New Bank: Schwab or Fidelity

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ralph124cf
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New Bank: Schwab or Fidelity

Post by ralph124cf » Tue Apr 02, 2019 1:18 pm

We have several retirement accounts at both Schwab and Fidelity, and we are trying to consolidate things. I am satisfied with the brokerage/retirement accounts at both places, so I am primarily interested in the banking/cash management account differences.

I understand that Fidelity does not advertise itself as a bank, but does seem to offer most normal banking services in their Cash Management Account. Schwab does advertise as a bank, but the account seems to be much like Fidelity's Cash Management account.

I have read some horrendous reviews about Schwab's banking services, but I can't find any about Fidelity's banking.

Any experiences here to help me decide?

Thanks,

Ralph

Dottie57
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Re: New Bank: Schwab or Fidelity

Post by Dottie57 » Tue Apr 02, 2019 1:34 pm

Schwab actually has a bank (FDIC). Fidelity does not have a bank but a “Cash Management Account” which emulates a bank. Fidelity account does not have FDIC.

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Nate79
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Re: New Bank: Schwab or Fidelity

Post by Nate79 » Tue Apr 02, 2019 1:37 pm

I really like Schwab's banking service - they are an actual bank. Great technical support, everything free, linked to brokerage accounts, etc. But the one thing they do not have is automatic sweep of cash to higher yielding MMF. Instead you get a bank interest rate and need to manually move money into the MMF. So a minor annoyance.

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jpsfranks
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Re: New Bank: Schwab or Fidelity

Post by jpsfranks » Tue Apr 02, 2019 1:42 pm

Dottie57 wrote:
Tue Apr 02, 2019 1:34 pm
Schwab actually has a bank (FDIC). Fidelity does not have a bank but a “Cash Management Account” which emulates a bank. Fidelity account does not have FDIC.
The default cash position in the Fidelity account is FDIC insured through partner banks. The interest rate is low however which is why many choose to use a money market fund with competitive rates instead of the FDIC insured default.

Fidelity as a bank account is discussed extensively in these threads:

viewtopic.php?f=2&t=209884

viewtopic.php?f=2&t=266538

arf30
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Re: New Bank: Schwab or Fidelity

Post by arf30 » Tue Apr 02, 2019 1:59 pm

Dottie57 wrote:
Tue Apr 02, 2019 1:34 pm
Schwab actually has a bank (FDIC). Fidelity does not have a bank but a “Cash Management Account” which emulates a bank. Fidelity account does not have FDIC.
The cash management account is FDIC.

bck63
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Re: New Bank: Schwab or Fidelity

Post by bck63 » Tue Apr 02, 2019 2:04 pm

Dottie57 wrote:
Tue Apr 02, 2019 1:34 pm
Schwab actually has a bank (FDIC). Fidelity does not have a bank but a “Cash Management Account” which emulates a bank. Fidelity account does not have FDIC.
I believe the CMA has FDIC insured up to $1 million. They use multiple banks. I have no money in the FDIC portion. I keep money there in a MMF and municipal bond fund.

I have another Fidelity brokerage account for equities.

I love the CMA. I find it really helpful for spending and saving.

Dottie57
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Re: New Bank: Schwab or Fidelity

Post by Dottie57 » Tue Apr 02, 2019 2:37 pm

arf30 wrote:
Tue Apr 02, 2019 1:59 pm
Dottie57 wrote:
Tue Apr 02, 2019 1:34 pm
Schwab actually has a bank (FDIC). Fidelity does not have a bank but a “Cash Management Account” which emulates a bank. Fidelity account does not have FDIC.
The cash management account is FDIC.
Yes you are right. After posting, I went over to Fidity to check. Fidelity doesn’t own a bank but works with outside banks to provide accounts.

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ryuns
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Re: New Bank: Schwab or Fidelity

Post by ryuns » Tue Apr 02, 2019 6:57 pm

For our personal accounts, I use Schwab and my wife uses Fidelity. Similar features, and both are great. For my part, I love Schwab. I just got back from an overseas trip and got reimbursed for all my ATM fees. I also used my ATM card as a credit card in a couple places where chip+PIN was required (rather than chip and signature, like my CC) and didn't pay foreign transaction fees.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton

stlutz
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Re: New Bank: Schwab or Fidelity

Post by stlutz » Tue Apr 02, 2019 7:06 pm

They are both excellent choices (I've used both over the years--currently using Fido).

The consensus from prior discussions is that Fidelity is preferred if you are looking for an easier way to get ~2% interest on a MMF as opposed to .4% from a checking account. Schwab has better customer service in the event that you have some type of problem as they own the bank while Fidelity contracts with others for the pure banking functions (checks, debit card).

sharukh
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Re: New Bank: Schwab or Fidelity

Post by sharukh » Tue Apr 02, 2019 7:26 pm

stlutz wrote:
Tue Apr 02, 2019 7:06 pm
They are both excellent choices (I've used both over the years--currently using Fido).

