Best Checking Account That Is Not A Checking Account

[Rates and offers change. All rates and features were current as of the date of this post. Please check the current rate and offer with each company.]

Traditionally a checking account pays no or low interest but lets you write checks, have a debit card, withdraw cash from ATMs, and do online bill payment. A savings account or money market fund pays higher interest but lacks some of the transactional features. Bank savings accounts also limit you to 6 withdrawals per month due to Federal Reserve Regulation D. Wouldn’t it be nice to have all the transactional features and high interest rate in a single account?

Here comes Fidelity’s Cash Management Account. Technically it’s not a checking account but it has all the good features of bank accounts and none of the limitations. Check these out:

  • No minimum balance.
  • Competitive interest rate
  • Unlimited ATM fee rebates from *any* ATMs
  • Unlimited check writing with no minimum per check
  • Free online bill payment, free debit card, free checks
  • Does not require direct deposit or debit card usage
  • Does not require a separate brokerage account (it is a brokerage account)

This is innovative. It’s checking, saving and brokerage accounts rolled into one neat package. 

Before Fidelity Cash Management Account, I used a no-interest checking account and a Vanguard money market fund. When I had too much in the checking account, I would transfer to the money market fund. When I needed money to pay large bills, I transferred back.

With Fidelity Cash Management Account, there is no more transferring back and forth. Everything goes intoFidelity Cash Management Account. Everything earns good interest from day one. I don’t have to hunt for a specific bank’s ATM either. After everything was set up, I closed my bank checking account. I also moved over the money in the Vanguard money market fund.

This is Fidelity’s counterattack to Wells Fargo’s free trade offer. Wells Fargo attracts customers to its checking accounts by offering free trades on the brokerage side. Fidelity attracts customers to its brokerage business by offering the best banking features.

I find it ironic that to get the best deals you have to go to a brokerage firm for banking and go to a bank for brokerage. But that’s the way it is, and it’s perfectly understandable. Checking accounts are bread and butter for Wells Fargo. They don’t want to pay high interest on them. So are brokerage accounts for Fidelity. Free trades for all will not work for Fidelity.

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  1. Sun says

    From your description, the account really sounds interesting. I will have to take a look. I am afraid I may end up getting one more account 🙂

  2. Anonymous says

    What do you think about “safety” issue? I try to separate my checking account and other investment accounts because I am concerned about ATM cards getting cloned etc., and I might not be able to check my balance often if I am traveling.

  3. Harry Sit says

    @Sun, I think you will like this one. It’s worth closing several other accounts elsewhere.

    I forgot to include the bonus links.

    – $100 bonus [update: no longer available] for transferring in $10,000.
    – Up to 25,000 United miles OR American miles

    Double dipping on both the $100 bonus and one of the miles offer is allowed.

    @anonymous, if you are concerned about “safety,” you can still use this account in the same way you use your checking account today. You get higher interest and freedom for using any ATMs. You don’t *have to* do the auto overdraft to your emergency fund or investment account.

  4. Johan Ericsson says

    For those who are USAA members, the USAA Asset Management Account (AMA) has all the same advantages. It also doesn’t have that goofy “core” account with a lower interest rate. No need to do the overdraft thing that you described.
    The USAA core MM account can be tax exempt funds or a taxable MM account. The interest it pays is quite competetive.
    You should mention that this type of “checking” account is not FDIC insured. But, when it comes to a checking account, you shouldn’t need FDIC insurance as much: because you can always put a larger chunk of your savings into a standard Savings account if you are concerned about FDIC insurance.
    Fidelity is a pretty reputable company too, don’t think they are likely to go under.

  5. Harry Sit says

    USAA has exclusive membership requirements. It’s not open to the general public. Great for people who are eligible, but impossible for people who cannot join. From what I read, the ATM rebate from USAA is limited to $15 a month. USAA also charges you $2 each if you make more than 10 ATM withdrawals from non-USAA machines.

