Using a Brokerage "Cash Management Account" as Primary Checking

I’m curious whether people do this and if there are any caveats to be concerned about. As many are aware, many retail brokerages offer free “cash management accounts” as part of their offerings from the brokerage.

These accounts are different from accounts where you setup an account with the bank and with the brokerage firm (i.e., Schwab’s setup where they actually have Schwab Bank). I’m talking about accounts where the money is held with the brokerage.

The three most notable I’m aware of that provide decent bank-type offerings are Merrill Edge, Fidelity, and TD Ameritrade. Feel free to add more.

They offer no-fee accounts, free checks, and some (Fidelity at least) offer ATM reimbursements without meeting other requirements. These are better than the majority of bank checking account offerings. Of course there are other banks and credit unions that offer these benefits, but those aren’t always an option.

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Fidelity banned a bunch of people for using them to move money more than investing, so they’re not ideal.

If you have anything weird going on in your brokerage account (use margin, short sell, mergers pending, etc), i would recommend against this. You never know when some weird thing will hose your buying power (even if it’s just a glitch for a day or two and doesn’t result in a margin call), and you don’t want to be bouncing checks in the meanwhile. I’ve had several million dollar glitches in my buying (well in excess of the size of the position that generated it I will add), but I own a lot of weird stuff.

If you like their features, I would recommend a separate linked cash account at the broker rather than using your “main” one.


Agree. It’s ok if you have a small account, but I wouldn’t want to expose my entire liquid net worth to the risk of bad check, debit or EFT fraud just for convenience.

IB has a direct linked debit card now, but at least it can be turned on and off at will via Account Management.

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What do they offer that schwab doesn’t offer? Considering the risk of them not liking you using the account as a checking account, what real benefit is there?

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I use Fidelity and BoA as my two primary accounts. The main reason I keep cash in my Fidelity account is to take advantage of the ATM refunds. I don’t really write checks.

Personally, I first started looking into it because I need to setup an account for a business entity. Schwab only allows business accounts if you have $250k, and for various reasons, I’m not allowed to use my personal assets to benefit this particular entity. This apparently means I can’t open the business account with Schwab (internal entity concerns, not related to Schwab specifically).

Anyway, that’s how I started, but now I found out that basically all the retail discount brokers have some sort of account like this, and they’re free for businesses. So I just wanted to see what people’s thoughts are as I’m considering moving over another business account where somehow I ended up paying over $400 in fees last year.


I am interested in this topic as well.

I opened a Fidelity CMA account years ago because FWF talked about it being great :slight_smile:

Fast forward a few years, I used it for free international ATM withdrawals. It worked great in Europe; no issues.

I have heard many say that Schwab is better. However, Schwab does a hard pull and Fidelity does not. Some may not care about that but many do…

As someone else mentioned, Fidelity does provide free checks.

Very peculiar. Mind sharing a source or further context on this?

I don’t remember exactly - it was on FWF. I think ppl were pushing around churn funds somewhat frequently via ACH and that was suspected to be the cause. The result was lots of accounts were closed and could not be used except for taking out your money.

I’ve done this in the past and have one now, with Wells Fargo Advisors (the former A.G. Edwards, if anyone remembers them). I’ve always called them ‘Brokerage Checking’ accounts (each firm has a different name for them, but usually has one, and the cash portion is ‘swept’ (hence the term ‘sweep’, which is sometimes used) into a money market or FDIC-insured or government fund account each day.

My idea was basically this: Put my payroll (or part of it) into the account, then pay my bills from it, and then, at the end of the month, move whatever money was left over into an investment as even a conservative one (e.g., income fund) is far better than a savings or checking deposit account. Then you don’t have to ‘commit’ a portion each month and it should work easier psychologically, at least for me.

I think the idea is sound, however it has not worked for me. The reason is the abysmally poor interest rate in the ‘sweep’ portion where the cash goes. Wells Fargo Advisors (not WF bank, which I don’t deal with if I can help it due to the low-quality customer-service reps who answer the phone) pays around .12% (or .0012) at present. As a result, I pay everything out of that account first as even my regular CU checking is far superior to that and I never have anything left over to move to the Intuitive Investor (robo-advisor ETF account) that I have with them.

Fidelity seems better at least to me, as they provide sweep options for their brokerage checking account (like multiple funds to pick sweep options, as most used to do) and one of them is a government bond fund paying around .7-.8% which is at least reasonable for money to sit for a month or two until my bills cycle. Then I can use Fidelity GO (their robo-advisor) or just move it into a fund (perhaps the whole idea of robo-advisors is a silly fad that does not really save any money over picking a good actively-managed fund).

I asked fidelity a long time ago why they seemed to give decent accounts to people just starting out (even though I am not just starting out any more) and they said that it worked for them to build loyalty and a good customer base who stayed with them. I think i may give that a try - you never know, perhaps they were telling the truth.

Anyway, I hope this ramble is helpful. Just how I was thinking about this particular topic.

Vanguard has a similar account which seems less streamlined and they will not bother with you until you are Voyager Select ($500k of assets at Vanguard) and it gets to be free (worthwhile) at Flagship ($1M):

If you have some serious money at Vanguard already, it is interesting and not well advertised. If you are not part of the Vanguard eco-system then it isn’t worth looking into.