The consensus from prior discussions is that Fidelity is preferred if you are looking for an easier way to get ~2% interest on a MMF as opposed to .4% from a checking account. Schwab has better customer service in the event that you have some type of problem as they own the bank while Fidelity contracts with others for the pure banking functions (checks, debit card).
Perfectly summarized

mptfan
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Re: New Bank: Schwab or Fidelity

Post by mptfan » Tue Apr 02, 2019 7:31 pm

ralph124cf wrote:
Tue Apr 02, 2019 1:18 pm
I understand that Fidelity does not advertise itself as a bank,
That's because Fidelity is not a bank.

HawkeyePierce
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Re: New Bank: Schwab or Fidelity

Post by HawkeyePierce » Tue Apr 02, 2019 7:49 pm

Schwab's debit card has no foreign transaction fee whereas Fidelity's is 1%. If you're using your debit card to get cash at foreign ATMs, that gives Schwab an edge.

I've been using Schwab as my primary bank, periodically moving funds to one of their money market funds manually. No complaints here. Fidelity is definitely tempting as a one-stop shop if only they'd drop the foreign transaction fee.

stlutz
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Re: New Bank: Schwab or Fidelity

Post by stlutz » Tue Apr 02, 2019 7:58 pm

Note that the fee applies to debit card purchases but not ATM withdrawals.

Topic Author
ralph124cf
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Re: New Bank: Schwab or Fidelity

Post by ralph124cf » Wed Apr 03, 2019 12:15 am

HawkeyePierce wrote:
Tue Apr 02, 2019 7:49 pm
Schwab's debit card has no foreign transaction fee whereas Fidelity's is 1%. If you're using your debit card to get cash at foreign ATMs, that gives Schwab an edge.

I've been using Schwab as my primary bank, periodically moving funds to one of their money market funds manually. No complaints here. Fidelity is definitely tempting as a one-stop shop if only they'd drop the foreign transaction fee.
I don't like the foreign transaction fee, but at least it is stated up front.

The bigger problem is the "stealth" fee in the form of the exchange rate. Generally, you do not get a great exchange rate from credit and debit cards. I only found this out when I had to make an immediate return on an item that I purchased with a no foreign transaction fee card, and found that the return was 3% less than the charge. I tried to challenge the difference, but I was told simply that they did not use the same exchange rate for returns as for charges. That was the spread between the "official" rate quoted by the WSJ, which varied by .01% throughout that day.

The only card I have found that give a really good exchange rate is the HSBC premier card (both credit and debit) which is absolutely on the WSJ exchange rate. These cards are only available if you are willing to leave $100,000 on deposit or pay $50/ month. However, the deposit minimum can be met with one of their savings accounts which currently pay 2%, so no big sacrifice.

Ralph

TravelGeek
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Re: New Bank: Schwab or Fidelity

Post by TravelGeek » Wed Apr 03, 2019 12:48 am

stlutz wrote:
Tue Apr 02, 2019 7:58 pm
Note that the fee applies to debit card purchases but not ATM withdrawals.
Is that referring to the 1% foreign transaction exchange fee? I don’t have any personal experience with either Schwab or Fidelity (but considering signing up for one of them as an option for international travel). Fidelity says:

“Your account will automatically be reimbursed for all ATM fees charged by other institutions while using a Fidelity® Debit Card linked to your Fidelity Cash Management Account at any ATM displaying the Visa®, Plus®, or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited from the account. Please note that there may be a foreign transaction fee of 1% that is not waived, which will be included in the amount charged to your account.”

https://www.fidelity.com/cash-management/atm-debit-card

Topic Author
ralph124cf
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Re: New Bank: Schwab or Fidelity

Post by ralph124cf » Wed Apr 03, 2019 1:03 am

TravelGeek wrote:
Wed Apr 03, 2019 12:48 am
stlutz wrote:
Tue Apr 02, 2019 7:58 pm
Note that the fee applies to debit card purchases but not ATM withdrawals.
Is that referring to the 1% foreign transaction exchange fee? I don’t have any personal experience with either Schwab or Fidelity (but considering signing up for one of them as an option for international travel). Fidelity says:

“Your account will automatically be reimbursed for all ATM fees charged by other institutions while using a Fidelity® Debit Card linked to your Fidelity Cash Management Account at any ATM displaying the Visa®, Plus®, or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited from the account. Please note that there may be a foreign transaction fee of 1% that is not waived, which will be included in the amount charged to your account.”

https://www.fidelity.com/cash-management/atm-debit-card
Purchases incur the 1% fee, ATM transactions do not.

