The Ultimate Guide to Fidelity’s Cash Management Account (CMA)

I’ve used Fidelity’s Cash Management Account (CMA) as my primary “checking,” “savings,” and “cash management account” for over six years. I recommend this setup to my students. I recommend it to my children. I recommend it to you.

The default CMA setup is already strong. However, I’ve spent years refining it — optimizing for tax treatment, yield, and automation — and the results are worth sharing.

(Yes, I’m the kind of person who optimizes a cash account while losing six figures in equities — we all need hobbies.)

 

Disclaimer (or lack thereof)

I don’t get paid by Fidelity to shill their products. This blog loses money. I do this for fun.

 

The Primary Advantages of Fidelity’s CMA

• No fees, no minimum cash holdings, no monthly transaction limit.
• All cash earns competitive interest — automatically.
  • Your money is auto-invested in a money market fund (MMF), and shares are auto-liquidated as needed to cover transactions.
  • Mortgage payment? ATM withdrawal? Venmo? Covered. That means 100% of your cash is working at all times.
• Get paid one business day earlier.
  • My paycheck consistently arrives one business day earlier than it does with a traditional checking account, giving me faster access and earlier investment opportunities.
• Free ATM withdrawals — worldwide.
  • All fees reimbursed automatically, typically within 1–2 business days. Even foreign ATMs. I’ve found exchange rates to be favorable too.
• Customizable core MMF.
  • The default core position is SPAXX, but you can swap it out via automation with a better MMF of your choosing (more on this below).

 

The Primary Downsides

• No way to deposit physical cash.
  • You’ll still need a local bank account for that. I maintain a $0 balance checking account locally for that purpose.
• No Zelle support.
• Funding holds on incoming transfers if you initiate from Fidelity.
  • Rather than pulling from Fidelity, it is much better to push from the other institution. When following this process, funds will be available immediately upon arriving to Fidelity. Thanks to The Finance Buff for teaching me this trick.
• Mobile check deposits can take a while to clear.
  • As a result, I deposit checks through US Bank’s mobile app instead. The funds are instantly available for low-dollar checks in my experience. From there, I push to Fidelity and the funds are available the next day.
• Messier transaction log.
  • Because MMFs are bought/sold automatically to cover spending, you’ll see extra transactions. Example: if you make a $20 ATM withdrawal and a $1,000 credit card payment, you’ll also see a $1,020 MMF liquidation.
• Not FDIC insured.
  • CMA funds are invested in MMFs, not bank accounts. But I personally use a 100% treasury MMF — more on that below — and am comfortable with the risk. “Breaking the buck” is extraordinarily rare.

 

Want to Set One Up? Here are Some Pointers

 

1. Open an Account

https://www.fidelity.com/spend-save/fidelity-cash-management-account/overview

 

2. Set SPAXX as Your Core Position (or Change It Later)

As of Spring 2024, SPAXX is a valid core option. Any unallocated cash in your account will automatically be swept into it.

• SPAXX is a money market fund currently yielding ~3.97%.
• The FDIC-insured sweep option yields closer to 2.21%.

 

3. Set Up Firewalls (Optional, for Extra Security)

If you’re risk-conscious, consider opening two CMAs:

• Use your primary CMA for higher-value, lower-risk transactions (e.g. mortgage, credit cards).
• Use your secondary CMA for checks and anything more exposure-prone (e.g. sending a $100 check to the PTA).

That way, if your secondary account is compromised your primary account won’t be.

 

4. You’ll Have Three Account Numbers (Yes, It’s Weird)

You’ll get:

• A Fidelity-specific account number starting with the letter X
• A 17-digit number starting with 39900000
  • Your account number is easily found by clicking on “routing number ⓘ” within the CMA online.
• A 13-digit number printed on your checks

Both the 17-digit and 13-digit account numbers should work fine when setting up ACH transfers at other institutions. Here is an official Fidelity Reddit thread discussing this issue.

