 19, 2018 11:16 am

arf30 wrote:
Wed May 16, 2018 1:14 pm
eg1 wrote:
Wed May 16, 2018 1:02 pm
Does option 2 get really cumbersome during tax time to figure out all the cost basis with all the buys and sells?
They'll send a consolidated 1099 like Vanguard does so you only report one number, but if you're concerned you can minimize it by using the "maintain minimum balance" option in the cash manager - it will just top off the CMA every once in a while when balance falls below the threshold you set.
For a money market fund? The buys and sells won't matter. Fluctuations in MMF NAV are de minimis.

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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Sat May 19, 2018 11:17 am

whodidntante wrote:
Sat May 19, 2018 11:16 am
For a money market fund? The buys and sells won't matter. Fluctuations in MMF NAV are de minimis.
Good point.

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Re: Fidelity CMA + MMF vs. online credit union

Post by Cash » Sun May 20, 2018 6:24 am

arf30 wrote:
Sat May 19, 2018 10:42 am
Cash wrote:
Sat May 19, 2018 8:05 am
We also used to have accounts at BOA, Alliant, and Fidelity, and consolidated all at Fidelity. I think it's a nice, one-stop setup. We also have a checking account at TD Bank in case we need a physical branch for anything (once in the past two years). I also write all checks from that account, where I keep only a small amount of money, and not the Fidelity account to avoid the issue I had at Alliant.

I keep cash in FTEXX (muni money market) in the CMA to avoid taxable interest income.
You can have multiple CMAs in the same Fidelity account - lots of people spin up a second CMA solely for ATM/debit/checkwriting and keep a small amount of money in it (using the cash manager). It does seem crazy that banks don't ask you to log in and approve/deny new ACH requests.
Yeah I suppose that's another solution, though I would not set up that account to use cash manager (if anyone were to gain access, they could still withdraw up to whatever is available in the backup account).

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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Sun May 20, 2018 7:47 am

Cash wrote:
Sun May 20, 2018 6:24 am
arf30 wrote:
Sat May 19, 2018 10:42 am

You can have multiple CMAs in the same Fidelity account - lots of people spin up a second CMA solely for ATM/debit/checkwriting and keep a small amount of money in it (using the cash manager). It does seem crazy that banks don't ask you to log in and approve/deny new ACH requests.
Yeah I suppose that's another solution, though I would not set up that account to use cash manager (if anyone were to gain access, they could still withdraw up to whatever is available in the backup account).
The cash manager has two modes, for this account you would disable the overdraft protection and set it to top off the account at $500 (or whatever limit). It's an overnight process that runs once a day, so there's no risk of it draining your backup account. At most they drain $500, you notice the fraud because cash manager sends you an alert that it's moving money, disable the cash manager and notify Fidelity.

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Re: Fidelity CMA + MMF vs. online credit union

Post by crg11 » Thu Jun 14, 2018 9:01 am

Just wanted to say, thank you for this thread and the excellent tidbits in it. Because my new employer has a 401k with Fidelity, I have been working on moving my Vanguard 401k, IRAs, etc to Fidelity and consolidating when possible. This thread made me realize I could also move for my emergency fund and has at least made me entertain the idea of moving my checking over.

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Re: Fidelity CMA + MMF vs. online credit union

Post by indexfundfan » Thu Jun 14, 2018 9:05 am

indexfundfan wrote:
Thu May 17, 2018 11:28 am
arf30, how long is the hold when you submit an ACH pull using the Fidelity website?
Answer my own question: if you submit your ACH pull on day T, the money is credited on T+1 and available on T+5.
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Re: Fidelity CMA + MMF vs. online credit union

Post by JohnSmith123 » Wed Nov 21, 2018 11:28 am

Hey a question since I find the CMA and the description online quite confusing.

So if I have the checking/cma account, to optimize my money:

1) The Core fund I cant change to a higher yielding MMF, so I keep it as $0
2) Buy FTEXX or SPRXX or whatever MM fund I want

When a debit hits the account, Fidelity will automatically liquidate out of the MM Fund (since the core is $0)?

Is this correct?

thanks!

