What Is a Brokerage Checking Account?

Checking accounts can make money management easier. If you’re investing through an online broker, you may have the option to open a brokerage checking account.

These accounts may offer features similar to those of traditional checking, such as debit card access, online bill pay, and mobile banking. But is a brokerage checking account right for you? Understanding how these accounts work can help you decide.

What Is a Brokerage Checking Account?

A brokerage checking account is a checking account that’s offered through an online brokerage. When you open a new investment account, you may be given the option to open a checking account as well. These accounts may also be referred to as sweep accounts or cash management accounts.

Your brokerage checking account is separate from your brokerage investment account. With a regular brokerage account, you’re depositing money that you plan to invest in stocks, exchange-traded funds (ETFs), mutual funds, and other securities.

Depending on the brokerage checking account’s features, you may be able to:

• Pay bills
• Make purchases using a linked debit card
• Withdraw cash at ATMs
• Deposit checks via mobile check deposit
• Transfer funds from your brokerage checking to your brokerage investment account

Online brokerages may offer these accounts as a convenience to investors. For example, you may use this account to hold funds you plan to invest or to receive money from your brokerage account after selling an investment.

Compare Checking Accounts From Trusted Banks

Exploring checking accounts and finding one to fit your needs is as easy as using our checking account finder.

How Does a Brokerage Checking Account Differ from a Regular Checking Account?

Brokerage checking accounts share several things in common with regular checking accounts. They largely function the same way, allowing users to pay bills and spend or transfer funds. However, there are some differences that set them apart from checking accounts offered by banks or credit unions.

Fees

Regular checking accounts can charge a variety of fees, including:

• Monthly maintenance fees
• Overdraft fees
• Foreign ATM fees
• Check ordering fees

Brokerage checking accounts, on the other hand, are more similar to online checking accounts when it comes to fees. That means you may pay no monthly maintenance or overdraft fees. Your brokerage may reimburse you for some or all of the ATM surcharges you incur monthly.

Minimum deposit

Banks and credit unions may require you to make a minimum deposit to open a regular checking account. For example, you might need at least $100 to get started.

With brokerage checking accounts, there may be no minimum deposit required to open an account.

Minimum balance requirements

Regular checking accounts can have minimum balance requirements you need to meet in order to avoid a fee. For example, you may need to maintain a daily average balance of $500 to avoid a monthly service charge. With brokerage checking accounts, there may be no minimum balance requirements to worry about.

Check writing

Both regular checking accounts and brokerage checking accounts can offer check-writing. The difference between the two is that regular checking accounts may charge fees for checks while your brokerage may give them to you free of charge.

Debit cards

Regular checking accounts and brokerage checking accounts can also offer debit card access. With either one, you can use your card to make purchases, pay bills, or withdraw cash at the ATM. Both can also come with daily transaction limits on how much you can spend or withdraw.

ATM availability

When comparing regular checking to brokerage checking, it’s important to consider ATM access. Some brokerages have their own associated banks where you can withdraw money fee-free, but not all of them do. However, brokerage checking may come with unlimited ATM fee reimbursements, something that’s harder to come by with regular checking accounts.

Interest

Banks and brokerages can offer interest checking though again, not all of them do. If you’re comparing brokerage checking accounts, be sure to consider the APY you might be able to earn on deposits.

FDIC protection

FDIC coverage protects regular checking accounts up to $250,000 per depositor, account ownership type, and financial institution. However, if your brokerage partners with banks to increase coverage limits, you can get up to $1.25 million in FDIC coverage with a brokerage checking account.

Pros and Cons of Brokerage Checking vs. Regular Checking

Here are some of the pros and cons of choosing brokerage checking over regular checking.

The Bottom Line

A brokerage checking account could be a good fit if you want a convenient way to add or withdraw money to a brokerage investment account. What’s important to keep in mind is how easily you’ll be able to access your money and what fees you’ll pay compared to the checking account you already have. Taking a brokerage checking account for a test drive can give you an opportunity to see how well it fits your needs and lifestyle.

Brokerage Checking FAQs