    The balance in the “core” part of the Fidelity mySmart Cash Account is deposited at Fifth Third Bank, which is FDIC insured.

  6. Anonymous says

    For what it’s worth, one option USAA offers for the sweep account is FDIC insured. Also, USAA allows you to deposit checks by scanning them in — no need to worry about them lost in the mail.

    Still, if you don’t have access to USAA, then this Fidelity account is great! (And even if you do, the differences are minor.)

  7. Anonymous says

    There appears to be limitations on Fidelities rebates of ATM charges… from the Fidelity website:

    Other institutions may assess ATM fees for use of ATMs in their network. mySmart Cash AccountSM customers or Fidelity accounts coded Premium, Private Access, or held by customers with householded annual trading activity of 120 or more stock, bond or options trades, will be reimbursed for ATM fees charged by other institutions. Please review your Customer Agreement for specific information on reimbursement caps or limits. For each foreign transaction, Visa charges a foreign transaction fee of 1%, which will be included in the amount charged to your account.

  8. Anonymous says

    Re anonymous:
    There are limitations on the atm reimbursement at fidelity in general – but one of the qualifications for reimbursement is a “mySmart Cash Account”, exactly the indicated account.

    There are some limitations for this account that make it not quite a complete replacement for a traditional bank. E.g. fidelity doesn’t accept cash deposits (at a branch or via an atm.)

  9. Anonymous says

    I opened a Fidelity Smart Cash account and so far I’ve found two annoying limitations:

    1. Unable to schedule monthly transfers from my Fidelity Smart Cash Account to my Fidelity Roth IRA. I’ve tried to set it up from both sides, and spoken w/ a representative about it – no remedy.

    2. I’ve tried to link this account to my Emigrant Direct savings account with no luck. Because it is not a true checking account, it has a problem with “accepting ACH (automated clearing house) transfers.” This is especially annoying b/c now I have to keep my old checking account just to serve as the middle man. I can’t even fund the Smart Cash account with money from the Emigrant Direct savings account.

    Also, as of now, my core Smart Cash account is only earning 1.98% interest.

  10. Harry Sit says

    Anon – I believe both limitations you mentioned are not real limitations. They can be done.

    1) Schedule monthly transfer to Roth IRA: Add mySmart Cash as a bank account on the Roth IRA side. Or use the Bill Pay function in mySmart CAsh. Create a recurring bill payment to Fidelity, referencing your IRA account.

    2) Link to Emigrant Savings. On Emigrant’s side, create a linked bank account by entering the ABA number and account number from the checks you receive from Fidelity. Or on Fidelity’s side, set up Money Line and enter the ABA and account number for your Emigrant account.

  11. Anonymous says

    TFB – thanks for your response. Unfortunately I’ve already tried both of your suggestions.

    1. Scheduling monthly payments – doesn’t work from w/in Fidelity. I’ve tried it from both accounts (SmartCash and Roth IRA). It’ll let you enter all the info and see the “inactive” status but when I called to ask what the deal was, they told me it couldn’t be done w/ their current online transfers system. The only option was to use their “Personal Withdrawal Service” which is a paper form you fill out that is managed on their side – you can set up monthly transfers with it, but it’s inflexible in that you can’t switch the funds you deposit to or skip a transfer easily b/c it’s not visible from inside the Fidelity account. I looked into using the BillPay service, but it doesn’t recognize “Fidelity” as a “company with an account number” so I’m guessing that means my “bill” / transfer would be a mailed check. This is ridiculous! (And I’ve let the customer service people know that.)

    2. I’ve used the routing number for my SmartCash account on Emigrant Direct’s side, but it still recognizes that it’s not a true checking account. I’ve called and they said tough luck since it’s not an account type they support (they want a true checking account). Same reason w/ Fidelity (can’t transfer to another savings account).