 

 

5. You Can Do Better Than SPAXX (but it’ll take a bit more effort)

SPAXX has an expense ratio of 0.42%.

There are Fidelity MMFs with expense ratios as low as 0.18% (though they have $10M minimum investments).

A clever workaround is that these $10M minimum investment MMFs are often accessible at other brokerages for much less than the $10M minimum (for example, WellsFargo’s minimum initial purchase amount is $50). Once purchased at the external brokerage, you may transfer the MMFs “in-kind” to Fidelity. Once you have established this holding at Fidelity, it can be purchased indefinitely in the future.

I found this resource helpful in identifying where you can buy each MMF. If you query for “fidelity” in the top right, it should filter only Fidelity MMFs. The third MMF in the table below (FRGXX) can be purchased at Ameriprise, Interactive Brokers, Merrill, and Wells Fargo.

 

Once purchased externally, you transfer the funds to Fidelity fairly easily. Within Fidelity, click “Transfer”, then “Transfer an account to Fidelity”, then “Investment or retirement accounts”, then “Start Transfer”, then proceed with the directions that follows. Partial transfers are preferred since they leave the other brokerage account open (and avoid account closure fees). One more tip — wait until about a week after purchasing your MMF at an external brokerage before initiating the transfer to Fidelity to ensure that the transaction has settled.

 

6. Transfer MMFs Easily (and Help Your Kids/Friends Optimize)

I have a joint CMA with my 18-year-old daughter to allow for instantaneous transfers from my CMA to hers (a simple alternative to Zelle). One trick I learned recently (thanks to blog reader Peter) is that it is incredibly easy to transfer MMFs “in-kind” across your Fidelity accounts. As a result, I can easily “seed” my daughter’s CMA with the better MMFs.

Apparently, you can also transfer these MMFs to friends/family through following the instructions on this form, but I haven’t done so yet. By gifting a MMF “seed” to friends/family, you gift a lifetime of elevated interest on their cash.

 

7. You can Automate the Better MMF Purchases

Here’s the trick: even if SPAXX is your core, you can still automate recurring purchases of a better MMF like FRSXX.

What I do:

• Get paid monthly. Say $10k.
• Rather than let the $10k sit sub-optimally in SPAXX, I auto-buy $5k of FRSXX twice (two separate scheduled purchases).

Why split the automation of this $10k purchase into two $5k transactions? If I were to contribute $7k to my HSA/401k and my net pay drops to $3k, a single $10k automated purchase would fail. However, two automated purchases of $5k would clear so long as I had a total cash balance of at least $5k.

What’s the downside? Your transaction history will be a bit more cluttered.

Here’s how to access this functionality and how I currently have it configured.

 

8. Quantifying the Upside of These Shenanigans

Treasuries aren’t taxed at the state level, so you can compute the after-tax yield as:

After-tax yield = Pre-tax yield * (1 – fed marginal rate – state tax rate * (1 – fraction of income from Treasuries)  )

Since munis aren’t taxed at the federal level, the fed marginal tax rate goes to zero in the above equation.

As a result, when we apply the above equation (and my tax parameters of 24% fed + 6% state), we get a pretty large difference in after-tax yields across MMFs. For me, FTCXX yields almost 1% more than SPAXX on an after-tax basis. I’m in the process of changing my core position from FRSXX to FTCXX after learning this.

Ticker	Yield	Treasury %	After-tax Yield	Equivalent Fully-Taxable Yield
SPAXX	3.97%	55.09%	2.91%	4.16%
FRSXX	4.18%	99.63%	3.18%	4.54%
FTCXX	4.03%	0%	3.79%	5.41%

 

Don’t forget to claim the state tax deduction for treasury income by following these instructions from the Finance Buff.

 

Final Thoughts

Fidelity’s baseline CMA is good — but with a few mouse clicks, an optimized CMA is even better. I can’t imagine ever going back to a conventional checking or savings account.