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The only possible downside that I can think of is that I'd have to deal with a little extra hassle if I wanted a cashier's check.

Almost everything wrong with consumer banking in america is contained, or stems from the ability to refer to cheque as a neccessary and normal thing in modern day finance.

I tore up my last cheque book ten years ago, I have had to resort to Western Union three times now (once a year) to send money to Her Majesties Customs and Excise for my UK pension topup, its the only thing I still do that way, and if the UK stopped using a closed-loop domestic clearing house and opened up SWIFT I'd do this via the IBAN immediately.

Cheques are cool. They're also horrendously stone age and the "yes but..." are the collected history of insanity that is american banking.

Jimmy Stewart, holding the fort at the friendly credit union on christmas day...

Check != Cashier's check

The former is what you're describing. The latter is where the bank takes the funds from you then itself guarantees the piece of paper. Much more like an arbitrarily denominated bit of cash often used in large transactions in the States when (1) a seller doesn't trust the buyer too much or (2) the seller wants the funds to clear more quickly.

Also, regular checks are great. There's something about having to physically take time to spend money via a goofy little ritual that makes it easier to save the stuff.

Cashier's cheques are needed in the US because of fundamental distrust between financial institutions. Funds clearing more quickly... Because the process is locked to physical paper moments and could be milliseconds but no because cheques.

If there is so much distrust between buyer and seller,why hasnt western financial civilization in europe tanked by now?

I get cashier cheques aren't personal cheques but the underlying logic of why they exist is because of legacy reasons which are inefficient and reinforce bad behaviours.

When I bought my apartment in Spain, I had to get a Cashier's check for both the deposit and the final purchase.

There's apparently still some utility in them in parts of Europe. When I challenged it (I had to pay 80 EUR for the check!) I was told that a bank transfer could be reversed or canceled, and that Cashier's checks prevent that from happening.

I don't see this situation changing until the banks get together with the central bank and create a unified escrow system to replace Cashier's checks.

As of now, they don't see the benefits of changing to a new system outweighing the costs.

I'm not originally from America either so cheques do seem super ancient to me. That said, it's more convenient to pay my housekeeper and lawn guy with cheques instead of regular trips to the ATM. They're not venmo or google/apple pay kind of people either.

Why not wire transfer? Here bank transfers are very cheap (free for most people unless you do a lot) and usually take a few hours at most (at some banks are instant). If someone requests anything else as payment for rent you can be fairly sure they try to evade taxes on it as wire transfer is both the most convenient, cheapest and the safest way to pay.

Wire transfers in the US are expensive for most checking accounts. In the $20-40 range per payment. Also people don't usually carry around their account numbers for receiving payments.

In my bank app both my account number used for national transfers and IBAN used for international is shown under account details with a copy button.

Then again, we also have an app (Swish) similar to venmo allowing you to instantly for free send money to a phone number.

> * Wire transfers in the US are expensive for most checking accounts*

They’re free to and from Fidelity accounts. I’d guess the same for Schwab accounts.

Are you talking wire transfers or ACH payments? ACH is typically a much slower method of transferring money (1-5 business days) though it is generally free to do so. ACH also carries all of the risks associated with checks save the risk of losing a piece of paper before you can deposit it.

Wire transfers can happen almost immediately but typically cost $20-40 for one, or sometimes both, parties involved.

> Are you talking wire transfers or ACH payments?

Wire transfers [1]. (For most business accounts, wire transfers are also free.)

[1] https://www.fidelity.com/cash-management/bank-wires

Most banks allow you to transfer between accounts at the same bank for free, and faster than ACH transfers because they can settle it quickly when its internal.

Fair enough, but venmo/google/apple pay is even more convenient than wire transfers and they're not into those either. Checks/Cheques are just a cultural norm in America.

>I tore up my last cheque book ten years ago

I never had a cheque book, but I have a faint memory of my parents using cheques back in the 1970s :-)

I got a cheque a few weeks back from HMRC and it was the first one I'd personally seen in over 10 years - it seemed like something from a different age.

A girlfriend got her IRS refund in the 1970s on a cheque printed into a hollerith card!

If you have bank of america you can link your bofa and merrill accounts. They even give you bonuses on your credit cards of +25/50/75% cash back for balances over 25/50/100k in assets between both.

So, let's say I keep $100k in my emergency fund account... what exactly does 75% cash back for my credit card mean?

They increase the cash back by 75% of whatever it already was. So if you were getting 3% back (currently, for their Cash Rewards card, that can be 1 of the following categories: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings), you'd now be getting 5.25% back.

Which is a complete rip-off. You could easily get 2% interest on that $100k you're leaving with them by just leaving it with a better bank. For that to be worth it, you'd need to get at least $2k cash back on that credit card. At 5.25% (which is only for that 1 category you chose!) you'd need to burn through $38k/year... i.e., you gotta $100 a day on that card.

Except even if you somehow were planning to spend $100/day on that one lucky category, your cash back would be an order of magnitude lower, because they'd only give you that cash back on the first $2,500 in purchase, i.e. you could only earn $131 at most. So you're losing out on at least $2,000 to earn at most $131. Terrific deal!

> Which is a complete rip-off. You could easily get 2% interest on that $100k you're leaving with them by just leaving it with a better bank.

The optimal method is to invest the $100k in VTI or even a money market fund. You don’t have to leave it as cash.

