Why I Left My Bank For Fidelity Cash Management Account

I left my bank for Fidelity and it was one of the most important decisions in my personal finance journey.

So today, I want to share why I stopped using traditional banks and moved to a brokerage account at Fidelity that has saved and made me thousands of dollars. If you’re watching this and you’re earning less than 4% interest in your savings, are just sick and tired of getting nickeled and dimed on account fees, or just want a better bank account, then this post will help you.

This post may contain affiliate links, meaning I get a commission at no cost to you if you decide to make a purchase through my links. Visit this page for more information. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.

Content Overview

Today, I’ll go over key aspects of the Fidelity Cash Management Account; the high interest rate it offers via money market funds, how the account does this automatically for you, a really awesome ATM card with benefits I haven’t seen anywhere else, the security features this account has that are lacking at other banks and credit unions.

In fact, when I was a victim of a SIM swap scam and almost lost $100,000, this was the only account the scammers couldn’t take over, so we’ll talk about that too.

And I’ll also talk about how this account has really supercharged my wealth journey with its powerful automation tools when it comes to investing.

Let’s get started!

Offers A Top Tier Interest Rate

The first thing I want to mention is that although the Fidelity Cash Management Account is technically a brokerage account, you can basically treat this like a bank account that earns one of the highest interest rates around. This was the main reason I switched to this account. You can use this account to invest in stocks or as a bank account, or use it for both like I do.

Because it’s a brokerage account, you can have them hold your money in their government money market fund SPAXX, with the ticker symbol SPAXX. SPAXX is currently offering an excellent 3.98%. This rate is comparable to the best high-yield savings accounts and much higher than rates offered by the big banks. The national savings average is 0.41%, so SPAXX is 9 more than you’d normally get.

Because money market funds are not FDIC-insured, the next question you may have is how safe are they? The simple answer is that they’re very safe. To put this in perspective, if we had a 1 to 10 safety scale, with 10 being the safest with things like savings accounts and CDs, then a money market account would be like a 9.9, only ever so slightly below a 10. I really don’t see any concern with having my cash in a money market fund, and this is for a couple of reasons.

Reason number one is although they’re not FDIC-insured, they have SIPC protection. SIPC is short for Securities Investor Protection Corporation, which protects each customer up to $500,000 in their brokerage account, of which $250,000 can be in cash. Reason number two is if you look at what SPAXX is made up of, you can see that it’s filled with U.S. Treasury bills and securities, which are very safe and secure since it’s back by the full faith and credit of the U.S. government.

Alternatively, you can choose to have your money in an FDIC-insured deposit account, which is where Fidelity will hold your money at their partner banks. This option is currently earning 2.21%. Normally, the insured amount is up to $250,000, but Fidelity offers coverage up to $5 million for a single account.

They’re able to do this because Fidelity will send amounts above the $250,000 limit to another bank so that your account is always protected. So, if you’re one of the lucky people sitting on say a million dollars in cash, Fidelity will split this internally between four banks to make sure your entire money is FDIC-insured. With its lower interest rate, I never selected this option with how conservative and safe the money market fund is. Now, I’m not your financial advisor and so you have to make your own decision, but whatever choice you make, your account operates like cash either way.

Interest Automation on Uninvested Cash

The great thing about earning interest with the Fidelity Cash Management Account is that it’s all automatic. You get paid the interest you earn on the first day of every month as a dividend and that money will be added together with the rest of your funds and earn interest as well.

If you need to spend or pull your money out, you don’t have to switch the money sitting in your account from SPAXX to cash. That’s also completely automated. Whenever you need to transfer money from your account, it converts what you need into cash immediately. This includes taking money out with the ATM card.

Superb ATM Card With Incredible Benefits

Speaking of the ATM card, this is one of the best ATM cards you will ever come across because it offers unlimited global reimbursements of ATM fees. This feature alone has personally saved me thousands of dollars.

If you have an ATM card from another bank, chances are you get charged a fee every time you take money out, or it’s only free you use an ATM your bank owns. With this Fidelity debit card slash ATM card, you’ll get refunded for all ATM withdrawals, regardless of what ATM you use, no matter where you are in the world. The only other card that offers this is the Schwab Bank Visa Platinum Debit Card.