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Re: Fidelity CMA + MMF vs. online credit union

Post by IntangibleAssets » Wed Nov 21, 2018 11:39 am

JohnSmith123 wrote:
Wed Nov 21, 2018 11:28 am
Hey a question since I find the CMA and the description online quite confusing.

So if I have the checking/cma account, to optimize my money:

1) The Core fund I cant change to a higher yielding MMF, so I keep it as $0
2) Buy FTEXX or SPRXX or whatever MM fund I want

When a debit hits the account, Fidelity will automatically liquidate out of the MM Fund (since the core is $0)?

Is this correct?

thanks!
This is correct, the only hassle is you have to manually purchase the funds each time you get a new deposit as it will auto go to the core fund.

OP...In addition to this I also have the fidelity CC to streamline rewards credit cards 2% on everything is ok with me and keeps it all smooth at fidelity.

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Re: Fidelity CMA + MMF vs. online credit union

Post by arf30 » Wed Nov 21, 2018 11:52 am

If you want 100% of your money in a MM fund, use the brokerage account for checking, or setup deposits to the brokerage and debits from the CMA using overdraft mode.

Personally I just use the CMA like a regular checking account, except I keep an extra 10k in SPRXX there (with dividend reinvestment off) for emergencies.

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Re: Fidelity CMA + MMF vs. online credit union

Post by IntangibleAssets » Wed Nov 21, 2018 11:56 am

arf30 wrote:
Wed Nov 21, 2018 11:52 am
If you want 100% of your money in a MM fund, use the brokerage account for checking, or setup deposits to the brokerage and debits from the CMA using overdraft mode.

Personally I just use the CMA like a regular checking account, except I keep an extra 10k in SPRXX there (with dividend reinvestment off) for emergencies.
The CMA is a brokerage account, I don't believe all the extra steps are necessary, it's simpler for me just to keep it all contained within the CMA. To each their own though!

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Re: Fidelity CMA + MMF vs. online credit union

Post by Gadget » Wed Nov 21, 2018 7:24 pm

The core fund on the main CMA account has a terrible rate. But the core fund for the brokerage account is good. Here's what I do.

1. Setup a CMA account. Keep something small like $250 in it. Withdrawl all money from this since it will sweep from the brokerage account for each transaction.
2. Setup the brokerage account as an overdraft fund for the checking account. Deposit all money into this. This is the real checking account balance.
3. I changed my brokerage core account to FZFXX (Fidelity Treasury Money Market fund). It has no state taxes, which makes it better than SPAXX which is the only other core account option for me. Currently, FZFXX has a 7 day yield of 1.87%.
4. When I get a year end bonus, I will buy into FZDXX for their Prime Money Market fund. Which has a current 7 day yield of 2.11%, but requires $100k to enter the fund. But a Fidelity rep confirmed that once you own some of the fund, you can buy and sell it no matter how much money you have in the fund. The downside of FZDXX is that you have to manually purchase it. So out of laziness, I will frequently be in the FZFXX core fund for my brokerage account.

This setup effectively gives me a checking account with a core account that yields a decent rate. Yes, Vanguard's version has better fund rates. Ally and other internet banks have better savings rates. But I have not seen an online bank with free ATM withdrawls and a core checking account rate this good. I don't want to have to constantly swap money between savings and checking. Maybe other internet banks do this easily and I'm just ignorant though.

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Re: Fidelity CMA + MMF vs. online credit union

Post by lisaneedsbraces » Wed Nov 21, 2018 7:29 pm

Gadget wrote:
Wed Nov 21, 2018 7:24 pm
The core fund on the main CMA account has a terrible rate. But the core fund for the brokerage account is good. Here's what I do.

