Charles Schwab 2.01% checking account

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Everyone with a Schwab Bank Investor Checking™ account automatically earns 2.01% APY, regardless of your balance

* No account minimums
* Free checks
* No monthly service charges
* Free bill pay
* No ATM fees
* FDIC insured

Linky

Interesting, I am wondering if they have an ACH capability to send money to other accounts than just the Schwab brokerage. With unlimited ATM rebates, a 4.25% rate and CheckFree BillPay, that would make it the perfect account for me.

One downside is that you have to open a brokerage account along with the checking account to get the rate. There doesn't seem to be a minimum balance on the brokerage account as long as you open the Investor Checking account, but now you have another brokerage account open.

I thought it was interesting that it made the main page of cnn's money section. link. Here's hoping that it spurs a rate war we can benefit from.

Hey, this is pretty cool. I've had an Investor Checking account for about a year now. (I've had a brokerage account with Schwab since high school). The higher rate applies to existing accounts too.

Previously, I had kept all my money in the brokerage account. It qualifies for a money market sweep, so that had a yield of approx 4.75%. Then, any transaction on the checking account would overdraft transfer from the brokerage (no limits or fees on overdraft transfers). This became my ghetto high-yield checking account, but has two disadvantages 1) a household balance of $500k is required to get MM sweeps in the brokerage account, and 2) Every transaction you do to the checking account triggers an extra two transactions for the transfer.

I'm primarily a fan of the refunded ATM fees, it's a great feature. Along with the free books of checks, deposit envelopes are included to mail deposits to the bank (postage is pre-paid). I haven't ever used their billpay feature, since I use the ex-MBNA billpay.

You can set up ACH's to anywhere. Execution and be as fast as next-day. For MY account, I have to mail in an annoying form to set up each account. There's nominally an online ACH account setup feature, but it doesn't show available for me. I don't know if it's because my account is ancient, or what. Also note that Schwab-initiated transfers are to and from the brokerage account, not the bank account. I'd rank the ACH ability as functional, but not as good as, say, Fidelity's.

I would prefer a truly unified account, but the combination bank/brokerage gets me the features I'm looking for.

Now that the bank interest rate is within spitting distance of the money market rate, I may actually keep a bit of balance in the account, just to cut down on annoying overdraft transfers. Note that the bank can have three types of auto transfers with the brokerage account:

1) Scheduled daily, weekly, monthly, etc transfers of a particular dollar amount
2) Overdraft transfers, 1 per transaction
3) "Target balance transfers", where a daily transfer is made to keep the checking balance at a particular level.

Oh, and want to know the final irony? The yield on the Schwab Bank checking account is now much higher than the yield on interest paid on uninvested cash in the brokerage accounts

This beats Bank of the Internet (BofI) by far (although BofI has excellent customer service)

Regarding mailing your deposits: I used to use Netbank's postage-paid envelopes for 3 years and then BofI's for the past 2. Never had a check lost and it gets deposited within 2-3 days after you mail it (the superior interest rate vs. that of a local bank makes up for those 2-3 days in transit).

BofI caps your ATM refunds at $8/month (I think), but it looks like Schwab's is unlimited.

My only caution: How long do you think Schwab can maintain something like this? Do you think they'll be shady when it comes to raising the interest rate (like ING and Emigrant now) or will they "keep it real?"

Question 1: Can i just open the checking acct and get all the benefits (I dont mind keeping 1000 as a min. that's what I do at BofI)?

Question 2: How does Schwab handle its billpay? BofI doesn't withdraw money (for e-bill payments) until the recipient actually cashes it. That means I can send my landlord an e-check today, and if he doesn't cash it for 2 weeks I earn 3.40% apy on that money (and since this happens every month, I definitely make out at the end of the year). Many other bill payments subtract the money as soon as they send the check.

Today's BankDeals Blogspot article:

It has no minimum balance requirements and no monthly fees. Other perks include free bill pay, free checks and ATM fee rebates. The account is under Charles Schwab Bank which is FDIC insured.

