Banking and Checking

[inquisitive]

What's the best way to organize all my finances so that I have liquidity while at the same time making the most on my money?

Right now I have a free checking account which I use to pay bills, but I have to transfer money from my high interest savings account periodically which is a hassle and sometimes I transfer too much or too little since the bills vary from month to month. My income from my job deposits directly into the high interest savings account which makes about 3%/year so I could actually be doing much better by getting an index mutual fund or something along those lines, but then would I be able to transfer to the checkings account? Or is there an account that I could invest in stocks/mutual funds while writing free or low cost checks off the same account, and being able to withdraw funds occasionally from an ATM?

I'm also looking into opening a Citi bank account and getting a Thank You Rewards credit card if anyone has experience in this.

 

[LOL!]

If you have $25,000 in investments, then you should consider getting a WellsFargo PMA thing going. You get free checking (with all the usual free things) and free investing in stocks and mutual funds. You can transfer money from checking account to brokerage account virtually instaneously. To transfer from brokerage to checking takes overnight.
You will not get a great rate on interest on checking, but you would get free ATM withdrawals from your checking account.

You would still need to go online to click transfers between checking and brokerage.

Other options are go with Schwab, Fidelity, or Vanguard which all have checking accounts associated with a brokerage acccount, but all of them cost more than WellsFargo.

 

[Delawaredave5]

I want to get rid of my "local bank" and get checks and ATM card from Fido or Vanguard.

Fido looks like a better deal than Vanguard:
Fidelity Investments

Friend of mine uses Schwab - he uses ATMs anywhere - Schwab reimburses ATM fees at end of month (there's some limit but he's never close).

He loves it.

 

[Rambler]

I use Charles Schwab. I am moving (slowly) my traditional banking from other banks to them, because their banking and brokerage services call all be accessed from the same portal. It is easy to move money around to the various places you want it...cash sweep MM fund to checking, or to savings, or to CDs, or bonds or equities. I like Schwab for various reasons, mainly the above, but there are also branches here and there where I can go talk to someone if I need to, and their call-centers are absolutely top-notch. Always available, friendly, in Phoenix rather than Bangalore, etc. You can get a lot more historical info on your acct from their portal than you can from any other bank I have used. I highly recommend them.

R

 

[Animorph]

I use the Fidelity mySmart Cash account as my normal checking account. It's tied to my brokerage account, where it can automatically draw on cash and money market accounts for overdrafts or to maintain my minimum balance target. It automatically pays any ATM fees, so any ATM is free.

I still have my local B of A account, with $100 in it, and which is also connected to my Fidelity accounts for EFT's. I keep it around in case I need to deposit a check I'd rather not send through the mail. I do have a local Fidelity office that I have used for some large deposits as well. If they finally let me scan checks and deposit them electronically I'll probably drop the local bank.

 

[ziggy29]

Fido looks like a better deal than Vanguard:
Fidelity Investments

Friend of mine uses Schwab - he uses ATMs anywhere - Schwab reimburses ATM fees at end of month (there's some limit but he's never close).

He loves it.

I have a Schwab account like this as well, and I love the 2% monthly cash back from their Visa into my Schwab taxable investment account.

As far as one-stop shops for competitive offerings in all aspects of financial services (banking, brokerage, mutual funds and the like), I think Schwab and Fidelity are out in front. Of course, for many people not having access to Vanguard funds is problematic, but there's no reason why you couldn't also keep a Vanguard mutual account or two and set up online fund transfers.

 

[W2R]

All of my taxable investments are at Vanguard, other than a relatively small amount (around 1%) which is at my bricks-and-mortar bank for living expenses.

Maybe this is stupid or ignorant, but I prefer to limit my access to Vanguard in order to lower my risk of having large amounts of my funds stolen somehow. Instead, I only use checks and debit cards connected with my bricks-and-mortar bank. I access money from Vanguard solely via electronic transfer to my bank.

 

[Bestwifeever]

What's the best way to organize all my finances so that I have liquidity while at the same time making the most on my money?