Ralph

ag1
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Re: New Bank: Schwab or Fidelity

Post by ag1 » Wed Apr 03, 2019 6:14 am

When you use the ATM card linked to Fidelity cma card at an ATM machine, do you get access to your brokerage accounts as well? I am worried that is a major security risk in case someone gets hold of your cards !!.

Or is there a way to restrict your ATM card to see only the CMA account


Ag

student
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Re: New Bank: Schwab or Fidelity

Post by student » Wed Apr 03, 2019 6:29 am

ag1 wrote:
Wed Apr 03, 2019 6:14 am
When you use the ATM card linked to Fidelity cma card at an ATM machine, do you get access to your brokerage accounts as well? I am worried that is a major security risk in case someone gets hold of your cards !!.

Or is there a way to restrict your ATM card to see only the CMA account


Ag
From what I remember, you cannot check account info such as balances using an ATM card as they are not a bank. I think you are worrying about if your cash portion cannot meet the withdrawal demand, will they stop the transaction or liquidate your holdings to meet the demand. I believe they will not let the transaction go through. Also, they have protection against fraudulent activities. However, to have extra layer of protection, I have separate CMA account that is different from my the brokerage account.

mervinj7
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Re: New Bank: Schwab or Fidelity

Post by mervinj7 » Wed Apr 03, 2019 6:46 am

HawkeyePierce wrote:
Tue Apr 02, 2019 7:49 pm
Schwab's debit card has no foreign transaction fee whereas Fidelity's is 1%. If you're using your debit card to get cash at foreign ATMs, that gives Schwab an edge.

I've been using Schwab as my primary bank, periodically moving funds to one of their money market funds manually. No complaints here. Fidelity is definitely tempting as a one-stop shop if only they'd drop the foreign transaction fee.
I use my Fidelity Debit card at ATMs worldwide and there is no fee for cash withdrawals just like Schwab. There's only a fee for using your debit card to make purchases but of course I never use my debit card for purchases.

MnD
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Re: New Bank: Schwab or Fidelity

Post by MnD » Wed Apr 03, 2019 9:20 am

stlutz wrote:
Tue Apr 02, 2019 7:06 pm
They are both excellent choices (I've used both over the years--currently using Fido).

The consensus from prior discussions is that Fidelity is preferred if you are looking for an easier way to get ~2% interest on a MMF as opposed to .4% from a checking account. Schwab has better customer service in the event that you have some type of problem as they own the bank while Fidelity contracts with others for the pure banking functions (checks, debit card).
I agree both are excellent choices and just add 1) the 1% foreign transaction fee for debit card purchases at Fidelity and 2) Since t-bills are part of some peoples savings plan, note that Fidelity has auto-roll for T-bills at auction whereas at Schwab you have to place an order to replace any that are maturing.
Last edited by MnD on Wed Apr 03, 2019 9:21 am, edited 1 time in total.

HawkeyePierce
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Location: New Zealand

Re: New Bank: Schwab or Fidelity

Post by HawkeyePierce » Wed Apr 03, 2019 9:21 am

ralph124cf wrote:
Wed Apr 03, 2019 12:15 am
HawkeyePierce wrote:
Tue Apr 02, 2019 7:49 pm
Schwab's debit card has no foreign transaction fee whereas Fidelity's is 1%. If you're using your debit card to get cash at foreign ATMs, that gives Schwab an edge.

I've been using Schwab as my primary bank, periodically moving funds to one of their money market funds manually. No complaints here. Fidelity is definitely tempting as a one-stop shop if only they'd drop the foreign transaction fee.
I don't like the foreign transaction fee, but at least it is stated up front.

The bigger problem is the "stealth" fee in the form of the exchange rate. Generally, you do not get a great exchange rate from credit and debit cards. I only found this out when I had to make an immediate return on an item that I purchased with a no foreign transaction fee card, and found that the return was 3% less than the charge. I tried to challenge the difference, but I was told simply that they did not use the same exchange rate for returns as for charges. That was the spread between the "official" rate quoted by the WSJ, which varied by .01% throughout that day.

The only card I have found that give a really good exchange rate is the HSBC premier card (both credit and debit) which is absolutely on the WSJ exchange rate. These cards are only available if you are willing to leave $100,000 on deposit or pay $50/ month. However, the deposit minimum can be met with one of their savings accounts which currently pay 2%, so no big sacrifice.

Ralph
That sounds like you got ripped off by the merchant. Visa and Mastercard's exchange rate is generally as close to the interbank rate as a regular consumer is ever going to get. Issuing banks aren't converting currencies themselves, that's done by the payment network.

You may have been hit by "direct currency conversion" which is a scam perpetrated by some merchants in which their merchant bank does the conversion and charges you in your native currency. This is usually anywhere from 3 to 7% worse than the rate from Visa and Mastercard.

(I build credit card payment processing systems for a living)

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