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Fidelity's New mySmart Cash Account - a Free High-Yield Checking Account


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:
  • 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.
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Anonymous   |     |   Comment #1
If you're not already a Fidelity customer, you have to fill out paper application and mail it in.
Anonymous   |     |   Comment #2
Why would this be better than the Salem Five account? S5 only offers $15 in ATM rebates but I wouldn't guess most people use more than that in a month ... and higher APY? clue me in here why this is better, unless you're a Fidelity customer and you value that convenience as worth 1%+
Banking Guy
Banking Guy   |     |   Comment #3
Yes, I think the main advantage of this would be if you plan on using Fidelity's brokerage account (now or in the future). Otherwise, Salem Five's checking account would be hard to beat (or some other checking accounts that I listed in my best checking account post.)
Cyclone   |     |   Comment #4
I see your point about Salem Five, but I believe there is a market for this acct. There are a number of people who like Fidelity's MM in brokerage offerings on top of the excellent customer service and $100 sign up bonus. Even though there can be higher interest rates than Fidelity's FSLXX (5+%) or tax-exempt munis for those in high tax brackets, I think the MoneyLine transfer services does it for many of us.

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.
Anonymous   |     |   Comment #5
Cyclone, could you (or anyone else for that matter) explain how this Fidelity account compares to the Schwab checking/brokerage combo?
indexfundfan   |     |   Comment #6
Cyclone, I use Fidelity's Moneyline all the time.

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.
Cyclone   |     |   Comment #7
There have been times when it does not come out of my account next bus night, but rather 2 bus nights later. And yes, while it does not start accruing dividends until the day after you buy, it does earn the dividend for the day you sell.

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.
Anonymous   |     |   Comment #8
Does anyone know if they refund international atm fees? Also do they charge a forex fee on debit card use, I know for a fact schwab does not and they offer a platinum debit card with all the bogus warranty, car rental protection etc...
Craig   |     |   Comment #9
Yes, they do refund international atm fees, according to the info at the website...but it does mention that the 1% fee Visa charges is not refundable...

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....
diablo   |     |   Comment #10
Here's why I opened this account. Using the automatic transfer feature, you can basically get free ATM withdrawals directly out of your Fidelity investment account (assuming it has a cash balance). You do this by keeping $0 in mySmart Cash, an every time you make an ATM withdrawal, that amount gets taken out of your investment account to cover it. As far as I can see there is no reason to ever leave any money in this account. Just have it transferred in automatically. As was mentioned above, this will allow you to put your checking account on autopilot and always get the higher yield from your investment account. I see no reason to ever have a positive balance in this account (there is no fee for automatic transfers).
Mika   |     |   Comment #11
I'm curious if people think overall this is the "best" checking account. I would be coming from Bank Of America, and like the other poster, might just keep BOA to have an account with many branches.

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.
Craig   |     |   Comment #12
i think it's a great checking account, actually....The trouble with those "Reward Checking" accounts is if you don't do all the debit card transactions each month, you lose ALOT of interest...i think they are a pain in the rear, personally...

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!
Anonymous   |     |   Comment #13
I opened a new mySmartCash account with Fidelity and what I find ridiculous is the amount of time it takes for the money to become "available" for transactions. I initiated ACH on Saturday, and they posted it on Monday. Now it won't be "available" until next Monday, which is 4 business days after the post date. With my bank (actually a credit union), I can scan a check, upload it and it becomes available immediately, even for amounts like 25k. With this Fidelity, example, I am talking about E-Transfer, which should be even faster than checks (the money was withdrawn from my bank on Monday, and it won't be available in Fidelity account until next Monday).