Uninvested Cash at Schwab

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I learned something about Schwab and uninvested cash today. With Fidelity or Vanguard, you select a default money market account and your uninvested cash goes into that fund. It can be a different fund for each account. With Schwab, your funds default into an area called "cash and cash investments." I discovered that all the cash that is sitting there is earning 0.2 percent, and has been doing so since the account was opened years ago. It never occurred to me to look into this.

I'm considering moving away from Schwab, as I consider this a deceptive nondisclosure practice. Thoughts? What are others doing with uninvested cash at Schwab?
 
That would make me extremely angry. I would move that money somewhere else, just to stick it to them.
 
I learned something about Schwab and uninvested cash today. With Fidelity or Vanguard, you select a default money market account and your uninvested cash goes into that fund. It can be a different fund for each account. With Schwab, your funds default into an area called "cash and cash investments." I discovered that all the cash that is sitting there is earning 0.2 percent, and has been doing so since the account was opened years ago. It never occurred to me to look into this.

I'm considering moving away from Schwab, as I consider this a deceptive nondisclosure practice. Thoughts? What are others doing with uninvested cash at Schwab?
The Schwab sweep account interest rate is disclosed. All you have to do is look it up. I put my uninvested funds in SWVXX which has been paying 5.14%.
 
I invest my cash at Schwab in SWVXX, their money fund, but since it trades like a mutual fund it takes a day to sell shares and I have to wait until the next business day to transfer the proceeds cash into my checking account. A PITA, if you ask me. And it doesn’t download into Quicken properly, it comes in as cash and I have to manually enter the trades into my computer.
 
I invest my cash at Schwab in SWVXX, their money fund, but since it trades like a mutual fund it takes a day to sell shares and I have to wait until the next business day to transfer the proceeds cash into my checking account.
This is the usual way folks here handle it. A minor nuisance, and Fido certainly handles it better, but really not such a big deal.
 
The Schwab sweep account interest rate is disclosed. All you have to do is look it up. I put my uninvested funds in SWVXX which has been paying 5.14%.

I invest my cash at Schwab in SWVXX, their money fund, but since it trades like a mutual fund it takes a day to sell shares and I have to wait until the next business day to transfer the proceeds cash into my checking account.
Me too... A few clicks and it's in, a few more clicks and it's out. One day to move it in, one day to move it out. It would be nice if it were all done "immediately" (same day), but one day is not to bad, IMO.
 
Schwab sucks for the way they handle cash. I moved most out due to this reason.
 
The Schwab sweep account interest rate is disclosed. All you have to do is look it up. I put my uninvested funds in SWVXX which has been paying 5.14%.
I do the same but it is super annoying. Vanguard does a much better job as their default settlement account has been at 5.23% recently.
 
The sweep money actually goes into Schwab Bank, which is an FDIC insured bank. Their bank makes loans, sells CDs etc.
 
As many have said... it is a know problem... one that more than likely will never be changed as it has not hurt their business...

Like you, I did not know it up front, but saw it very early when I moved investments there...

Just move the cash to MM and be done with it...

BTW, ALL brokerages have SOMETHING that people do not like... it is a tradeoff of what bugs you the most...
 
It never occurred to me to look it up. I made an incorrect assumption. And I will not be adding to Schwab and will take most out, except mutual funds with substantial profits.
 
I learned something about Schwab and uninvested cash today. With Fidelity or Vanguard, you select a default money market account and your uninvested cash goes into that fund. It can be a different fund for each account. With Schwab, your funds default into an area called "cash and cash investments." I discovered that all the cash that is sitting there is earning 0.2 percent, and has been doing so since the account was opened years ago. It never occurred to me to look into this.

I'm considering moving away from Schwab, as I consider this a deceptive nondisclosure practice. Thoughts? What are others doing with uninvested cash at Schwab?
That is the single reason I chose not to open up a Schwab account a few years ago when I was looking into it. I already have Vanguard and Fidelity accounts but so many people here posted that they like Schwab customer service better and they have physical branches which is an added plus. So, I was going to open an account. But then when people here said I would have to manually move money from the cash fund in order to get the higher money market rate - I said no way! I have a lot of brokered CDs paying interest each month that I let accumulate in the brokered money market account. Then when the accumulation hits a certain level, I reinvest it. It would be a huge bother to have to constantly move that money around. This would apply to any equity funds where I do not reinvest dividends. I do not understand why Schwab has this practice and Vanguard and Fidelity do not.
 