To open the checking account, you first have to open the Schwab One Brokerage Account followed by the linked Schwab Bank Investor Checking Account. The typical $1,000 minimum is waived for the brokerage account when you also open the Investor Checking account. Also, there is no fee to open and maintain the brokerage account. The accounts can be opened online, by phone or at a branch.

According to this San Francisco Chronicle article, Schwab branches won't accept deposits. You'll have to mail in checks, use direct deposit or transfer electonically. Their electronic funds transfer (ETF) system is called MoneyLine allows you to link to your external accounts and make online ACH transfers. MoneyLink has no fees and it allows you to link to multiple external accounts

verruckterBaum said: Just for comparison's sake, my Fidelity core account (fed free/state free) has an effective yield greater than 4.25%. I don't think I'm in the minority. There are no minimums on the core account and if you have a little bit more money you can step up to 5.12% with FSLXX.

Any advantages of this over Fidelity? In my opinion Fidelity has a better linked CC (1.5% back), the same bill-pay, and great transfers.

But can you use FSLXX as a core account. I thought core accounts are the bank desposit accounts (which are low) or a few muni funds, which only offer attractive yields if you are in a high tax state or in the 35% bracket. My understanding is you can only link core accounts to Fidelity bill pay.

ss315 said: verruckterBaum said: Just for comparison's sake, my Fidelity core account (fed free/state free) has an effective yield greater than 4.25%. I don't think I'm in the minority. There are no minimums on the core account and if you have a little bit more money you can step up to 5.12% with FSLXX.

Any advantages of this over Fidelity? In my opinion Fidelity has a better linked CC (1.5% back), the same bill-pay, and great transfers.

But can you use FSLXX as a core account. I thought core accounts are the bank desposit accounts (which are low) or a few muni funds, which only offer attractive yields if you are in a high tax state or in the 35% bracket. My understanding is you can only link core accounts to Fidelity bill pay.

Your understanding is incorrect. I regularly use bill pay and I have $0 in my core. I keep it all in FSLXX. But consider core accounts only. I'm not sure what you consider to be a "high" bracket. Most fed free/tax free core accounts are around 3.3%.

25% federal tax bracket, 0% state tax bracket 3.3%-->4.4% effective yield.

You must make $30,600 to be in the 25% tax bracket (single). I hardly call $30,600 a "high" bracket.

Now consider a 3% state tax bracket. 3.3%-->4.58%. Now consider California (25%+9.4%). 3.3%-->5.03%

Forget I said FSLXX, these are just core accounts.

Isn't fidelity limited to 6 "checking" transactions a month since it is a MMA?

alchemize said: Isn't fidelity limited to 6 "checking" transactions a month since it is a MMA?

MMF doesn't equal MMA.

Fidelity advantages:

1) Unified account
2) Higher yield on transaction-based money market (which can auto-sell to cover transactions, a "semi-sweep")

Schwab advantage:

1) ATM rebates
2) Zero minimum balance

3. Can you get a Fidelity ATM card without the debit feature activated? I am weary of the liability of a debit card tied to a brokerage account (similar concern for the Schwab account).

I don't know, I use my Fidelity CC and Fidelity AMEX Gold. I don't have an ATM card per se. If you DON'T want ATM functionality, it is hard to beat a no annual fee AMEX Gold card.

Thanks! Do they still offer the AMEX gold card? Where do I get more info for it? I cannot find it on the site.

) Higher yield on transaction-based money market (which can auto-sell to cover transactions, a "semi-sweep")

I don't know what is semi-sweep about the core accounts which if you are not in the 15% tax bracket are higher than 4.25% effective yield.

2) Zero minimum balance


There is zero minimum balance on the core accounts which pay at least 4.4% if you are not in the 15% tax bracket.

I think it is misinformation to call Fidelity's core accounts semi-sweep and to imply that they have a minimum.

I will give you that unlimited ATM rebates is a huge Charles Schwab advantage.

Xeon852 said: verruckterBaum said:
I don't know, I use my Fidelity CC and Fidelity AMEX Gold. I don't have an ATM card per se. If you DON'T want ATM functionality, it is hard to beat a no annual fee AMEX Gold card.
I thought the AMEX Gold could be used as an ATM. Cash withdrawals are instant, not deferred debit like purchases, however.