Right now I have a free checking account which I use to pay bills, but I have to transfer money from my high interest savings account periodically which is a hassle and sometimes I transfer too much or too little since the bills vary from month to month. My income from my job deposits directly into the high interest savings account which makes about 3%/year so I could actually be doing much better by getting an index mutual fund or something along those lines, but then would I be able to transfer to the checkings account? Or is there an account that I could invest in stocks/mutual funds while writing free or low cost checks off the same account, and being able to withdraw funds occasionally from an ATM?

I'm also looking into opening a Citi bank account and getting a Thank You Rewards credit card if anyone has experience in this.

You do what my daughter does with online savings direct deposit and a traditional bank. Just a caveat re Citibank, where she has a "free" checking account--she just received a notice about a new $9.50/month maintenance charge even for formerly free accounts that had direct deposit (her company had split her direct deposits between the online bank and Citibank), etc. She got around the new fee because her company has a partnership with Citibank, but be sure to check those fees.

 

[Rich_by_the_Bay]

While mostly with Vanguard, I opened two accounts at Ally on line. One is for the cash part of my portfolio, and the other is for my "buffer" fund which I mentally view as separate and kind of an emergency/unanticipated expense fund.

I did this when the spread between my Vgd Prime MMF and the Ally FDIC-insured savings abount hit 1% (in favor of ally, let alone the FDIC piece).

I have a bunch of short term fed bonds in the portfolio as near-cash, but did want some of my money in a true insured, instantly available state. But if you can be a little risk-tolerant, short term federal bonds earn considerably more than the typical mutual MMF.

 

[walkinwood]

All of my taxable investments are at Vanguard, other than a relatively small amount (around 1%) which is at my bricks-and-mortar bank for living expenses.

Maybe this is stupid or ignorant, but I prefer to limit my access to Vanguard in order to lower my risk of having large amounts of my funds stolen somehow. Instead, I only use checks and debit cards connected with my bricks-and-mortar bank. I access money from Vanguard solely via electronic transfer to my bank.

We do the same thing. We like having access to a brick & mortar bank for some services. I have set a reminder in an online calendar (it sends me an email) to check balances near the end of the month and replenish as needed. I do not write checks or transfer funds anywhere else from my Vg account.

 

[walkinwood]

..... I could actually be doing much better by getting an index mutual fund or something along those lines, ......

Please think hard before you put cash that you need for your current living expenses into an index mutual fund. Equity and medium/long term bond funds are very volatile. I use Vg's ST. Investment grade corp bond to hold cash that I need 6 months out. I am comfortable with the volatility of that fund.

 

[youbet]

I use Charles Schwab. I am moving (slowly) my traditional banking from other banks to them, because their banking and brokerage services call all be accessed from the same portal. It is easy to move money around to the various places you want it...cash sweep MM fund to checking, or to savings, or to CDs, or bonds or equities. I like Schwab for various reasons, mainly the above, but there are also branches here and there where I can go talk to someone if I need to, and their call-centers are absolutely top-notch. Always available, friendly, in Phoenix rather than Bangalore, etc. You can get a lot more historical info on your acct from their portal than you can from any other bank I have used. I highly recommend them.

R

I agree. I've been with Schwab many years and have been happy with them. I recently did a deep dive into Fido, Vanguard and Schwab to see if I should stick to Schwab 100% or roll my left-behind-at-RE 401k to one of the others. My conclusion remains that there aren't enough unique advantages to justify having mulitple brokerages and I'll stick with 100% Schwab.

Investors' individual circumstances will impact this decision, of course.

 

[inquisitive]

The Wells Fargo PMA looks like a great deal with free checking, easy to transfer funds from banking to checking, free ATM withdrawals from checking, and 100 free stock trades/year. Unfortunately I am under the $25,000 minimum but maybe later this year I will do it.

How much does it cost for stock trading with Fidelity or Schwab and are there monthly fees? Do they work like the Wells Fargo package?

 

[clifp]

Schwab recently lowered trades to $8.95 for everyone for any number of shares. (It use to be only the Platinum customers that had the $8.95 price).

No account fees. In fact, in my 25+ years of using Schwab and I can count on both hands the number of fees I've paid to the company, and I have done a ton of unusual things.