If you do decide to move a substantial amount to another brokerage, be sure to ask the new brokerage (ahead of time) if they will offer you an incentive to join them (sometimes a 1%-3% cash incentive). Fidelity is a popular alternative. I park Schwab cash in SWVXX.
 
I learned something about Schwab and uninvested cash today. With Fidelity or Vanguard, you select a default money market account and your uninvested cash goes into that fund. It can be a different fund for each account. With Schwab, your funds default into an area called "cash and cash investments." I discovered that all the cash that is sitting there is earning 0.2 percent, and has been doing so since the account was opened years ago. It never occurred to me to look into this.

I'm considering moving away from Schwab, as I consider this a deceptive nondisclosure practice. Thoughts? What are others doing with uninvested cash at Schwab?
That is a fairly well-known attribute at Schwab for those that are paying attention. I sweep the balance to their Advantage MM fund, SWVXX periodically. It only takes a minute. This is part of why they don't charge commissions, they have to make their money somewhere.

If I had to do it over again I might go with Fido instead as you can define their money market account as your settlement account and not have to manually sweep money around.

The thing that I do like about Schwab is their customer service. I have two real people that I can call. About half the time they actually answer the phone. The other half I leave a message or send an email and they respond promptly. So that customer service is worth the minoe inconvenience of having to sweep money into SWVXX.
 
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I invest my cash at Schwab in SWVXX, their money fund, but since it trades like a mutual fund it takes a day to sell shares and I have to wait until the next business day to transfer the proceeds cash into my checking account. A PITA, if you ask me. And it doesn’t download into Quicken properly, it comes in as cash and I have to manually enter the trades into my computer.
All of my Schwab transactions upload to Quicken fine. I like that whe I buy a new ticker or new CUSIP that the security automatically populates into Quicken from Schwab.
 
Let's say you have a taxable investment account at Schwab with all your cash in their MM fund paying ~5%.

Now you set up a limit order to buy shares of an ETF at a price a bit lower than current price level.
It might be a week or three before that limit order executes.
So can you leave all your cash in the MM fund or do you need to move enough into their 0.25% sweep fund to cover that possible buy?
 
Why should I have to look it up? It should be disclosed, front and center.
 
Yes, I had made note of that issue several years ago (IOW whined and complained about it). I didn't/ don't care for it as I keep open limit orders and have no intention of opening a margin account to cover trades until I can transfer funds because of their low interest rate. It became more of an issue when interest rates shot up, at which time I reduced the size / amount of my limit orders and moved the majority of funds into money markets which paid more. That is why they don't have my or DH's IRAs.

That said, their customer service, for the most part, is superior, and they have handled cost basis issues better for me than Vanguard.
 
BTW, ALL brokerages have SOMETHING that people do not like... it is a tradeoff of what bugs you the most...
I agree! TBH, I miss TD-Ameritrade. I preferred the mutual fund comparisons I was able to do with their tools. I'm down to Fidelity and Schwab and if I eventually downsize to one brokerage house, it will probably be Fidelity.
 
I've been with several brokerage firms over the past 5+ decades. None are perfect, all have pros and cons but I've stayed with Schwab since they meet my needs and trading/investing style.
 
All of my Schwab transactions upload to Quicken fine. I like that whe I buy a new ticker or new CUSIP that the security automatically populates into Quicken from Schwab.
Everything else works fine for me as well. I think the issue with SWVXX is that Schwab categorizes it as cash on their website (refer to the positions list on your account summary page). I’m using the Mac version of Quicken so maybe there’s a difference?

A bit annoying to keep up with, but once the issue is recognized it’s not a huge deal. I’ve been with Schwab for over 30 years and don’t plan on moving.
 
Once you know how to handle this, it's not that big of a thing. Just pay attention to when CD matures and you have to be proactive or else you're going to lose a day or two of interest.
 
To be fair, up until about six months ago profits from Fidelity went into a cash account that paid maybe 2%? I had to move it each time to a Fidelity MM account or they spread it around a half dozen FDIC banks. Happily, Fidelity changed and said I could name my "cash account" recipient, which I did. FZDXX for the win.
 
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