1. Setup a CMA account. Keep something small like $250 in it. Withdrawl all money from this since it will sweep from the brokerage account for each transaction.
2. Setup the brokerage account as an overdraft fund for the checking account. Deposit all money into this. This is the real checking account balance.
3. I changed my brokerage core account to FZFXX (Fidelity Treasury Money Market fund). It has no state taxes, which makes it better than SPAXX which is the only other core account option for me. Currently, FZFXX has a 7 day yield of 1.87%.
4. When I get a year end bonus, I will buy into FZDXX for their Prime Money Market fund. Which has a current 7 day yield of 2.11%, but requires $100k to enter the fund. But a Fidelity rep confirmed that once you own some of the fund, you can buy and sell it no matter how much money you have in the fund. The downside of FZDXX is that you have to manually purchase it. So out of laziness, I will frequently be in the FZFXX core fund for my brokerage account.

This setup effectively gives me a checking account with a core account that yields a decent rate. Yes, Vanguard's version has better fund rates. Ally and other internet banks have better savings rates. But I have not seen an online bank with free ATM withdrawls and a core checking account rate this good. I don't want to have to constantly swap money between savings and checking. Maybe other internet banks do this easily and I'm just ignorant though.
Why not run everything in and out of the Brokerage account and leave the CMA at $0? Will ATM withdrawals from the CMA, while the balance is $0, not pull from the brokerage?

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Re: Fidelity CMA + MMF vs. online credit union

Post by Gadget » Wed Nov 21, 2018 7:30 pm

lisaneedsbraces wrote:
Wed Nov 21, 2018 7:29 pm
Gadget wrote:
Wed Nov 21, 2018 7:24 pm
The core fund on the main CMA account has a terrible rate. But the core fund for the brokerage account is good. Here's what I do.

1. Setup a CMA account. Keep something small like $250 in it. Withdrawl all money from this since it will sweep from the brokerage account for each transaction.
2. Setup the brokerage account as an overdraft fund for the checking account. Deposit all money into this. This is the real checking account balance.
3. I changed my brokerage core account to FZFXX (Fidelity Treasury Money Market fund). It has no state taxes, which makes it better than SPAXX which is the only other core account option for me. Currently, FZFXX has a 7 day yield of 1.87%.
4. When I get a year end bonus, I will buy into FZDXX for their Prime Money Market fund. Which has a current 7 day yield of 2.11%, but requires $100k to enter the fund. But a Fidelity rep confirmed that once you own some of the fund, you can buy and sell it no matter how much money you have in the fund. The downside of FZDXX is that you have to manually purchase it. So out of laziness, I will frequently be in the FZFXX core fund for my brokerage account.

This setup effectively gives me a checking account with a core account that yields a decent rate. Yes, Vanguard's version has better fund rates. Ally and other internet banks have better savings rates. But I have not seen an online bank with free ATM withdrawls and a core checking account rate this good. I don't want to have to constantly swap money between savings and checking. Maybe other internet banks do this easily and I'm just ignorant though.
Why not run everything in and out of the Brokerage account and leave the CMA at $0? Will ATM withdrawals from the CMA, while the balance is $0, not pull from the brokerage?
I was under the impression that I had to keep something in the CMA account for ATM withdrawls. I may be wrong though. I never asked. In that case, I guess I could leave my CMA account at 0.

When I get time I'll ask Fidelity, unless someone else already knows.

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Re: Fidelity CMA + MMF vs. online credit union

Post by lisaneedsbraces » Wed Nov 21, 2018 7:37 pm

Gadget wrote:
Wed Nov 21, 2018 7:30 pm
lisaneedsbraces wrote:
Wed Nov 21, 2018 7:29 pm
Gadget wrote:
Wed Nov 21, 2018 7:24 pm
The core fund on the main CMA account has a terrible rate. But the core fund for the brokerage account is good. Here's what I do.

1. Setup a CMA account. Keep something small like $250 in it. Withdrawl all money from this since it will sweep from the brokerage account for each transaction.
2. Setup the brokerage account as an overdraft fund for the checking account. Deposit all money into this. This is the real checking account balance.
3. I changed my brokerage core account to FZFXX (Fidelity Treasury Money Market fund). It has no state taxes, which makes it better than SPAXX which is the only other core account option for me. Currently, FZFXX has a 7 day yield of 1.87%.
4. When I get a year end bonus, I will buy into FZDXX for their Prime Money Market fund. Which has a current 7 day yield of 2.11%, but requires $100k to enter the fund. But a Fidelity rep confirmed that once you own some of the fund, you can buy and sell it no matter how much money you have in the fund. The downside of FZDXX is that you have to manually purchase it. So out of laziness, I will frequently be in the FZFXX core fund for my brokerage account.

