[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.