Fidelity Investments Inc. is a multinational investment management corporation offering a wide range of personal and professional investment products and advising options.

This financial services company was established in 1946 and is now the fifth largest asset management firm in the world controlling more than $2 trillion in assets.

Rated the #1 online broker of 2020 by both Barron’s and Investor’s Business Daily, Fidelity is also considered to be an overall sound choice for cash management accounts by review publications and customers alike.

If you’re not familiar, a cash management account is an all-in-one account that combines features of savings accounts, checking accounts and investment accounts in one place, with one institution.

Cash management accounts let you capitalize on convenience and security and this brokerage firm offers one with several notable perks. If you want a cash management account that can do more than the standard checking, savings, or investment account can, here’s what you’ll need to know about the cash management account offered through Fidelity.

What is the Fidelity Cash Management Account

Fidelity Cash Management accounts are brokerage accounts, not bank accounts. This makes managing your finances easier by allowing you to both save and invest under the same roof.

That said, you can also use this much like you would a checking account since it offers:

1. ATM cash access,
2. a debit card,
3. the option for bill pay,
4. and unlimited check writing capabilities. 

Your uninvested balance earns interest similar to an online savings account or you can choose to park your cash in other low-risk investment options like a money market account or CD.

Now let’s get under the hood and see how these accounts actually work.

Remember these are not deposit accounts nor bank accounts.

In fact, the cash you put in your Fidelity Cash Management account doesn’t actually stay with Fidelity at all (though it can be accessed through Fidelity).

Instead, Fidelity partners with other FDIC-insured banks, called Program Banks, and carries out what is known as “FDIC-Insured Deposit Sweep” or simply “Sweep” (a practice typical of cash management accounts).

Basically, Fidelity moves your money into different interest-bearing deposit accounts with other institutions so that it can leverage their FDIC insurance and maximize your coverage.

Your money will be swept into Program Banks chosen by Fidelity and you will be notified about which have been selected for you when you are presented with your Program Bank List. There are always going to be a minimum of five different banks available for Sweep, but exactly which ones are available to participate depends on demand and other factors. 

This practice of sweeping makes it possible for Fidelity Cash Management accounts to be FDIC insured up to $1.25 million. Most deposit products are only insured up to $250,000, but because your money will be distributed across multiple institutions and insured separately by the FDIC, coverage can extend well beyond this typical maximum. However, the coverage limit per bank is still $250,000, which is why you may have up to five different Program Banks. 

Fidelity will automatically sweep the first $245,000 of your cash management account balance into the first bank on your Program Bank List, reserving $5,000 for accrued interest, then the next $245,000 into your second bank, and so on. Just know that it is your responsibility to make sure that your cash is always within coverage limits at each Program Bank. If you do find that you’ve, for some reason, exceeded FDIC coverage limits or you wish to change one or more of your banks, call Fidelity at 800-931-9987 to update your Program Bank list as needed. 

Remember that you are not a customer with Program Banks but with Fidelity. If you are already a customer with a Program Bank beforehand, keep in mind that your aggregate balance will be used to assess coverage.

You will also need a Fidelity investment account in order to open a Cash Management account.

Fidelity Cash Management Account Rate + Features

Fidelity Cash Management Accounts do not earn much in the way of interest currently, but they have been competitive in the past.

Savings rates in general are shrinking across the board as the FED remains committed to zero rates through 2022.

Fidelity Cash Management Account Rates

To put these offers in perspective, the current national average for a savings account is 0.06% APY and just 0.04% APY for interest-bearing checking accounts.

Interest compounds daily and credits monthly.

You can use this account to invest in Fidelity CDs, mutual funds, fixed-income instruments, or MMAs as well, but the current rates won’t be too enticing.

According to Fidelity, the Fidelity Cash Management account is meant to supplement, not replace, your Fidelity brokerage account, which does not allow for spending but has many more investment options to choose from.

The Fidelity Debit Card, issued by PNC Bank, can be used at any Fidelity ATM or out-of-network ATM worldwide and all ATM charges made from your cash management account will be fully reimbursed. It can also be linked to Apple Pay.

You can use your Cash Management account to enroll in Fidelity BillPay, write as many checks as you want, deposit checks, and make transfers between this and external accounts, and more—all at no cost to you.

Unlike many cash management and money market accounts, the Fidelity Cash Management account does not have monthly maintenance or low balance fees.

Reviews and Customer Sentiment

Overall customer satisfaction is at 4.4 out of 5 stars on the Fidelity site. Customers appreciate how comprehensive Fidelity’s product lineup and website are and the general consensus is that the online banking platform is easy-to-use and does the job.

In terms of the cash management account, the disadvantages are that the product isn’t as competitive as it could be in terms of rates and APY and Fidelity doesn’t have many branches. In addition, there have been reports of transactions into and out of cash management accounts taking longer to go through than what is typical. Some customers have also expressed frustration in getting support from Fidelity.

The Fidelity Cash Management was given a rating of 4.5 stars out of 5 on NerdWallet because it has good ATM coverage, ATM reimbursements, and no monthly fees, but the account is dinged for not earning a better rate of return.

There are less than 200 Fidelity Investor Centers or branches across the country. This limited in-person branch access might not be what you want from a bank, but Fidelity makes up for this in other ways. For one, customer support can be reached 24/7 and the Fidelity app is very highly rated on the App Store—4.8 stars—and Google Play—4.5 stars. Call (800) 343-3548 to reach a representative at any time or day of the week or reach out via the site’s convenient live chat feature. 

Final Thoughts

As far as cash management accounts go, this one is solid but there are better options available elsewhere.

The best parts of this account lean towards the checking account features rather than the savings account features as current rates are grim. Therefore this account isn’t going to grow idle cash to the extent that a strong online savings account could, but it’s great for keeping large sums of money ready to deploy and invest.