Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab?

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Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab?

Postby Nutaboutgolf » Mon Jan 28, 2013 10:42 am

Looking to change banks for a primary checking account. I've done some research to the above places and have some questions...

In my research it appears all three firms offer a brokerage that linked to a CORE account or are basically two different accounts. Is this accurate? Do any of the firms offer any sort of automatic transfer between the accounts? For example, let's say I have $5000 in the brokerage and $0 in the core and needed an ATM withdrawal of $300, to my understanding I would need to transfer money from the brokerage to the core then do the withdrawal, but do any of the firms do that automatically?

I see Fidelitys and Schwab are highly recommended, I can't seem to find the ATM fee rebate caps, does anyone know what they are?
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Sunny Sarkar » Mon Jan 28, 2013 11:13 am

Fidelity offers a brokerage account (called "The Fidelity Account") with all bank like facilities like checking, direct deposit, ATM card, etc. from the "core account" (cash/sweep account) inside the brokerage account. The ATM card transaction fees are *not* reimbursed. Fidelity has another account called "Fidelity Cash Management Account" which offers similar features, plus all ATM card transaction fees are reimbursed. The Cash Management Account can be set up to overdraft (free, no fees) from the brokerage account. This way, it is possible to park all the cash in the brokerage core account, but use the all-fees-reimbursed ATM card of the cash management account.

See the section named "Alternative to Banks" at the bottom of this article:
http://TinyURL.com/SunnyWSJ

Best,
Sunny
“Our life is frittered away by detail. Simplify, simplify.” ― Henry David Thoreau
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Nutaboutgolf » Mon Jan 28, 2013 1:12 pm

That's exactly what I was looking for, thanks Sunny!
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Peter Foley » Mon Jan 28, 2013 1:16 pm

We have a both Schwab brokerage and bank account. Transfers between the two are easily done on line. The Schwab card has no fees, not even for foreign ATMs. If you travel internationally with any regularity I would recommend the Schwab card.
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Kosmo » Mon Jan 28, 2013 1:26 pm

Peter Foley wrote:The Schwab card has no fees, not even for foreign ATMs.


I've got a Schwab checking account also. ATM fees all get reimbursed at the end of the month. No limit I believe. The whole reason we got it was for the fee reimbursement and no international fees.

If you have a smartphone, you can transfer money from the brokerage to the checking account on your phone and then withdraw it from the ATM. Assuming you have cash in the brokerage account and aren't selling anything. Don't know about overdrafts/automatic transfers, haven't had to investigate that.
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Nutaboutgolf » Mon Jan 28, 2013 8:30 pm

I had read fidelity also had no foreign transaction fee. According to the fidelity rep the ATM fee cap is $10/day...While it's easy to transfer between funds, in the interest of thoroughness, I wonder if a CS account will automatically overdraft without a fee? I looked into to Vanguard and the no atm fee reimbursement, $30/year fee and $4.95/mo bill pay just isn't worth it...
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Nutaboutgolf » Tue Jan 29, 2013 4:56 pm

New question if using a brokerage as a checking account. Do I send my direct deposit directly to my brokerage account and if so will it automatically purcahase (in my case) mutual funds? And if I wanted to do a EFT transfer can I again use the brokerage or is it better to use the cash management account?
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Phineas J. Whoopee » Wed Jan 30, 2013 6:22 pm

Nutaboutgolf wrote: ... In my research it appears all three firms offer a brokerage that linked to a CORE account or are basically two different accounts. Is this accurate? Do any of the firms offer any sort of automatic transfer between the accounts? For example, let's say I have $5000 in the brokerage and $0 in the core and needed an ATM withdrawal of $300, to my understanding I would need to transfer money from the brokerage to the core then do the withdrawal, but do any of the firms do that automatically? ...

Hi Nutaboutgolf,

I can only speak regarding Schwab. By default if you overdraw your checking account they will issue a margin loan from your brokerage account to cover the difference. There is no fee if that happens, but I'd suggest you think carefully about whether you would want those circumstances to render you leveraged. Margin interest accrues, of course.

There are other overdraft options, but you have to specifically request them. When I did and asked for confirmation, they said they don't confirm overdraft arrangements in writing, but suggested I call again later to ask a different representative to tell me what was set up. That was four years ago; the policy may have changed.

I like the Schwab checking account overall, but I didn't like that part of the service.

For the record, I'm paranoid about being electronically fleeced, so I don't want a checking account at an institution where I have substantial assets. While I do maintain a small savings account at Schwab Bank, and it's linked for free overdraft transfers as well as to the debit card so I can just draw directly from it, I keep nothing in the brokerage account.

PJW
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Re: Brokerage w/ debit card? Fidelity vs Vangaurd vs Schwab

Postby Nutaboutgolf » Fri Feb 01, 2013 11:11 am

I spoke with multiple reps who cover new accounts, trading and investment advisers at Fidelity...Bottom line, each withdrawal from a brokerage, regardless if it was a direct withdraw from the brokerage account or an overdraft withdrawal counts as a sale which has the tax consequences. As you probably know, funds held for less than a year have higher tax consequences...Therefore you must achieve high gains in order to benefit from this message...

A compromise to this method is budget properly, deposit your $$$ into the mycash management account, pay off your bills then move the remaining income into the brokerage...

Also worth noting that with every deposit/transfer into the brokerage is a new "lot"...According to the reps, if you do overdraft your brokerage from your mycash, it SHOULD AUTOMATICALLY pull from the oldest lot...

There are many credit unions who offer around 3%, Belvoir FCU is 3.25% for up to $15K, which if you're around that amount is a free $40/mo

http://www.depositaccounts.com/checking ... ounts.html will help you find a high yield saving account.
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