Scottrade Brokerage Cash Management Tips

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If you have an account with online broker Scottrade, or are thinking of getting one, this post is about moving funds in and out of your account. Like many brokers, the interest paid on idle cash sweep balances is very low at Scottrade, so it doesn’t pay to keep cash there. Here’s a current interest rate schedule from my account page:

Many other online brokers I’ve used like Zecco or TradeKing have online ACH deposits/withdrawal systems similar to online banks, but moving money around with Scottrade is a bit different, although in some ways it is also better.

Scottrade has a service called MoneyDirect for electronic deposits. It is similar to most online bank transfer systems in that you just need the routing and account numbers for setup, but only allows one-way transfers from external bank to Scottrade.

However, a useful feature about the MoneyDirect system is that you can make instant, same-day deposits. So I can leave minimal cash in Scottrade, but if I wake up one day and want to make a trade, I can move up $100,000 into my account with just a few clicks during market hours. From the site:

New and existing clients will be given credit for the transfer the day it is requested, as long as the request is made prior to 8:45 p.m. (ET) Monday through Friday. Transfer instructions received on a non-business day or after the specified cutoff time will be processed the next business day around 6:00 a.m. (ET).

Restrictions: Funds deposited through Money Direct cannot be used to purchase stocks under $4, any unlisted stocks, any options, or any stocks that are deemed non-marginable by Scottrade until the third business day after the deposit.

I’ve had an account with Scottrade for years, but despite vague promises, moving money out electronically through them is still unavailable. However, there is a workaround. If your account has a minimum account equity (cash + stock value) of $5,000, you can request checkwriting capability on your account. With checkwriting, you’ll have a checking account number and routing number that you can use to link to other financial institutions.

If you use certain banks using CashEdge, you can look for the “investment accounts” options as shown here. Scottrade is one of the participating brokers, although you still need your checking account number.

Scottrade will provide you a free Visa debit card and 50 free checks. My checks are through UMB Bank. I’ve gone below the $5,000 level and kept my check writing ability, so even if your account is usually smaller, it may be worth it to reach $5k temporarily to qualify for this feature. In addition, you can now access your money by writing yourself a check, using the debit card for a purchase, or making an ATM withdrawal.

Read my Scottrade review for more tips and my account opening experience.

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  1. Thanks for tip. As I have been idling on the sidelines for awhile it would be nice to earn some interest on my cash.

  2. Thanks for the tip on the check request – I never thought of that.

    I’ve had great luck withdrawing money simply by picking up the phone and requesting a check. If I call before 3pm, they get the check in the mail that day and I have it the next day (the nearest office is ~60 miles from my home).

  3. I’ve never actually taken money out of my Scottrade account, but I have been annoyed by this myself — effectively, if I ever want to access the money that’s in it, I’ll have to wait several days. Glad to know about the checking option, though. Have you read the fine print — are there any fees if you drop below X dollars for Y amount of time? Also, how ’bout a new referALL swap post? I suppose whoever my code went to last time must not have used it — never got any trades :(.

  4. Personally I find it easier to use the ACH from a bank to initiate the withdraw from Scottrade. In my case, I use the free option that comes with a HSBC account and withdraw money that way.

  5. Do you recommend this service for beginning investors? What about business stock? How would you recommend getting started?

  6. Speaking of interest rate chasing… Has anyone looked into the Costco Interest Plus online savings account? It appears to have an FDIC insured rate of over 2% and a bonus for first time deposits. ($60 or $20)

    Just wondering if anyone has used it as there are a lot of Costco/interest rate buffs on this blog.

  7. I used to do the same thing with the check writing but later I discovered that there is an easier way.

    If you initiate a transfer from Scottrade into another bank account (ING in my case) from that bank’s website, it works fine.

  8. Anyone have advice on what the best sign-up bonus is at present? Thanks.

  9. Nice! I wish Interactive Brokers had this service too! Well, I’ll have to settle for cheaper trades for now 😉

  10. I called my Scottrade branch and asked questions regarding the check writing/ visa debit card. He informed me that you initially need $5K in equity when submitting the application. Thereafter you do not have to keep that much in equity. You will not be charged any fees for not keeping a $5K equity.

    Once you have the check writing feature you will have a routing# and account# for scottrade. Than it as simple as setting up in your own banks online page the external account for scottrade.

  11. Job Classifieds says

    It’s a cool feature but $7 a trade was cheap in 2000. Now it’s expensive.

  12. $7 a trade is cheap cheap cheap. Anyone who bases their brokerage decision on the difference between a $5 trade and a $7 trade is not only a low-roller (like, at the bottom), but more to the point, not likely to make any more money on the market (after time spent) than working a minimum wage job.

  13. Paul, I am sure you are right at the top of the pole for account balances. The meat pole that is.

  14. Oh now, don’t get cranky. However emotional that makes you, you get the point. There is a broader issue that doesn’t seem to get enough “airtime” about how all this haggling over the difference between a $4.95 TradeKing trade and a $7 Scottrade trade and a $9.95 Sharebuilder trade and a $19.95 Fidelity trade is extremely trivial with even a $1,000 investment. If I want to position myself on a certain day when a stock is going where I want it to, the $2 difference between waiting a week for funds to transfer to TradeKing, and trading immediately via Scottrade, is far overwhelmed by the likely adverse change in stock value.

    Especially when you think of how we’re not dumping even a mere $1,000 into the market on expectation of withdrawing $1,000 on a long play — hoping for $5,000? — what the heck is $2 (or slightly more) worth arguing over?

    Honestly I suggest this as a MyMoneyBlog front-page topic. Something that surveys the mandatory waiting periods for funds to transfer between the various brokerages, and the lost opportunities not only via changing share prices over one week’s time, but also the lost interest accrual caused by always needing (for sloths like TradeKing) to dump heaps of money into their reserves at super-low interest rate accrual just in case.

    In cyberspace, there are routine comments which come to be regarded as “threadcrapping,” such as the phase we just came out of where people were saying, “Windows Vista sucks!” The issue had been parsed a billion times over. No less here.

  15. Can anyone suggest a brokerage account like scottrade with margin rates like optionshouse?

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