In light of products such as Fidelity's cash management account (CMA), which allows holdings in extremely safe, high yield money market funds, while ALSO able to effectively function as a checking/savings account with ATM and check writing options, are traditional online high yield savings accounts (HYSA) effectively obsolete? In other words, what benefits does a HYSA provide that Fidelity CMA cannot?
I can think of two things:
1. FDIC insurance on deposits for HYSA - While this is true, that a CMA does not have FDIC protection (unless you hold money in the non-competitive bank deposit core position), you have the ability to invest in extremely safe government security MMF, such as FDLXX. My thought is that if the government defaults on its treasury obligations, then something has gone very very wrong and its ability to ensure FDIC insurance on bank deposits might be in doubt as well.
2. The ability to directly buy CD's from the bank, rather than a brokered CD from Fidelity - Is this much of an advantage though? I mean, I don't know much about brokered CD's but don't they function essentially the same as direct bank CD's? Any downsides?
In light of the above, are there any other benefits that I am missing from traditional online HYSA? Or is it a no-brainer to switch to Fidelity CMA or something similar?
I can think of two things:
1. FDIC insurance on deposits for HYSA - While this is true, that a CMA does not have FDIC protection (unless you hold money in the non-competitive bank deposit core position), you have the ability to invest in extremely safe government security MMF, such as FDLXX. My thought is that if the government defaults on its treasury obligations, then something has gone very very wrong and its ability to ensure FDIC insurance on bank deposits might be in doubt as well.
2. The ability to directly buy CD's from the bank, rather than a brokered CD from Fidelity - Is this much of an advantage though? I mean, I don't know much about brokered CD's but don't they function essentially the same as direct bank CD's? Any downsides?
In light of the above, are there any other benefits that I am missing from traditional online HYSA? Or is it a no-brainer to switch to Fidelity CMA or something similar?
Statistics: Posted by We're wolves — Wed Aug 21, 2024 10:07 am — Replies 12 — Views 654