The more optimal method is to leave 1-3 months worth of expenses as cash and put the rest of the money in something like VTI. You don't want a market crash to erase half of your emergency fund at the exact moment you need it.

Emergency funds should be in FDIC insured savings accounts, that pay at least 50 basis points less than the fed funds rate.

Also, you should have a stash of cash you can find at home in case of power outage or network loss and you can’t get money from the bank. And guns and canned food and clean water.

You can still get 2% interest on that buy buying treasury ETFs, or 1.56% currently by asking them to open a preferred deposit account for you, which is essentially a savings account with a high interest rate. You dont have to keep it in cash.

Not sure why you're downvoted. Parent is worded in a very confusing way.

Typically, brokerages don't give you any interest on checking. Now, banks haven't really either since 2008, but prior to that you could make a few dollars a year on checking interest.

https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... is fascinating if you enjoy this kind of stuff.

Not sure where you're getting that from. My Fidelity cash management account sweeps any idle balance into a money-market fund. I don't have any first-hand experience with Charles Schwab, but their website indicates that their checking accounts likewise accrue interest with no minimum balance.

Of course, interest rates are currently so low that it's basically a moot point. And I hardly ever have let any idle cash sit around without sweeping it into a short-term bond fund, or something better than the money market default.

Fidelity's Cash Management account is really designed for folks who are keeping up to $1.5MM in their cash account, with the funds swept between multiple banks to ensure the entire balance is FDIC insured. The interest rate is appalling, but it's appalling everywhere.

Schwab got rid of sweeps. Really makes Fidelity a lot more appealing if you keep a lot of cash in there.

I feel like I'm discussing climate change, where there are multiple perceptions of reality competing for attention.

Other people in this thread report that Schwab pays interest on checking account balances. Schwab's website clearly states that their checking account accrues interest. There's a footnote link there, but the fine print simply says that the rate can change over time.

https://www.schwab.com/public/schwab/banking_lending/checkin...

Of course, just as I don't understand people using a traditional bank these days, I likewise don't understand letting a large cash balance sit in checking account. The best interest rate you're going to see these day is probably sub-1%.

So why leave excess money sitting around in a checking account, when sweeping it into even a short-term U.S. bond fund would provide 2x-10x the return with no additional risk? (i.e. if U.S. Treasuries default, then money market accounts are probably screwed too anyway)

How much are people keeping in checking accounts to make that worth it?

Realistically it's better to move as much as possible to a dedicated savings/investment/brokerage account instead, and if you're doing that then why not just write checks against a single combined account?

Depends how big your portfolio is I have about £4k in my UK one this is a bit high but its normally about a grand

Cash management accounts actually pay really good interest rates these days. Personally I’d rather invest my cash and borrow against it on margin haha

That normally is actually a better strategy. I love that Schwab lets you overdraft your checking account with no fees (if you choose), and they first try to pull cash out of your brokerage account before borrowing on margin.

That's actually fantastic. I just signed up for an Interactive Brokers debit card, which I'm hoping will do the same thing.

Schwab has interest on its checking accounts as well. I've been using them for over 5 years and couldn't be happier.

This just sounds like my bank, although I'm in Europe. Why are US banks so behind?

I live in the US...

I haven’t received a physical paycheck from an employer since 2004.

I haven’t written a physical check since probably 2007. But as noted, cashier’s checks are a completely different product.

I’ve had mobile deposit from my US bank since 2010.

And various banks have offered ATM fee reimbursement (capped at a certain amount) since 2010.

Maybe the issue isn’t that US banks are so behind, but rather the age/year of when folks entered the US banking system and were first exposed to these things themselves versus what they were taught in a classroom.

Most of my contractors (house) charge 2% more for visa/mc so I give them checks. I pay my car insurance by check in person because my bank and insurance company routinely lose automated payments of any kind. In person I usually pay with ApplePay or a chip CC, and routinely refuse to shop at places (looking at you Pei Wei) who refuse to accept Apple Pay or chip cards. The cash in my wallet sits there for months.

I moved to the US as an adult ten years ago and the banking system was surprisingly behind - I finally understood why PayPal existed, for instance. And I had to write my first check - lots of them!

Well, what if your broker goes out of business? Like, is FDIC insurance chopped liver? The head of the SIPC has stated publicly that your cash is not covered except if it is deposited to buy securities.

Your friendly broker really wants your cash, because at this point keeping most of the interest is their best source of income.

Cash management accounts are better for large balances than FDIC accounts at banks for the most part. Since the brokerage abstracts where the balances are actually stored they split your large balances over a number of FDIC accounts and you get up to $1.5M in FDIC cover at some places instead of $250K. If you’re thinking of Robinhood they just did a bad job of execution, and shockingly thought SIPC alone would do, and that’s what angered the SIPC head.

You misunderstand, the cash in these accounts are kept in an FDIC sweep, so it's FDIC insured.

It's often true that the funds aren't covered until they're in the custody of the partner bank. This is the case for some of the neobank cash accounts. Not sure about Schwab tho.

These accounts are FDIC insured. They're real bank accounts.

The FDIC accounts that Fidelity advertises are with real banks[1] which are not Fidelity per se. They're just tightly integrated.

This all seems very like "why don't you just use the cloud instead of an old fashioned server?"

[1]https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBa...