When you hear the term “brokerage,” the first things that come to mind are probably stocks and mutual funds. Not many people would think brokerages would offer checking accounts, but many do.
Brokerage checking accounts are viable alternatives to the regular checking accounts offered by banks, which have become more expensive in recent years. As a result, many consumers have left their traditional banks for community banks, online banks, and credit unions—yet brokerages are often left out of the conversation.
Here are a few reasons to consider a brokerage for opening a checking account:
1. Dodge the monthly fees. Among the top 10 U.S. banks, only PNC Bank offers a free checking account with no strings attached. On the other hand, most checking accounts from brokerages lack a monthly fee—probably their most attractive trait.
You don’t have to worry about meeting minimum account balances or rerouting your direct deposits to avoid monthly fees. If you’ve been paying monthly fees for a checking account, going with a brokerage might bring plenty of savings.
2. ATM access here, there, everywhere. Much like an online bank, brokerages do not operate extensive branch and ATM networks. Brokerage checking customers should be able to conduct the majority of their banking chores without the need to visit a physical location.
As a tradeoff, brokerages tend to offer free access to any ATM. Charles Schwab’s checking account, for instance, offers unlimited ATM fee reimbursements on withdrawals. Other brokerages may partner with certain banks or ATM networks to offer such free transactions.
3. Perks galore. Interest-bearing deposits, free online bill pay, mobile banking applications, and mobile check deposit are just some of the great benefits you’ll find with a brokerage checking account. Other perks may not be as upfront.
For example, with Fidelity’s Cash Management account (basically a checking account), you can be eligible to apply for a Fidelity credit card that pays a flat 2 percent cash back rate on all purchases. Fidelity also partnered with three banks to hold customer deposits—meaning the deposit insurance covers up to $750,000, as opposed to the standard $250,000.
Brokerage checking accounts aren’t right for everyone. Although brokerages make a compelling case for their checking accounts, they’re not the best fit for every consumer.
More likely than not, you’ll be managing your account online or through a mobile device. If you often find yourself requesting the assistance of a teller or banker, a brokerage won’t be able to offer a comparable level of convenience or service.
Additionally, some brokerages may require you have a brokerage account to qualify for a checking account. Scottrade, for example, only offers its checking account to clients who have at least $500 in equity in a Scottrade trading account.
The bottom line: Don’t overlook brokerages when deciding where to open a checking account.
Simon Zhen is a columnist and staff writer for MyBankTracker.com, where he covers bank rates, news, and technology.