Cash Management - Thinking of Switching to Schwab

[alienbogey]

I've been realizing I need to get off my arse with regard to managing our cash as it hovers between being spent and being invested.  For years we've had traditional checking and savings accounts at GenericMegaBank (GMB), and each pays an astounding .01% interest rate.  Our balances are large enough to avoid fees. 

(FEES FOR A SAVINGS ACCOUNT FFS?  But I digress....)

So, I'm looking at Schwab checking, paying .37% (not a lot but still 37X more than GMB) and 2.2% for the Schwab savings vehicle I would choose.  Given that we on average hold $20K in cash that pencils out to $400+ per year as opposed to staying with GMB.

I've read all the ins & outs of the Schwab features and the only thing I can see that has the potential to be inconvenient is not being able to run to the local branch for a cashier's check.  It doesn't happen often but I have made impulse vehicle purchases on great deals and cashier's checks are often preferred.

Any solutions to that drawback?  Furthermore, are there any other considerations, pro or con, to switching to online banking as opposed to local B&M that I may not be aware of?

[terran]

I have the Schwab investor checking because they reimburse ATM fees worldwide and don't charge a foreign transaction fee, so it's great for travel. Most our our cash is in an Ally savings account.

I think it's still worth having a local bank account for the occasional cash transaction or bank check needs, although honestly, it's probably been a year since either of those has been needed. Credit unions are a good option, or free checking accounts (maybe with a $100 balance) are pretty easy to find.

Edit: I'm not seeing a Schwab savings account with 2.2% interest. I'm guessing you're planning to use a money market fund in a brokerage account? Perhaps SWVXX with a current 7-day yield of 2.16%? I'm sure you know this, but unlike bank accounts, money market funds aren't FDIC insured.

[GizmoTX]

We switched to Schwab years ago for free checking, free checks, free ATM, savings, brokerage & could not be happier. Customer service is fantastic.

We keep a checking account at mega-bank for the store front features, including free notary. We have a direct deposit going into this account to waive the monthly fee. Since mega-bank charges to print checks, we never use any from this account. We could use its Bill Pay to send a check but mega-bank deducts the amount immediately while Schwab deducts when the check is presented for payment, which helps with proof of payment. This account is set up to autopay all our recurring bills that have the same amount each month & charge for credit card payments. We also link PayPal & Zelle to this account to limit risk since its balance is always low. Mega-bank charges to transfer money out but Schwab does not, so we always push from Schwab if a transfer is needed.

[Peachtea]

We switched to Schwab for most Checking functions a few years ago and love it. We switched because of reimbursement of atm fees and no foreign transaction fees on withdrawing money/using debit card. Love that we can let the balance go low whilst transferring cash to savings/investments without worrying about fees or minimum deposits. It has all the functions online as our chase accounts did, like photo check deposit. Compared to chase, everything takes less time, from deposits being accepted to cash transferred out showing as gone.

We also use the brockerage account for investments because it’s very convenient moving money to it, the interface is good, and fees are low like Vanguard. But for savings we use discover since the interest is competitive (2 something percent), it’s fdic insured, and transfers between schwab is easy.

Only downside to schwab is the no cash deposit option, but it’s rare we need that. 1-2 times a year, usually Xmas. We kept 1 chase acct alive for this purpose but got rid of that recently as it’s not worth the hassle of multiple accounts when we can just hang on to the cash on those few occasions and record expenditures manually in mint.

[doingfine]

Use Schwab, happy enough. Good service, decent website.

You might also consider Fidelity who has a couple of additional options - namely they allow you to hold cash in their higher yielding MM funds with transfers made automatically to your checking account, allowing you to receive full interest on all your cash all the time. With Schwab you must manually sell the MM funds to generate cash for transfer to checking. Fidelity also has a popular 2% cash back credit card.

Lastly, I keep most of our cash at Vanguard whose MM funds pay more than Schwab's. If you already have a Vanguard account or other brokerage, you might consider just holding your cash there and transferring to your current bank as needed.

[A Fella from Stella]

This is all great stuff. I had no idea. I am in the process of changing from a big bank to a local one, but tis might be a better one to go to.

[samirol]

Another good option is Fidelity's cash management, it is pretty easy to put the money into a money market fund getting 2.14%. No foreign transaction fees, links up with a 2% cash back card, waived ATM fees, etc. There's an in-depth thread on Bogleheads about people who are using it as a one stop shop:

https://www.bogleheads.org/forum/viewtopic.php?t=266538

It is especially convenient for me because my 401k, employer's HSA, and everything is all with Fidelity, plus their customer service has always been good.

[alienbogey]

@terran - yes SWVVX is the money fund I'm considering to replace the megabank .01% savings account.  Yes, I'm aware it's not FDIC insured.  Thanks for the heads up.

Based on other replies (thx, people) I looked into online savings accounts but one problem is the Federal limit of 6 withdrawals a month from a savings account.  I already get occasional nastygrams from megabank for exceeding that limit as I move money about, and it's one reason I have for closing the account.

I hadn't thought of the no-cash-deposits to an online bank drawback, so right now I'm thinking that I'll keep the local B&M megabank checking but most likely close the savings and go with Schwab SWVVX.