 

[Woz2000]

What bank is paying 3% on savings

<snip>...deposits directly into the high interest savings account which makes about 3%/year...<snip>

 

[Nords]

What's the best way to organize all my finances so that I have liquidity while at the same time making the most on my money?
... so I could actually be doing much better by getting an index mutual fund or something along those lines, but then would I be able to transfer to the checkings account?
Or is there an account that I could invest in stocks/mutual funds while writing free or low cost checks off the same account, and being able to withdraw funds occasionally from an ATM?

What you're asking about is the concept of "chasing yield". You're attempting to squeeze out every last little bit of 0.005% of interest without focusing on the risk of loss of principal.

How would you have felt in late 2008 or early 2009 if your pay was deposited into something that automatically bought an index fund, which dropped 10% in the next couple weeks?

How much money goes through your account in a year? How much extra money would you hypothetically earn if it was in a 3% account instead of a 1% account? 2% of $100K/year is $2000. Is that worth the risk of losing $3000-$4000 in an equity fund, or having to wait for the share price to recover?

The reason we have low-interest cash accounts is for their high liquidity. The idea is that you can quickly pay... cash... or an electronic funds transfer without having to sell something that may not fetch a good price or may not even have a market to sell into.

The real savings of having cash comes when you can offer a highly liquid currency right now instead of fund shares that you have to sell or a charge card or a loan. You usually get a discount of a few percent for your cash, which is the equivalent of chasing yield in a high-interest account.

 

[inquisitive]

So I think I'm going to go with the Wells Fargo PMA deal. Does anyone know if the $25,000 includes Roth IRA investments? If I transfer that I will be over the limit.

If I have my paycheck go automatically into some kind of investment, can I write checks on this account and have it sell whatever I'm invested in, or do I need to sell the investment and then write checks? I've realized that I always have a few thousand that is sitting and either making nothing in a checking account or a small amount in a savings account. Would like to put this toward something useful but also be able to write checks on it.

 

[Pete]

In another thread someone mentioned the PenFed Platinum credit card. 5% on gas, 2% at the supermarket, and 1% on everything else. Rewards are taken directly off your next statement, and there are no limits on the rewards.

 

[DblDoc]

So I think I'm going to go with the Wells Fargo PMA deal. Does anyone know if the $25,000 includes Roth IRA investments? If I transfer that I will be over the limit.

If I have my paycheck go automatically into some kind of investment, can I write checks on this account and have it sell whatever I'm invested in, or do I need to sell the investment and then write checks? I've realized that I always have a few thousand that is sitting and either making nothing in a checking account or a small amount in a savings account. Would like to put this toward something useful but also be able to write checks on it.

You need to re-read Nords' post above ^.

You need an emergency fund that is liquid if you need to write an occassional check you have not budgeted for. I use a "high yield" checking account at ING which is paying 0.25% right now . But it is safe and liquid. Run a tight budget and then invest what you have left over. I would never "automatically" invest in something that I may have to sell on a whim in the near term. That is not investing. That is gambling.

DD

 

[jebmke]

All of my taxable investments are at Vanguard, other than a relatively small amount (around 1%) which is at my bricks-and-mortar bank for living expenses.

Maybe this is stupid or ignorant, but I prefer to limit my access to Vanguard in order to lower my risk of having large amounts of my funds stolen somehow. Instead, I only use checks and debit cards connected with my bricks-and-mortar bank. I access money from Vanguard solely via electronic transfer to my bank.

This is what we do as well. Almost all of our expenses are either direct debit or on a credit card. The DDs and direct deposits (pension) all hit at the first of the month. By then I also know what the balance due is on the credit cards (due around mid month) so I can make one transfer from VG a month to fund the month. Normally I keep about a months worth of cash in the bank MM fund in addition to small amount in checking.

 

[LOL!]

So I think I'm going to go with the Wells Fargo PMA deal. Does anyone know if the $25,000 includes Roth IRA investments? If I transfer that I will be over the limit.

Yes, your Roth IRA counts toward the $25K requirement.