I could be wrong, I thought it was a regular Gold card and you couldn't do PIN transactions like cash withdrawals.

I apologize.

(FWF secret of the day): It isn't available, but if you are actually a customer, have an account, and go to apply for the ATM Visa card. The application is right there to apply for the AMEX. I believe you must be logged in at the time.

verruckterBaum said: I think it is misinformation to call Fidelity's core accounts semi-sweep and to imply that they have a minimum.
I think we misunderstood each other, but I also did make a couple of mistakes.

- The yield Schwab Bank checking is slightly lower than that the tax-equivalent yield on a Fidelity core fund, assuming that you pick a "good" tax-free sweep, and not the crappy FCASH.

- The yield on Fidelity's transaction-based money funds (FSLXX, etc) is also generally superior to Schwab's transaction-based MMFs. Additionally, the Fidelity transaction-based MMFs will work "semi-sweep" in that they will be sold to pay for withdrawals, but not purchased on deposits.

- Reading through Fidelity's fee schedule again, I can't determine what would keep you from keeping a brokerage account with only the core MMF, and no funds, and avoiding all fees.

So, Fidelity has Schwab beat on the yield. Not beat bad, but still beat.

"Schwab Bank reserves the right to modify or discontinue the ATM fee rebate at any time. Note: Unlimited ATM rebates do not include fees imposed by merchants for POS transactions or currency exchange fees for international ATM withdrawals."


This doesn't sound too promising. Most int'l ATMs I've been to charge a fee of some sort.


Does this mean cash advances from an ATM machine and/or straight up ATM withdrawal?

verruckterBaum said: (FWF secret of the day): It isn't available, but if you are actually a customer, have an account, and go to apply for the ATM Visa card. The application is right there to apply for the AMEX. I believe you must be logged in at the time.

This is true. I just did it a couple of weeks ago, and have received the fee free Gold cards. It is also true that they can be used as ATM cards, though I have not actually done so myself, yet. You have to pay $40 for Membership Rewards, which I didn't, but since all the normal benefits of a Gold card apply, it's pretty nice.

can anyone tell me if this is possible?

Lets say I just withdraw $20.00 from any atm. some atms, especially the ones at casinos have huge rate hikes ive seen $15.00 withdrawal charges. so i withdraw 20.00 only from a casino atm and schwab will pay me back $15.00? NO WAY they will lose so much money! Couldnt schwab's competitors organize all their employees and keep doing this and make schwab go bankrupt? thats probably a long shot but still wouldnt this make schwab lose money?

ShiZZAh said: can anyone tell me if this is possible?

Lets say I just withdraw $20.00 from any atm. some atms, especially the ones at casinos have huge rate hikes ive seen $15.00 withdrawal charges. so i withdraw 20.00 only from a casino atm and schwab will pay me back $15.00? NO WAY they will lose so much money! Couldnt schwab's competitors organize all their employees and keep doing this and make schwab go bankrupt? thats probably a long shot but still wouldnt this make schwab lose money?

Casinos in Las Vegas charge $15 atm surcharges? really? it's that high? yikes...well, if they do, that's very unusual practice..most atms i have seen, charge a maximum of $2 for each withdrawal...and some less...in my area (NYC) we even have alot of 99 cents atm machines...like in Mcdonalds and in our huge chain of Duane Reade drug stores.....

I linked one of my other bank accounts with my Schwab OCL account, so that after evoking an overdraft (for whatever reason), I can stop the interest right away by pushing repayment from the other bank. Then I can do another small transfer after the statement posts, to pay off the small amount of interest. You can also pay off the overdraft by setting up a billpay from your Investor checking account to pay the OCL account (takes about a week):

Schwab Bank Overdraft

877-824-5625
5190 Neil Road
Suite 100
Reno, NV 89502 - 8532

But call to comfirm this info is the same for you.

ivanivanix said: ...Schwab's system simply takes the missing amount from OCL and puts it into checking to cover the request in question. And again, if there is another one. The only thing that happens is some tiny APR% starts ticking away on that borrowed amount. It takes a phone call to CSR to bring the balance of OCL to zero and that daily APR stops accumulating. ...