I calculated the other day that between all of the cash in our business accounts & personal accounts, I was losing about $300/mo in interest I could be earning if that cash was invested with my other short-term monies.
But if I transferred it all out, I’d need it right back again for the various activities that happen inside my personal/business checking accounts.
Ugh.
Wouldn’t it be great if there was a checking account equivalent that returned ~5% on your sitting cash like the money market accounts are doing right now?
Welcome to Fidelity Cash Management Accounts.
I was listening to a podcast recently where the host was transferring most of his “bank account cash” over to these Cash Management Accounts because you can use them like checking accounts & they can hold your cash in SPAXX (the Fidelity Government Money Market Fund). I just looked and the 7-day yield of SPAXX right now is 4.97%.
Wow, beats 0.01% at Chase.
These Cash Management Accounts are not “checking accounts” since they’re held at a brokerage, but they operate similar to checking accounts. You can get debit cards. You can get checks. ATM fees are free. Wires are free.
The main thing you can’t do is deposit cash and get cashier’s checks.
But, who cares? You can still do those things at Chase or your local bank. And then you can wire funds back & forth (or bank transfer) as you need to move the cash around.
I went ahead and set-up several Fidelity Cash Management Accounts and transferred most of my sitting cash over.
I’ll still bank with Chase and keep a little cash there, but as often as I need more cash, I’ll just wire it over from Fidelity so that it’s making money while it sits there. I’ll start paying my credit cards off with the Fidelity accounts, paying bills from the Fidelity accounts, and anything else I can do.
Chase & Fidelity working together for me will add another $300/mo that I was losing by using Chase alone.
In case you’re like me and you have some cash sitting in a bank account earning nothing, consider moving it somewhere else. Try to not have much money at all making nothing, especially with such good savings rates right now.
Oh, and just a disclaimer, SPAXX is not FDIC-insured. You get to choose when you set-up your Cash Management Accounts at Fidelity whether you want your cash to be FDIC-insured for a lower rate or you want it in the SPAXX fund for a higher rate. Choose the option that’s best for you!