  12. Anonymous says

    Using billpay to transfer funds to another account by paper check is indeed ridiculous, but works just fine. Since you can mail to just about any payee, billpay can be used to bypass almost all annoying restrictions. Another example of this is the difficulty of setting up electronic transfers between accounts with different registrations. So this is the easiest way I’ve found to transfer money to my daughter’s money market fund account, or to make a payment to her credit card, because it avoids the need to fill out paper forms and run around to get signature guarantees at a bank.

  13. Anonymous says

    I setup EFT transfers for my SmartCash account for both paypal and my old Bank of America checking account and it works fine using the routing and account numbers off the SmartCash checks.

  14. Silicon Shadow says

    I had a terrible time with this — getting ACH to work reliably accross the board. The account number off the check often does not work. (routing number is correct though). If you look at the direct deposit instructions, you can use the numbers that this translates to beginning with 399 for account number. It was enough of a pain that I keep and ING electric orange account too and setup automatic pulls from fidelity to bring my pay checks in.

    Its nice too since I get paid every two weeks but prefer to see lumps come in twice a month — the extra account serves as a buffer.


  15. Gresh says

    Schwab also offers most of these features in their SchwabOne accts-different than the Schwab checking. Scwab works through PNC Bank, so although its not technically a ‘checking’ acct, I have had no problems with any ACH transactions, direct deposit, etc. In particular the free ATMs (rebating all fees charged by other banks) is nice. I am adding the Schwab checking to my brokerage setup because it offers a rebate of the 1% VISA/MC charge on foreign currency transactions as well as the rebate of foreign ATM fees.

    My only caveat is that I use ACH and have not used their billpay system so I can’t comment on that end.

  16. Anonymous says

    I tried to open an account at the fidelity website. It appears that to open an account, you must be an existing customer. They ask for user id and password. Is there a way around this?

  17. Amiga says

    Please let us have your comments on these money market funds (Fidelity checking account) now that the buck is broken.

  18. Harry Sit says

    Amiga – The “core” cash in Fidelity mySmart Cash account is deposited in a FDIC-insured bank account. If you buy a money market fund inside mySmart Cash, none of Fidelity’s money market funds has broken the buck. I don’t expect any of their money market funds to break the buck. Even if one does, I wrote about Breaking The Buck Is Not a Big Deal.

  19. Mike says

    Yes. My Core Account is handled by UMB (United Missouri Bank), I would presume it is FDIC insured, but pays a low interest rate. I typically do online transfers into the higher paying Fidelity Cash Reserves Fund (not FDIC insured). The account will automatically sell shares of Fidelity Cash Reserves to fund payment of outstanding checks. I would bet on the collapse of the US Government (including FDIC) and the end of the world before I would bet on Fidelity Cash Reserves going under.

    The only downside is Fidelity is not allowed to handle cash deposits (via ATM or at their office). This is rarely an issue and when it is we use our seldom used credit union checking account to handle this.

  20. Matt says


    Just curious — have you ordered deposit slips for your mySmart account recently? I just received a new batch, and the envelopes included are no longer postage-paid. I have a local credit union I can use to deposit checks, but simply dropping them in the mail was tops for simplicity.


  21. Matt says


    Another great experience with Fidelity’s customer service. I started a chat session, was connected with a rep within 30 seconds, and the rep indicated they do still offer postage-paid envelopes. Not sure why I didn’t get them initially, but they’ll be in the mail to me tomorrow.


  22. Phil Lach says

    Im very pleased with “My Smart Cash” account from Fidelity. The Fidelity staff is polite and courteous, and they go beyond the limitations of traditional banking to be of assistance.

  23. Newbie says

    For anyone concerned about direct deposit and ACH withdrawals there is special information you will need to specify the following:

    United Missouri Bank
    Kansas City, MO
    ABA# 101205681

    Prefix and account number:
    39900000 followed by your account number (for example, if your account number is Z123456789 the account number you will need to reference is 399000007123456789)

    (Be sure to replace the X with 5; or the Y with 6; or the Z with 7; followed by the remaining eight digits of your account number)

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