I’ve heard a lot of positive things about the Fidelity Cash Management Account and I’ve been seriously researching and considering opening one. Am I correct in understanding that I could have it set up so that my direct deposit goes into the CMA and is automatically used to buy into the money market fund, then have it automatically liquidate the money market fund to cover expenses and withdrawals from the account?
I don’t think you can change the core position of a CMA account, or have cash deposits auto sweep to a money market fund, though you can auto sweep out of your money market fund (e.g. if your core position is $0, your money market funds will be used for purchases). The core position for a CMA is an FDIC insured account with lower yield than most HYSAs.
However, that’s only applicable to the CMA, you can change the core position of other account types. I think the Fidelity account is the main one where you can set your core position to a money market fund (like SPAXX), and I think it defaults to SPAXX.
And then there’s their Bloom products, which IIRC can only use SPAXX as their core position.
It’s important to note that the awesome debit card is only for the CMA, the Bloom product’s debit card is more similar to traditional bank account debit cards (no ATM reimbursement, 3% foreign transaction fee, etc), and I think other account types have similar terms to the Bloom debit card. The Bloom products also give a small amount of cash each year for transferring in cash.
So in short, you’ll want the CMA for the debit card and something else for the better core position. I leave my CMA @ $0 unless I go on a trip, and then I put in enough cash for the trip and transfer everything back out when I get home. I put all of my regular spending on the Bloom accounts because SPAXX is good enough and I like the small cash bonus each year (there’s also debit card spending rewards for the Bloom debit, but I don’t use it).
Fidelity has a lot of products and they can be a little convoluted, but once you get it set up it’s smooth.
Oh, that makes sense. Thanks for the very thorough and helpful response.
After reading this and some other posts, it looks like what I actually want is the standard brokerage account, so I can have SPAXX as my core position and make other investments in the same account. It looks like the brokerage account has all the same features as the CMA except for the debit card perks, but I almost never use debit cards.
I did not know about the yearly “Savings Match” on Bloom until you mentioned it here. Maybe I’ll also open that account and throw $300 in for the cash bonus.