In the wake of Hurricane Sandy, I realized access to our money was pretty important. Our local bank branch was down, and without power, for over 10 days. Sure, there were other branches to visit and online banking to exploit — but when it came down to it — as Mark Twain sort of said, “If you’re going to put all your eggs in one basket, you better have a pretty good basket!” — I knew I had to build a better basket.
I didn’t like having a single checking account where all our various direct deposits funneled because, I reasoned, if our bank does go down — or is hacked — all our various fund go straight down with it, and so, over these past few weeks, I have endeavored to spread our banking risk by opening new checking accounts and modifying our direct deposit schemes to widen our safety net by narrowing our risk niche.
I wanted checking accounts that were free from petty fees and nuisances. I also wanted a national and reputable company. I thought an American Express Bluebird account was the answer to my problems, but it was more trouble than it was worth.
In my research, I noticed a new trend of which I was not aware: Because of the banking crises in 2008 or so, the Feds allowed traditional brokerages and other financial institutions to offer checking accounts and traditional banks could offer brokerage services. Today, many traditional banks now offer free stock trading while brokerage houses now provide no-fee checking.
I quickly discovered there are two premier free checking accounts.
The first is Charles Schwab Investment Checking. To get free checking, you have to first open a Broker One account and then link the checking account to the broker account. There are no minimums for anything and all debit card purchases and ATM withdrawals are no-fee. If you only open a Broker One account, you have to keep a $1,000.00USD minimum balance or set up a monthly ACH (Automatic Clearing House) transfer of $100.00USD into the account. As long as you have the checking account linked, there are no minimum balances for anything.
The second is a Fidelity Cash Management checking account. You don’t need to open the checking account with a minimum balance. All ATM and debit card fees are waived or credited back. You do not have to open a second account in order to have the checking account.
Here is my rough reaction to Schwab Investment Checking and Fidelity Cash Management in notes taken over the last month. Both companies offer an initial online setup, but you do need to still fill out some paper and mail signatures and permissions to them. Schwab loves paper. Fidelity less so. It takes, on average, Fidelity three business days longer to do a similar task than it does Schwab.
Schwab: Lots of Paper to sign for EFT/ACH and checking. They need your signature on file and lots of checkbox permissions. Only the broker account can be truly set up online.
Fidelity: Setup was all online, but I was stopped by the system after I submitted my identifying information. I called to find out what happened. I was told to wait three hours. I did. Four hours later, I received an email telling me my email address was updated. I went online and tried to set up a new user account. It worked, but I never received a welcome letter or any basic information in email telling me I was a new customer.
Schwab: Automatically sent my card. The card is golden and good-looking. The front and back of the card have a finishing sheen.
Fidelity: Must request a debit card. Unclear how you know to request one. I clicked around in my account until I found a link. The card is ugly and dull like AMEX Bluebird. No front or back finishing glossy coating. Cheap feel in your hands.
Schwab: If you want to set up any sort of outside transfer of money to your Schwab accounts, it all has to be done with paper.
Fidelity: I was able to force money into my account from my outside bank account, but having regular “in and out” access to my bank account from the Fidelity side requires paper permission.
Schwab: They like paper and signatures and voided copies of checks. Oddly enough, you can order checks for your new account online — and set your check number — without having to push any paper at all.
Fidelity: So far, only paper processing required is to request that your Cash Management account be allowed to also be a checking account.
Phone Customer Service:
Schwab: Proactively called me the first day. MoneyLink is the name of the service that allows “in and out” transfers between your Schwab account and your external bank accounts. I called to confirm my identity and to link my brokerage account with my outside bank account.
Fidelity: Friendly is fast to answer your call, but they don’t really have ready answers. They promise to check and call you back, but don’t.
Electronic Customer Service:
Schwab: They love email. Response time was 2.5 hours concerning my debit card inquiry and linking my outside checking account to my Schwab checking account. Detailed. Efficient. Friendly. Non-cut-and-paste. Schwab will answer you in email.
Fidelity: Simple questions are hard for them to answer. “When will my debit card arrive and what is my checking account number?” Took two days to reply. Waiting for them to answer, I learned I had to request a debit card online and also figured out a strange algorithm substituting X for 5 and Y for 6 and Z for 7 to translate a complicated Fidelity account number into a standard checking account number. What a hassle! The email from the rep was cut-and-paste with non-URLs, and they did not use email to tell me any of this. They just sent me an email with a link to my online account where I had to login to have them tell me nothing. Fidelity emails to tell you to login to your account for an answer.
Schwab: Order online. Look great. Duplicate checks available. Pick your start number up to #9700.
Fidelity: Paper request you mail to them. Checks are bland. No duplicates available. They start you at check #1000.
Schwab: Can’t seem to hide information you don’t want. Navigation is slick and clear with big menu text items. Transferring money is snap simple.
Fidelity: Hard to navigate. Small text. When you finally find home account view, it is clear and looks good. Easy to set a homepage view.
Schwab: Both iPad and iPhone apps available. Excellent interface. Deposit checks up to $1,000.00USD into either account. Higher check deposit amounts are available with higher deposit reserves. Customer service will work with you. You can get teller service at special Schwab locations but they do not accept cash deposits. Prepaid bank-by-mail envelopes provided.
Fidelity: Both iPad and iPhone apps are hard to navigate. Must edit the default view to set a homepage. No mobile check deposit with a Cash Management account unless you first have $2,500.00USD deposited in the account — once that minimum is met, there is no longer a minimum. No idea what the maximum allowed deposit is because I don’t have $2,500 in that account yet. Pre-addressed envelopes for bank-by-mail are provided, but postage is not pre-paid. You can only deposit a check via mail or the mobile app. You can’t walk into a Fidelity Investment storefront and do banking.
Schwab: When you link outside accounts, the routing identifying name that pops up is “Charles Schwab Bank.” I like that professional branding. It is clear and concise.
Fidelity: When you link an outside account to Fidelity Cash Management, the name of the bank you see is “UMB Bank, N.A.” I’m sure UMB is a great bank, but why can’t Fidelity, like Schwab, be identified as “Fidelity Investments Bank?” It would be so much cleaner and neater.