There are many cash management companies that you can open an account with for cash management. They include Fidelity, SoFi, E-Trade Financial, and Aspiration, among many others. Today, I will discuss fidelity cash management account review to help you with the relevant information you require before opening such an account. Opening a cash management account can be a significant milestone for your financial stability.
Fidelity started its operations in 1946. Its headquarters are in Boston, Massachusetts, U.S. Within the 75 years of operation, the company has done well, probably due to excellent management and clients’ trust. According to Barron’s and Investor’s Business Daily, the company is one of the world’s largest cash management companies. As of June 2020, it had $3.3 trillion in assets under management, and the total customer asset value number combined was $8.3 trillion.
While Fidelity Cash Management is a worldwide company, it operates in 27 countries, including Bermuda, UK, Ireland, India, China, and Japan. The company has about 46 offices. Most of the operations are online, and you can open an account with your smartphone within a few minutes. Online account management makes it convenient for users instead of visiting a physical branch now and then.
What is a Fidelity Cash Management Account?
The Fidelity cash management account is one of the best cash management accounts that you can find today. It is not a bank account like savings or checking but a brokerage account where account holders can buy and sell securities. However, it combines the features of savings and checking accounts. It does not have the same regulations as banks, but your money has insurance by FDIC.
The FDIC insurance is not direct to the company but the partner banks. Cash management accounts usually partner with banks to offer services. When clients deposit their money, Fidelity ‘sweeps’ the money to the partner banks. The company allows you to invest and save at the same time. With the account, you can;
That is why I earlier mentioned that it has some aspects of a bank account. Your savings also earn some interest. You are allowed to select at most five program banks whereby each of the banks can have $250,000 for FDIC insurance.
Selecting multiple banks ensures that the extra amount moves to various banks if you have more than $250,000. Fidelity will always notify you which banks have your money, whereby they pick them from your list. Fidelity usually sweeps $245,000 and reserves $5,000 for accrued interest.
Generally, the Fidelity Cash Management account manages mutual funds, offers retirement services, provides investment advice, index funds, offers wealth management services, securities execution and clearance, cryptocurrency, and life insurance.
What should you consider before opening a cash management account?
It is good to ask yourself various questions about an account you are about to open. Before opening a cash management account, you should ask yourself the following questions.
1. Does the account meet my demands?
When opening an account with a cash management company, you must have a goal. If you want to save, ask yourself whether you will get the target interest over a given time. You may need to withdraw money or pay bills frequently. An ATM card will be hardy for this matter.
2. Does the company offer insurance for my money?
Though FDIC does not offer direct insurance for money in cash management accounts, you should check whether the partner bank to the cash management company provides insurance.
Do not just feel okay when the company officials tell you that your money has an insurance cover, as it may turn out to be the opposite when the company collapses. Insurance helps you to recover your money in case the company dies. You cannot risk making the mistake of saving your money in a company without insurance.
3. Check the fees
Some companies will charge you to deposit money in your account, while others will charge you for various financial advice you get from them. You have to read the terms and conditions well and understand everything in those prints. You can have any of the officers explain to you various issues that you do not understand.
How do you open a Fidelity Cash Management Account?
Opening a cash management account is fast and is easy online. You need to visit the Fidelity Cash Management website to carry out the process.
- Read product information statement.
- Click on the ‘How do I open a Fidelity® Cash Management Account’ option.
- You may not have an account with Fidelity. In that case, you may choose to open a Cash management account only or both Fidelity Account Fidelity and Cash Management Account in one online session.
- For a cash management account, select whether it is an individual account or a joint account. Upon clicking next, you will have to indicate whether you are already a fidelity customer with another type of account such as brokerage, IRA, 401(k), and so on.
- If you already have an existing account, you will need to log in to that account and continue as per the instructions. If you don’t have an account with the company, select ‘No’ for the next step.
- Here, you will enter your three official names and your email address and select ‘Get Started.’
- A new window will open up to enter more details such as Social Security Number, date of birth, phone number, and residential address. Hit ‘Next’ to complete your account, confirm the details and fund it.
- If you want to open both a Fidelity Cash Management Account and a Fidelity Account, begin by indicating whether it is individual or joint. For a personal account, you will follow the same process as the one for a cash management account.
- When opening a joint account, you can either select; This joint account advocates for equal (50/50) share ownership. If either owner dies, he or she leaves his or her 50% share to his or her estate. All the parties must approve their details.
Is there any restriction to open a fidelity cash management account?