If I have my paycheck go automatically into some kind of investment, can I write checks on this account and have it sell whatever I'm invested in, or do I need to sell the investment and then write checks? I've realized that I always have a few thousand that is sitting and either making nothing in a checking account or a small amount in a savings account. Would like to put this toward something useful but also be able to write checks on it.

I do not think you can have your paycheck go automatically into some kind of investment. You can have your paycheck automatically direct-deposited into your WellsFargo PMA checking account. It is a full-fledged checking account, so you can write all the checks you want. Paper checks are free. It is not an investment account.

You can transfer money from checking to your WellsTrade brokerage account online. You may be able to contact WellsTrade and get a form to fill out to do automatic investing into a mutual fund like a Vanguard short-term bond fund. The transfers would then happen automatically. I doubt you could then write checks on the bond fund.

However, you could still do WellsFargo PMA (or any other bank checking account), you could then open yet another account at Vanguard. You could have Vanguard pull money from your checking account automatically and use it to invest in a short-term bond fund. Vanguard has check-writing on many of its short-term bond funds.

For myself, I am at the stage where I do not want anything but my 401(k) contributions to happen automatically. I want control and do transfers manually when I want to. I keep about 2 weeks worth of expenses in my checking account and the rest I manually transfer elsewhere to invest.

 

[growing_older]

WellsFargo PMA can do automatic checkwriting (scheduled) to anywhere, including Vanguard funds and WellsTrade brokerage. I don't know anyone who does checkwriting that automatically liquidates investments to cover the check. That sounds a little dangerous to me since if you need that money why would you be taking investment risks with it. Personally, if I was going to do anything like that, I'd like to be in the loop and make she investment sale manually to know what was going on. Would be interested to hear if you ever find an account like this. If you are thinking of going with PMA for free trades in the brokerage, you might want to look again as Vanguard brokerage, as they just dropped their fees and now have some free trades also.

 

[Texas Proud]

You need to re-read Nords' post above ^.

You need an emergency fund that is liquid if you need to write an occassional check you have not budgeted for. I use a "high yield" checking account at ING which is paying 0.25% right now . But it is safe and liquid. Run a tight budget and then invest what you have left over. I would never "automatically" invest in something that I may have to sell on a whim in the near term. That is not investing. That is gambling.

DD

Why not go with their saving account I can easily move money to my checking account if I need it. It also is paying around 1%... (made me look... it is 1.1%)...

 

[scrabbler1]

I always used my local bank (BofA and its predecessors) as a hub for my banking activities. This included electronic bill paying, ATM withdrawals, direct deposit of my paychecks (when I was working) and other electronic payments, and electronic purchases of mutual fund shares in my investments. But it also included other things which required an in-person bank teller such as the rare bank check, rare cash deposits, and getting quarters for the laundry. I would also deposit paper checks there, sometimes at the ATM, sometimes with a teller. The bank is walking distance from where I live and had branches/ATMs near my old office.

I would keep enough money in the account to satisfy minimum balance requirements plus a cushion of $500-$750 in case there was some unexpected expense I needed to write a check or get cash for. Furthermore, some of my mutual funds have checkwriting so they provide an extra level of quick access in case I need to write a rare, large check (at least $500 or $1,000) right away instead of doing an electronic redemption and waiting a few days.

Until the late 1990s, I had a MM savings account which I used for the minimum balance+cushion, effectively giving me a small interest amount on my checking. I had overdraft protection on the checking so I never had to worry about bouncing a check.

But in the late 1990s, the local banks had a "race to the bottom" when they starting greatly raising minimum balances and fees and forced me to either raise the amount in the MM savings (and forgoing greater dividends in the bond mutual fund I would getting the added money from) or combine it with the no-interest checking account. The latter was a better deal for me but it little more than the lesser of two inferior options.

Even though I don't work any more (retired in 2008), I still do the same things, except that my electronic paychecks have been replaced by electronic dividend payments. I still like having a local bank around as a hub for my activities.

 

[DblDoc]

Why not go with their saving account I can easily move money to my checking account if I need it. It also is paying around 1%... (made me look... it is 1.1%)...

Thanks for pointing that out.

DD