This setup effectively gives me a checking account with a core account that yields a decent rate. Yes, Vanguard's version has better fund rates. Ally and other internet banks have better savings rates. But I have not seen an online bank with free ATM withdrawls and a core checking account rate this good. I don't want to have to constantly swap money between savings and checking. Maybe other internet banks do this easily and I'm just ignorant though.
Why not run everything in and out of the Brokerage account and leave the CMA at $0? Will ATM withdrawals from the CMA, while the balance is $0, not pull from the brokerage?
I was under the impression that I had to keep something in the CMA account for ATM withdrawls. I may be wrong though. I never asked. In that case, I guess I could leave my CMA account at 0.

When I get time I'll ask Fidelity, unless someone else already knows.
I recently moved from the CMA to a brokerage account, and haven't tested ATM withdrawals from my $0 balance CMA yet, but it looks like it should work. You do need to set up the cash manager feature on the CMA and tell it which brokerage account(s) to pull from. The cash manager section of the FAQ describes it:

https://www.fidelity.com/cash-managemen ... agerstatus

mrmass
Posts: 123
Joined: Thu Jul 26, 2018 6:35 pm

Re: Fidelity CMA + MMF vs. online credit union

Post by mrmass » Thu Nov 22, 2018 5:46 am

I'd like to add that I've used Fidelity's online chat for support and give that an A+ I don't like calling, chat works for me.

WanderingInvestor
Posts: 9
Joined: Fri Jul 13, 2018 1:18 pm

Re: Fidelity CMA + MMF vs. online credit union

Post by WanderingInvestor » Thu Nov 22, 2018 5:34 pm

lisaneedsbraces wrote:
Wed Nov 21, 2018 7:37 pm

I recently moved from the CMA to a brokerage account, and haven't tested ATM withdrawals from my $0 balance CMA yet, but it looks like it should work. You do need to set up the cash manager feature on the CMA and tell it which brokerage account(s) to pull from. The cash manager section of the FAQ describes it:

https://www.fidelity.com/cash-managemen ... agerstatus
I know you do need something in the CMA's FDIC-insured core sweep (or the core cash balance if it hasn't swept yet) for Visa Debit charges to be approved, if everything else is an a different brokerage account's MMF under Cash Manager. At least according to how I read Fidelity's info on Cash Manager - they mention that Visa purchase transactions happen too fast for the margin department to approve. Even though the CMA is not a marginable account and the other brokerage account doesn't have to be to use Cash Manager, apparently Margin dept approval is needed for the acct-to-acct autotransfer.

But I also know, from recent experience with the CMA-only, with keeping my FDIC sweep and cash credit/debit balance at 0 by buying everything into SPRXX, that ATM withdrawals on the Visa Debit and Visa Debit purchases do work, against the money market. At least in my case where the MMF was in the same account, in the CMA itself.

Also, in the Balances display, the amount in SPRXX in my CMA shows as "core". Even thought it isn't the core, and can't be the default core in a CMA.

Don't know first-hand what happens with 0-bal CMA, cash all in MMF linked account via Cash Manager because I don't use it. But I suspect it's the inter-account transfer that is the limiting factor on instantly-approved card use (purchase and maybe withdrawal), not the money being in one of their core-type same-day-settle MMFs.

stlutz
Posts: 4852
Joined: Fri Jan 02, 2009 1:08 am

Re: Fidelity CMA + MMF vs. online credit union

Post by stlutz » Thu Nov 22, 2018 8:13 pm

I take a little bit of a different approach:

--I have all deposits go to my brokerage account
--I do my bill pays from the brokerage account
--I don't use cash manager
--I keep a small amount in the CMA for ATM withdrawals and on the rare occasion that I write a physical check.

By not using cash manager I limit my risk of fraudulent withdrawals due to debt card or fake check fraud, as money will not be auto-pulled from my brokerage account to handle such activity.

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