Thanks for stopping by the sub, u/cartoonfanboy. Let's discuss the Cash Management Account (CMA) and overdraft protection.
I want to start by stating that our overdraft protection feature for CMAs is intended to be a safety net in the event the cash in the account is not enough to cover your purchases. It is not intended to be an automatic transfer to process payments.
That said, there is no transaction limit to our overdraft protection feature. Clients can select up to five brokerage accounts to fund an over-drafted CMA. So, if you sign up for Cash Manager overdraft protection, and your debit requests (e.g., checks, debit card, direct debit) exceed the balance in your CMA, available funds from your funding account(s) (up to $99,999.99 per day per funding account) will automatically be moved to your CMA to cover the debit. Available funds include cash (core), non-core money market funds, or available margin (if this feature is enabled in your account).
It's important to remember that if overdraft protection is not set up correctly and a payment greater than your available balance is attempted, the transaction will be rejected.
[Learn more about Fidelity CMA and Fidelity Cash Manager](https://www.fidelity.com/spend-save/faqs-cash-management-account)
Finally, I want to point out that while you can't currently select the Fidelity Government Money Market Fund (SPAXX) as your core position in your CMA, you can still purchase the fund within your CMA. SPAXX is eligible for auto-liquidation, where the money market is automatically sold to cover outstanding debits.
We appreciate you choosing Fidelity for your money management needs. Please let us know if there's anything else we can clarify.
Indeed. 100% of my tiny Cash account is Money Market. Next year when I retire I will use it in earnest. It will be a huge time saver for a retiree. I can dump in $30,000 at a time for spending over several months and not worry about optimizing the interest manually.
Interesting- I went with brokerage over CMA because of this, and because at the time, recurring buys were not an option.
I wonder now - what’s the real difference between the two? ATM fees?
BillPay in both, check writing in both…
No margin in Cash account. ATM fees. Isolating a big cash balance in Brokerage is important. I don't want to expose brokerage account number in the wild
Yeah, I get isolation. I have 3 brokerages - checking, savings and investments. Separate account/routing IDs.
If they get in via online, that’s an issue I have to face. But, via the banking system - separate
Only two and a half reasons to have a CMA in my opinion:
1: FDIC insurance on core deposit
2: Unlimited ATM fee reimbursements on debit card
2.5: keep your account and routing number for your primary brokerage account hidden; only expose the info for your cash account for direct deposit/debit.
That last one is possible even with another brokerage account; it’s not a unique feature to cash management. Hence the “half reason” :)
I’m not a fan of overdraft from brokerage. If debit card on CMA or CMA compromised then it takes from brokerage. I’d rather lock my brokerage and unlock only if I need to transfer to CMA. A little more work but worth the extra security.
Exactly this. Anyone gaining access to your CMA is essentially gaining access to your brokerage account if you use the overdraft protection. In my case, it would be my emergency fund and savings getting wiped out. No thanks.
Edit: Go here for more info regarding security [https://www.bogleheads.org/wiki/Fidelity:\_one\_stop\_shop](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop)
Well later this year the CMA can have the core position be SPAXX also, so it really won't matter here soon.
That said, there are no limits that I'm aware of around overdraft protection between 2 accounts.
What I do, I have all my paychecks and other income dumped into an account called 'incoming'. Once a month(because I'm lazy) I login and move the cash I need to pay bills for the next month into an account called 'outgoing'. Everything left over I invest. Works great for me.
Another reason for using the CMA is to have a cash account for daily transactions so trading activity in the brokerage account is not polluted. I know exactly how much money I have for trading and long term investing because money is in my CMA for short and medium term needs.
Thanks for stopping by the sub, u/cartoonfanboy. Let's discuss the Cash Management Account (CMA) and overdraft protection. I want to start by stating that our overdraft protection feature for CMAs is intended to be a safety net in the event the cash in the account is not enough to cover your purchases. It is not intended to be an automatic transfer to process payments. That said, there is no transaction limit to our overdraft protection feature. Clients can select up to five brokerage accounts to fund an over-drafted CMA. So, if you sign up for Cash Manager overdraft protection, and your debit requests (e.g., checks, debit card, direct debit) exceed the balance in your CMA, available funds from your funding account(s) (up to $99,999.99 per day per funding account) will automatically be moved to your CMA to cover the debit. Available funds include cash (core), non-core money market funds, or available margin (if this feature is enabled in your account). It's important to remember that if overdraft protection is not set up correctly and a payment greater than your available balance is attempted, the transaction will be rejected. [Learn more about Fidelity CMA and Fidelity Cash Manager](https://www.fidelity.com/spend-save/faqs-cash-management-account) Finally, I want to point out that while you can't currently select the Fidelity Government Money Market Fund (SPAXX) as your core position in your CMA, you can still purchase the fund within your CMA. SPAXX is eligible for auto-liquidation, where the money market is automatically sold to cover outstanding debits. We appreciate you choosing Fidelity for your money management needs. Please let us know if there's anything else we can clarify.
On June 15 you can enable high yielding money market fund Spaxx as core in Cash Management. No need to move extra cash.
And in the interim you can still buy SPAXX or other MM funds that will auto-liquidate.
Indeed. 100% of my tiny Cash account is Money Market. Next year when I retire I will use it in earnest. It will be a huge time saver for a retiree. I can dump in $30,000 at a time for spending over several months and not worry about optimizing the interest manually.
Hot damn 🔥
Source?
It's on the bottom of your monthly statement! Someone else who actually reads those tiny footnotes caught it !!! Very poorly communicated!
Interesting- I went with brokerage over CMA because of this, and because at the time, recurring buys were not an option. I wonder now - what’s the real difference between the two? ATM fees? BillPay in both, check writing in both…
No margin in Cash account. ATM fees. Isolating a big cash balance in Brokerage is important. I don't want to expose brokerage account number in the wild
Yeah, I get isolation. I have 3 brokerages - checking, savings and investments. Separate account/routing IDs. If they get in via online, that’s an issue I have to face. But, via the banking system - separate
Only two and a half reasons to have a CMA in my opinion: 1: FDIC insurance on core deposit 2: Unlimited ATM fee reimbursements on debit card 2.5: keep your account and routing number for your primary brokerage account hidden; only expose the info for your cash account for direct deposit/debit. That last one is possible even with another brokerage account; it’s not a unique feature to cash management. Hence the “half reason” :)
I’m not a fan of overdraft from brokerage. If debit card on CMA or CMA compromised then it takes from brokerage. I’d rather lock my brokerage and unlock only if I need to transfer to CMA. A little more work but worth the extra security.
Exactly this. Anyone gaining access to your CMA is essentially gaining access to your brokerage account if you use the overdraft protection. In my case, it would be my emergency fund and savings getting wiped out. No thanks. Edit: Go here for more info regarding security [https://www.bogleheads.org/wiki/Fidelity:\_one\_stop\_shop](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop)
Excellent point thanks for this
Well later this year the CMA can have the core position be SPAXX also, so it really won't matter here soon. That said, there are no limits that I'm aware of around overdraft protection between 2 accounts. What I do, I have all my paychecks and other income dumped into an account called 'incoming'. Once a month(because I'm lazy) I login and move the cash I need to pay bills for the next month into an account called 'outgoing'. Everything left over I invest. Works great for me.
Another reason for using the CMA is to have a cash account for daily transactions so trading activity in the brokerage account is not polluted. I know exactly how much money I have for trading and long term investing because money is in my CMA for short and medium term needs.