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Fidelity is best known for its investment offerings, but what many people don’t know is that it also has an excellent checking account.
Fidelity’s cash management account offers many of the same services as other top online banks, all at almost no cost. And although the online experience is a little clunkier than with some other banks, it has a few extra features that can make it the perfect option in certain situations.
Fidelity Cash Management Account Details
Fidelity’s cash management account offers all the basic services we’ve come to expect from an online bank, with none of the fees or minimums.
The online banking experience isn’t quite as streamlined as what you might find with other online banks, but you have easy access to bill pay and transferring money between accounts (both at Fidelity and at other institutions) is simple and quick.
You also get a Visa® debit card, free checks, and all ATM fees are reimbursed, with the exception of a 1% foreign transaction fee.
Fidelity also has a smartphone app that lets you deposit checks from anywhere and keep a close eye on your accounts.
All of these basic services are free, and there is no required minimum balance.
Currently, Fidelity’s cash management account pays 0.07% interest, no matter your balance.
Fidelity’s cash management account has a few unique features that may appeal to certain types of consumers.
First, it offers a “Cash Manager” service that has three functions:
- Basic overdraft protection that automatically moves money from a designated account if you overdraw your checking account (this is offered by other online banks).
- Set a minimum target balance in your checking account and Fidelity will automatically transfer money from another account when you dip below that balance. This can prevent overdrafts from happening in the first place.
- Set a maximum target balance in your checking account and Fidelity will notify you when you exceed it so that you can transfer money to longer-term investments.
Fidelity also offers integration with its Visa credit card, which offers unlimited 1.5% cash back. This card requires a Fidelity account, and one option is to have your cash back deposited directly into your cash management account. Though you could also have those rewards deposited into a Fidelity IRA or 529 plan.
Fidelity also offers something called “Full View” which allows you to see not only all of your Fidelity accounts in one place but your accounts at other institutions as well. Full View also has budgeting capabilities that may make an external service like mint.com unnecessary.
Finally, unlike many online checking accounts, Fidelity actually has physical locations you can visit. You can find a branch near you here.
Are There Any Gotchas or Extra Fees?
For all the basic services, Fidelity’s cash management account is fee-free. But there are a few things to watch out for.
There is a 1% foreign transaction fee, as well as fees for various services like bank wires ($10-15) and cashier’s checks ($10) or problems like a returned check ($15).
Also, Fidelity’s cash management account is technically a brokerage account that allows you to buy and sell mutual funds, CDS, and certain other investments. There are various fees for those kinds of transactions, but they are not necessary if you are using it simply as a checking account.
You also cannot deposit cash to your Fidelity cash management account, and again the online user experience isn’t quite as smooth as with some other online banks.
Fidelity earned an A transparency score rating from MagnifyMoney.
Here is a quick summary of pros and cons:
- Reimburse ATM fees
- No minimum account fee
- No monthly fee
- Free overdraft protection by linking to a savings account
- Extra “Cash Manager” features
- Integration with Fidelity cash rewards credit cards
- “Full View” that could serve as a central budgeting and account management platform
- Online experience could be better
- 1% foreign transaction fee
- Cannot deposit cash
How Can You Open a Fidelity Cash Management Account?
The process isn’t quite as straightforward as with some other banks because you are actually opening a brokerage account, which has more rules surrounding it than a conventional checking account. But it’s not too difficult.
From the Fidelity.com home page, you can click the “Choose an Account” button that will bring you to a list of different types of accounts. You will see a “Brokerage and Cash Management” option under the “Investing and trading” section, and you can click the corresponding “Open online” link.
From there you will be asked to enter some personal information, answer a few questions to verify your identity, enter your current employment information, choose which features you want (like bill pay), sign the terms and conditions, and then make your initial deposit.
How Does It Compare to the Competition?
Fidelity’s cash management account is a fantastic option for anyone who wants the basic features of a checking account without any fees or account minimums, especially if you like some of its unique features. But there are few other checking accounts that may be worth considering.
As a whole, each of these banks offers most of the same basic features as Fidelity’s cash management account, but not its more unique features like the Cash Manager tool, integration with Fidelity cash rewards cards, or the Full View tool.
Ally Bank’s interest checking account has no fees and no account minimums, and offers most of the same basic features like online bill pay, mobile check deposit, ATM fee reimbursement (within the US), and easy transfers between both internal and external accounts. The online user experience is also simpler and easier to use than Fidelity’s.
Charles Schwab’s high yield investor checking account is very similar to Ally Bank’s checking account. Both offer all the basic services without a minimum balance and without fees, and Charles Schwab pays 0.10% interest no matter your account balance. Schwab is a bit like Fidelity in that both institutions offer more investment options than a traditional bank.
Capital One’s 360 Checking pays 0.20% interest on balances of less than $50,000, 0.75% interest on balances of more than $50,000, and 0.90% interest on balances of more than $100,000. It also offers cash deposits at select ATMs, which can be a big advantage. The big downsides are that ATM withdrawals are only free at Allpoint® ATMs (as opposed to all ATMs), and if you overdraft you will be charged interest on the amount of the overdraft until it is paid back (currently 11.25%).
Who Is This Account Best For?
The Fidelity cash management account is best for anyone who is already using Fidelity for their investments and wants a low-cost checking account without having to go to another bank. It’s also great for anyone who wants to make use of some of the unique features that Fidelity offers.
But if you don’t already have a relationship with Fidelity and all you’re looking for is an online checking account, some of the other options above may be better.