Fidelity Cash Management is an account that behaves like a high-yield checking account with an interest rate that is well above average. Even though Fidelity isn’t a bank, cash deposits up to $5 million are protected by the Federal Deposit Insurance Corporation (FDIC). If you’re considering Fidelity for high-yield checking, here’s what you need to know about the Fidelity Cash Management Account.
Account details and annual percentage yields (APYs) are accurate as of December 18, 2023.
Are the Fidelity Cash Management interest rates worth it?
If you are looking for a checking account that earns interest, consider opting for Fidelity Cash Management, though you can find higher yields on the best cash management accounts available in the market.
However, if you are really looking for a place to store cash until you are ready to invest it, then a high-yield savings account may give you higher rates.
Overview of Fidelity Cash Management interest rates
The Fidelity Cash Management Account is intended to be a storage spot for funds that were recently invested, or about to be invested. However, it behaves like a checking account with free mobile check deposit, bill pay, a debit card, check-writing abilities and easy transfers to external bank accounts. It also reimburses all ATM fees anywhere in the world.
It earns 2.72% APY and has FDIC insurance on balances up to $5 million.
With a higher yield than you’ll find with many other financial institutions (the national average rate for interest checking is 0.07% APY as of December 18, 2023 — according to the FDIC), Fidelity’s Cash Management Account is an effective way to fight inflation and passively boost your balances outside of your traditional savings account, especially if you already have a Fidelity brokerage account.
Cash balances are FDIC insured up to $5 million. How much can you earn?
Interest accrues daily in your Fidelity Cash Management Account and is paid on the last business day of the month. Here’s how that shakes out in terms of earnings.
Here’s what you can earn on a $10,000 balance after five years and 10 years.
What is the Fidelity Cash Management Account?
The Fidelity Cash Management Account behaves like a checking account that comes with FDIC insurance on deposits up to $5 million.
However, even though it’s not technically a checking account, this does not mean it’s lacking in any features. In fact, it still comes with everything you would expect, including:
- Secure debit card.
- Check writing.
- ATM access.
- Mobile deposit.
- Direct deposit.
- FDIC insurance.
- Digital wallet compatibility.
- Online and mobile banking.
Fidelity takes your account balance and deposits it with various program banks to ensure that you maintain FDIC insurance for all your balances up to $5 million.
It’s possible that you may already have an account at a program bank, if so, this may affect your FDIC insurance on funds at that bank. You can call Fidelity and opt out of certain banks to avoid this issue.
Many Fidelity customers choose to pair it with other Fidelity investment accounts, but it’s not required. Even if you only choose to do Fidelity Cash Management, you’ll still pay nothing in monthly fees, nor will you have a minimum account balance requirement.
How Fidelity Cash Management compares
Keeping in mind that, according to the FDIC, the national average rate for interest checking accounts is 0.07% APY (as of Dec. 18, 2023) — Fidelity compares very well. If you are already investing with Fidelity, then getting a cash management account there makes sense.
However, when it comes to other cash management accounts, you can find higher rates than with Fidelity. For example, Betterment Cash Reserve and Empower Personal Cash™ both earn higher yields than Fidelity — along with the Wealthfront Cash Account, which not only earns a higher yield, but also carries more FDIC insurance than Fidelity.
Fidelity review
Fidelity is an investment brokerage that serves over 43 million people and has over $11 trillion under administration.
They have a wide variety of investment accounts and investment choices. You can open taxable investment accounts, IRAs, 529s, accounts for charitable giving, annuities and more. For investment choices, you can choose from mutual funds, ETFs, individual stocks, bonds, crypto and much more.
Frequently asked questions (FAQs)
Yes, the Fidelity Cash Management Account pays interest. It currently has a 2.72% APY, which is much higher than the national average interest checking rate of 0.07% APY (as of Dec. 18, 2023, according to the FDIC).
A cash management account is a combination of a checking and savings account that is often offered by advisory firms. Technically speaking, it’s a nonbank cash account but it has features you would expect in a checking account and the funds are FDIC insured.
Yes, funds up to $5 million in a Fidelity Cash Management Account are insured by the FDIC.
Yes, you can get direct deposit to a Fidelity Cash Management Account. To get started, simply provide your routing and account number to your employer’s payroll manager.
A brokerage account is where you can invest money into various investments, including stocks, bonds, crypto and more.
A cash management account, on the other hand, is a place to store your money while it is waiting to be invested. It acts as a checking account and you can deposit and spend from it like you would any other checking account.