The only clear restrictions are that you cannot open an account without the necessary documents. You must have the Social Security Number. Most restrictions come once you open an account. You will find that securities in a brokerage account are not eligible for insurance coverage by FDIC.
However, the Securities Investor Protection Corporation (SIPC) has the mandate to protect your securities if the company collapses. Thus, there is no worry. Again, a partner bank will hold up to $250,000 for FDIC insurance. If you have more than $250,000, Fidelity will sweep the extra amount to the next bank.
Can I open a Fidelity® Cash Management Account if I already have a Fidelity brokerage account?
Yes. If you have an existing Fidelity brokerage account, you can open a cash management account. However, the account will not replace your current account. It will just add more features to your existing account.
The cash management account will help you to separate your spending activities from your investment operations. However, Fidelity will require the same details and will need you to log in to the existing account for them to prefill the details for you.
Does Fidelity Cash Management Account qualify for FDIC insurance coverage, and how does it work?
Fidelity Cash Management Account is not directly eligible for FDIC insurance. However, Fidelity moves the money you save with them to partner banks. It is the partner banks that have FDIC insurance, and thus your money will be secure. If, for any reason, Fidelity collapses, your money will be safe.
FDIC can insure up to $245,000 in each partner bank. If you have more than that, you can add other partner banks as well. Fidelity distributes the extra amount will to those banks. For example, if you deposit $750,000, Fidelity will allocate $245,000 to the first bank, another $245,000 to the next bank, the other $245,000 to the third bank, and the remaining $15,000 to the fourth bank.
You should select up to five partner banks, and when depositing money, you should have that in mind. Joint accounts can have up to $500,000 in a partner bank. However, the securities have a separate insurance body by the name Securities Investor Protection Corporation (SIPC) to insure up to $500,000.
How do I make sure my Fidelity accounts don’t exceed FDIC coverage limits?
You have to follow up on how much money Fidelity has swept to each partner bank. It is crucial to ensure that each partner bank does not receive more than $245,000. The excess cash will not have any insurance cover.
Errors can occur, and if you find excess in a particular bank, you can request that they transfer it to another bank. Remember that you can operate your account online and download an app that can help you monitor your account.
What types of accounts qualify to be cash manager funding accounts?
You can transfer funds from your bank account to your Fidelity Cash management account. You have to create an Electronic Funds Transfer (EFT) link between your bank account and the Fidelity® Cash Management Account. The accounts that are eligible to fund your cash management account include;
The funding sources help to maintain the minimum account balance. Remember that bank accounts are not for overdraft protection but only funding your Fidelity Cash Management account.
How do I apply and get the Fidelity credit card?
As long as you reside in the U.S and you are 18 years and above, you can apply for a Fidelity® Rewards Visa Signature® Card.
To apply for the card, you only need to sign in to your account online have the online application. The online application form will refill automatically. You can also call 888-325-6196 for directions on how to go about it.
The card is advantageous to use since it has several benefits. It gives you unlimited 2% cashback on the purchases you make with the card. Also, you get two reward points for every $1 you spend. There is no category restriction to earn points.
Moreover, reward points do not expire. You can use the card with Apple Pay®, Google PayTM, and Samsung Pay. You can use the rewards even to fund another account. Another benefit of the credit card is that it has no annual fees. Also, the card has zero fraud liability. If someone else uses it to fund some transactions illegally, you will not pay anything.
The credit card allows you to pay contactless or insert and swipe where necessary. Above all, the card has worldwide acceptance and can be very helpful in foreign lands. If you have any issues, you can benefit from 24/7 customer support.
Does fidelity cash management account offer free ATM access?
The Fidelity Cash Management account has free access to any ATM services. It is convenient when you want money urgently. The card is accepted worldwide, and thus, it will not be only for use in the USA. Withdraw money anywhere you see Visa®, Plus®, or Star® logos.
Again, you also get free ATM reimbursement. The security for the card is also on another level. You can sign up to get transaction alerts. You will be able to know when there are unauthorized transactions and take the necessary steps.
The card’s contactless technology makes it safe to pay for goods and services. It is also swift. You can also lock or unlock the card to prevent any unauthorized use.
Additionally, you can manage your card online using your smartphone. Manage your PIN, replace your card, and lock or unlock your PIN. The credit card also has extended warranty services for the first 90 days from the date of purchase.
Fidelity Cash Management Account is a suitable account to manage your funds. The cash management account can help you to save your money as you invest. Cash in a Fidelity Cash Management account is safe since the partner banks have FDIC insurance.
You will benefit from various services such as ATM withdrawals, bill pay, and money transfer, among others. You can either open an individual or joint Fidelity Cash Management account.