Travel is a big passion of mine. I’ve traveled to over 140 countries, and whenever I need money overseas, I just insert the ATM card into any machine. I don’t have to worry about what fees this machine or that machine charges because I know I’m getting it reimbursed.

Here’s a screenshot of two ATM transactions I made when Maryna and I were traveling in Thailand and Jordan. Within a day or two of pulling money out, Fidelity reimbursed the ATM fee for the transaction, saving me about $7 each time.

Also, if you’ve ever tried to convert U.S. dollars into another currency; at a bank, at the airport, or places like Western Union, you know you’re paying a ridiculous fee for doing so, but you’re also losing even more money than you think because they have a horrible exchange rate and could also tack on a foreign exchange fee. You can avoid all this trouble with the Fidelity ATM card.

Advanced Security Features

The other feature I love is Fidelity’s security options. They offer multiple layers of security and most importantly, Fidelity is one of a small number of financial institutions that offer using an authenticator app as a 2FA option, which is short for two-factor authentication.

What this means is that in addition to logging into your Fidelity account with your username and password, you can also require a one-time six-digit pin code generated from an authenticator app to be entered before gaining access to your account.

This is much more secure than having a pin code sent to you via a text message, because people can steal your phone number using a trick called a SIM swap scam. I mentioned earlier that I almost lost $100k from this – you can watch that video if you’re interested in what happened and how to protect yourself.

The main takeaway is that it’s much more secure to use an authenticator app compared to a text message when receiving a pin code.

Wealth Automation

Ok, let’s discuss why this account has been a game changer for my wealth journey, allowing me to save so much time with the power of automation. Fidelity has a pretty cool feature called “Recurring Activity” and I’ll show you an example of how you can use it to streamline your personal finances.

Let’s say you want to buy a few stocks or index funds on a regular basis, but don’t want to go through the order process every single time for every single stock or fund. Well, you can set your account up where it will automatically buy one or more investments on a set schedule; weekly, bi-weekly, or monthly.

You can do this for multiple Fidelity accounts too. Here you can see I already have an existing recurring investment activity, but I’m setting a second recurring one that will invest a total of $10,000 each month in the three funds I selected.

Once I submit this, it will show up on the summary screen and the recurring investments will happen automatically every month until I tell it to stop.

You can take this one step further. Maybe you want to invest once every two weeks because you get paid bi-weekly at work. In that situation, you can set up a recurring transfer rule where you direct Fidelity to take a set amount of money from the bank account that receives your paycheck and transfer the funds over to Fidelity. To do this, you can select “Transfer” option found in the dropdown menu of the “Create New Activity” button.

And that’s just one example of how Fidelity can streamline your personal finances with automation. There are a bunch of other ways Fidelity can save you time. You can set up recurring bank wires, you can automate Bill Pay to assist you in paying your mortgage or rent, credit cards, and utility bills to avoid late fees. Maybe you need to write checks every now and then. Well, you can order checks too and use them when needed.

The Fidelity Cash Management Account also has a bank account number and bank routing number so you can set up direct deposits or whatever you need from a banking perspective. It acts like a regular bank account.

And there’s absolutely no fee for any of that. There’s no monthly service fee, there’s no minimum balance fee, there’s no fee for repeating the word fee. Ok, that was a dumb joke, but it really is the one-stop-shop account for both saving and investing.

The Bottom Line

Having said all that, I still have accounts at traditional banks. Because one, I love free money for trying out new banks, you guys already know I dig those bank bonuses.

But two, and more relevant to everyone, is that currently, there’s no way to deposit cash into Fidelity. So, if you receive cash for whatever reason or get paid in cold hard cash, you still need a traditional bank to deposit them into. But unless it’s a high-yield savings account, I wouldn’t keep too much money in it because the interest you earn from it is super low.

The third reason is that if you have any apps or services that require it to connect to your bank account and share financial data, it will use a technology platform like Plaid. Fidelity doesn’t connect to these platforms most of the time so you should keep at least one traditional bank account open.

I’ve been using Fidelity since 2006 so I hope my almost two decades of experience using it was helpful. Let me know what you think in the comments below.