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Everyone with a Schwab Bank Investor Checking™ account automatically earns 2.26% APY, regardless of your balance
* No account minimums
* Free checks
* No monthly service charges
* Free bill pay
* No ATM fees
* FDIC insured
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.
Thanks for the heads up on this. I'll ask the obvious question... hard inquiry?
Thanks in advance to those who do open an account, find out the hard way, and let us all know. 
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.
Looks good. I don't see any details about how to make (paper) deposits...if that's even possible with this account.
Edit: If you click through Deposit Accounts > Checking it says:
"Deposits for the Schwab Bank accounts are not accepted at any Charles Schwab & Co. branches. However, deposits to your Schwab Bank Investor Checking account can be made by transferring funds from your Schwab One brokerage account and by mailing deposits to Schwab Bank."
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 is great news! I have been using Schwab checking for a long time (since they first started their Schwab Access account before they opened their “bank”). I have always had to manage my cash balance very closely because the interest rate was very low. Now, I can be a little more flexible.
One of the biggest benefits of this account for me is the automatic linking to my brokerage account. You can setup a minimum balance and it will automatically transfer funds from your SchwabOne account to keep that balance. It will also automatically overdraft to your SchwabOne and even go into margin if necessary. I don’t ever plan on borrowing at the margin rate, but just in case something came up, I have that protection.
I also enjoy being able to use any ATM with all fees refunded.
The one drawback that someone else pointed out is that they only way to deposit funds directly is by mail (which I don’t like to do). You can deposit funds at your Schwab Branch into your SchwabOne, but not Checking. Since the Branch really isn’t very convenient anyway, I setup a free checking account at Bank of America where I keep a small amount of emergency cash (in case I need more than I can get out of Schwab in one day) and I user their ATM to deposit my checks (mostly rebate checks from other FW deals). I use ACH to move money around.
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.
anaray said:
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.
1) No, you must open both the checking account and brokerage account, but neither have minimum balances when linked together
2) Schwab uses CheckFree for billpay, so your electronic payments are deducted immediately, but payments that require a paper check are not deducted until the check is posted back to the bank after it is cashed/deposited/ect..
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
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.
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.
It will automatically sell FSLXX holdings to cover obligations such as billpay, checks, and ach transfers. There's no fee for this.
As far as advantages compared to Fidelity, it lies in the Debit card. Fidelity's debit card requires $5k just to get one, and much higher balances to get ATM fee refunds.
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.
I didn't mean to pick a fight. It is just the only way where I see 4.25% to be "good" is if you are in the 15% tax bracket or less. Considering all the $100K/year salary people on this board, I thought that was pretty small.
Isn't fidelity limited to 6 "checking" transactions a month since it is a MMA?
verruckterBaum said:I didn't mean to pick a fight. It is just the only way where I see 4.25% to be "good" is if you are in the 15% tax bracket or less. Considering all the $100K/year salary people on this board, I thought that was pretty small.
No big deal. I guess my comparison was not to 4.25 but between taxable Fidelity funds such as the Select MM which pays over 5% to Fidelity core funds that are municipal funds w/ yields under 3.5. For those in no state tax locations, the 25 or 28 brackets come in under 5%. Indeed, these are better than Schwab's 4.25, but I wanted to know how to beat Schwab's rate with Fidelity. You answered my question--it seems like you can ignore Fidelity's stated requirement that bill pay be linked to a core account and simply keep overdrafting and having money pulled from a non core (but higher yielding) money market. This is great news--and it seems that I can move most of my banking to Fidelity. A few clarifications/questions:
1. Since Fidelity Select MM does not have check writing privledges, will your core account also take funds from Select MM for writen checks?
2. Can you mail in a check payable to you into Fidelity to deposit it? If so, does Fidelity provide free postage paid envelopes? (Does the Schwab fund does this as well)
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).
alchemize said:Isn't fidelity limited to 6 "checking" transactions a month since it is a MMA?
MMF doesn't equal MMA.
ss315 said:
1. Since Fidelity Select MM does not have check writing privledges, will your core account also take funds from Select MM for writen checks?
yes, it isn't FSLXX which does the check writing, it is CORE that does the writing and FSLXX which does the clearing/sweeping.
2. Can you mail in a check payable to you into Fidelity to deposit it? If so, does Fidelity provide free postage paid envelopes? (Does the Schwab fund does this as well)
Yes you can mail in checks, fee postage I don't know as I just drop my money in my local bank and do a same day electronic transfer.
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.
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