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Best Bank Account Interest Rates - Summary for September 20, 2016Fidelity's New mySmart Cash Account - a Free High-Yield Checking Account
POSTED ON BY Ken Tumin
Fidelity recently introduced the mySmart Cash Account that is designed to look a lot like a free high-interest checking account. It offers a yield of 3.50% APY with no initial deposit or minimum balance requirements. Also, FDIC insurance is provided. It looks very similar to what Charles Schwab started in April (see post).
Some of the perks of this account include:
If you're already using Fidelity Core account as a checking account, one benefit of this new account would be ATM fee refunds. You'll probably still want to keep most of your cash in the money market fund since it pays higher interest (currently around 5%).
For some there's a benefit of FDIC insurance. Fidelity's documentation states "The cash balance in the mySmart Cash Account is swept to an FDIC-insured interest bearing account at a participating bank." The money market funds in a brokerage account don't have FDIC protection, but most consider money market funds at major brokerages like Fidelity to be extremely safe.
Thanks to the reader Cyclone who mentioned this new account in the comments of the finding deals post. More discussion on this mySmart Cash Account is available at this FatWallet thread.
I'll have to add this new Fidelity account to my best checking account post.
Some of the perks of this account include:
- Free standard checkbooks
- No-fee ATM card at ATM machines displaying the Visa, PLUS or STAR logo
- Automatic credit of all ATM fees charged by another institution
- Free online bill pay
- Free Electronic Funds Transfer
- Overnight transfer of funds to or from your investment accounts
- Able to set up automated money transfers and overdraft protection with your investment account
If you're already using Fidelity Core account as a checking account, one benefit of this new account would be ATM fee refunds. You'll probably still want to keep most of your cash in the money market fund since it pays higher interest (currently around 5%).
For some there's a benefit of FDIC insurance. Fidelity's documentation states "The cash balance in the mySmart Cash Account is swept to an FDIC-insured interest bearing account at a participating bank." The money market funds in a brokerage account don't have FDIC protection, but most consider money market funds at major brokerages like Fidelity to be extremely safe.
Thanks to the reader Cyclone who mentioned this new account in the comments of the finding deals post. More discussion on this mySmart Cash Account is available at this FatWallet thread.
I'll have to add this new Fidelity account to my best checking account post.
With Fidelity's MoneyLine service, you get IMMEDIATE credit to put into FSLXX or other funds. What that means is that, say at 11:00am I initiate a transfer to Fidelity from my local acct to put funds into my HYMMF. At 11:01am the money is available, goes into my fund choice and I begin to double-dip. Another day or two later, the money leaves my local account.
Such lighting fast transfers (especially compared to HSBC and even GMAC's) are what makes Fidelity a winner to me.
One clarification I would like to make on your comment is that even though you can submit a buy request into FSLXX (or FSPXX for me) immediately, it does not earn dividends until the business day after the trade date. Since the money leaves your bank on the next business day, there is no double dipping.
Some banks pay interest on day of deposit and not on day of w/d, Fidelity FSLXX pays on day after deposit and includes day of w/d. Therefore, that part is a wash. Also, depending on how much you want to take out, you can get a w/d with a 1 week float if you play your cards right.
I already set up the account and like it very much! It compliments my other Investment Brokerage Account with them, perfectly!
I'm going to keep a working balance of about $1200 in the checking, and set the lower "threshold" in the Cash Manager to $100, so that every time it reaches that low, they will automatically transfer money in from my Fidelity 5% MM Fund the next day...
Also, should i pay a bill, write a check, make a withdrawal, use the debit feature, and go over my remaining balance, i have the "auto-overdraft" feature turned on to automatically cover the debits!
Using these features, in conjunction with the MM Funds in your other brokerage acct with them allows you to put your checking on "auto-pilot" which is really great!
Plus you get all the free checks you want and can use any atm worldwide for free with unlimited atm rebates (refunded same day!) as well.....
I will keep my small BOA Checking for convenient local check/cash depositing access for ach'ing to Fidelity...
Otherwise, all my investments and banking will now be with Fidelity...I'm so glad they came out with this account....
I wonder if the Middlesex Savings Bank offer is better though with the 6.25% rate on the checking account. I don't know if this bank has for instance as many web and e.g. ETF features as say Fidelity or BOA.
A couple other notes about the MySmart cash account from Fidelity:
*A phone CSR told me Fidelity holds check deposits for 4 days. This seems like a long time compared to BOA especially for in state checks;
*The Boston Globe noted that Fidelity will not charge NSF or bounce check fees.
I like the idea of keeping a $0 balance in the MySmart cash and keeping money in brokerage say in FSLXX.
Anyway, it's a great set-up...actually, i did keep a 0 balance in it, and everything else in FSLXX (Select MM Fund) but now keep a "working balance" of about $800 to $1000 in the Checking...and just let it overdraft when i go beyond that range.... It's silly to have constant overdrafts just to gain and extra $8 to $10 a year of interest (after tax) i think...
I keep all the big $ in FSLXX getting 5% plus....
Unlimited free atm usage with unlimited rebates, free checks, great bill pay and online banking and outstanding customer service..what could be bad about that? (lol)
I do retain my BOA Checking just for that rare check or cash deposit or need of a bank brnach service, and ACH over to fidelity via their FREE Money Transfer Service (unlike BOA).....and have my Pension Checks Direct Deposited to Fidelity....
Try it...i think you would like it!