VanguardAdvantage: All-In-One Checking Account At Vanguard?

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I saw that Vanguard has a new account called the VanguardAdvantage account. On the surface, it looks great. In addition to having full brokerage features (buy individual stocks, ETFs, options, and even brokered CDs), you also get full checkwriting abilities, ATM access, and online billpay. Since I have most of my retirement assets there, this would be good tool for added convenience and simplicity.

But then I found the catch. You need to have $500,000 invested at Vanguard to even be eligible for the account. Even at $500,000-$999,999 in assets, you have to pay a $30 annual fee for the privilege of getting what is basically a checking account, and you must pay $4.95 per month for Online Billpay service. No ATM refunds either (free at PNC banks only).

Vanguard seems to have an overall policy of grudgingly offering services that their customers ask for, but only if the less-wealthy are willing to pay a premium. I feel like they don’t want to stray from their basic roots of low-cost mutual funds, or maybe they just don’t want the hassle, but their competitors are leaving them behind.

Checking account features. For example, I can get the brokerage + checkwriting combo for free at Fidelity or Schwab, with no minimum balance requirements and ATM rebates. I don’t know about Chuck, but Fidelity has as-good if not better customer service reps than Vanguard.

Commission costs. The Vanguard Brokerage Services (VBS) account still charges $25 for an online trade + a $30 annual fee if you have less than $100,000 invested. Contrast that with 100+ free trades annually at only $25,000 in assets at both Zecco and Wellstrade.

I guess I’ll have to wait until I have a million dollars to get free checking at Vanguard. Doesn’t that just sound odd?

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  1. No thanks, I’ll pass. I personally do not think highly of Vanguard’s brokerage services, why not use someone like Scottrade and pay cheaper commisions and have free check writing capabilities.

  2. I love my Fidelity checkwriting account. It overdrafts from my money market, it’s just the best.

  3. I have no problem using Fidelity for this. I assume that Vanguard doesn’t have enough profits to take the losses that would come from having an account with everything free (and ATM fee refunds), which makes their fund expenses lower than most Fidelity funds.

  4. The sad part is that Vanguard is still the best mutual fund company.

  5. The good thing is that you have other choices. It doesn’t matter whether one company is competitive in all products. You pick the best from each company: Vanguard for index funds, Fidelity for banking, Wells Fargo for trading.

    • After 15 years with Wells Fargo, I wouldn’t use them for ANYTHING ! Convenient, yes, but HIGHWAY ROBBERY in everything else — why I just switched to Vanguard.

  6. enonymous says



  7. That is so true TFB,being an active consumer can save a person a lot of money.

  8. “I guess I’ll have to wait until I have a million dollars”

    I like that positive thinking. It’s already in your mind that you’ll eventually reach your goal.

    I keep most of my assets at Vanguard too.. and won’t change. But, sometimes I too just can’t understand their line of thinking.

  9. Don’t forget, Schwab also has a credit card where they rebate 2% back on all purchases into your account there… Schwab is making headway into being my all in one solution as they have cheap trades and I can buy Vanguard ETFs…

  10. Yes to TFB, enonymous and Tommy. Vanguard is a wonderful mutual fund company but never meant to be a general broker or finance management business. I think “grudging” is the perfect description, in that the other services detract from the ultra low cost fund model.

    My conservative-investor wife keeps two IRAs in Vanguard money market funds. She does nothing other than add money once or twice a year. Vanguard’s minimalistic system is perfect for her.

    I have my money at other brokers, where I regularly contribute to generic index mutual funds then switch it over to Vanguard ETFs when I’ve got a good chunk of $$$ (the sales commission must cost less than annual management fee at the other company). This way dollar cost averaging can be done at a low cost, and then long-term management fees are reduced to a minimum.

  11. Tommy, Vanguard isn’t necessarily the best mutual fund company. Some of the Fidelity Spartan index funds have lower fees than vanguards!

  12. It all brings to mind a comedian (whose name I cannot remember) who talks about how banks take money from those who have very little through low-balance fees, etc., while they give money through interest payments to those who have plenty. “Hey, you don’t have enough money, so we’ll just take what you do have and give it to this guy who has a lot of money.” Taking from the poor to give to the rich! Of course, it makes business sense from the bank’s point of view, but the irony is amusing.

  13. I switched to Schwab Investor Checking about 3 years ago and I’m pleased, pleased, pleased!! That’s how checking account should be: free, no minimums, full ATM rebate, free BillPay, excellent web access, alerts and very good customer support. Schwab offers free ACH link between the SchwabOne (Investment) account and the Checking account. They also offer free overdraft protection and minimum balance guard services. As of today my checking acct balance is earning 0.75% APR not too shabby in today’s ~0% interest rate economy. Can’t compare that to the a-la-carte menu of fees of BoA.

    But it gets even better with Schwab – I got an excellent HELOC last July at Prime-1% (no typo here). Again, not because I’m any kind of extra special client.

  14. JC,I may be dating myself,I haven’t bought a new mutual fund in awhile.I’ll have to check out the fidelity funds.I wonder if their is a site to compare fees?

  15. Leonardo says

    They offer a checking account, so they can receive the government bailout money.

  16. The VanguardAdvantage account is not new. The current level required is “Voyager Select” ($500k). Before Aug 2007, the requirement was the old Voyager level ($250k). Like the many who commented, I do not find this account competitive at all.

  17. @Maury:

    Fidelity offers a 2% AmEx and a 1.5% Visa card:

    Between that, and the no-foreign currency fee for ATM withdrawals on the Fidelity mySmartCash account, I’m pretty happy.

  18. I’ve got a schwab checking and it is the best. thing. ever. I know the NAME of my very personable customer service contact, and have her email address and office phone number. So long as they don’t change the account, I’m a customer for LIFE. No experience with the brokerage, but will probably get some soon since I’ll probably switch to their credit card with the 2% brokerage bonus. In some ways, it would be nice to have a couple of my accounts under one roof, but everyone seems to be the “killer app” in a different area, so no dice.

  19. Well hopefully they will learn how effective it will be to offer free services for customers and allow banking in the future to increase investable capital for the company.

  20. Bill Anderson says

    This makes sense. Vanguard was set up to serve the needs of long-term investors who want to keep fees to an absolute minimum. I rarely pull money out of my Vanguard account, and if I do it’s a planned event. If a transfer takes a day or two, that’s fine with me. I have a checking account at my bank–I don’t need or want my investment account to be easily accessible.

    If you want extra services, Schwab and Fidelity are an excellent choice. If, like me, you simply want to invest your money and pay the lowest possible fees, then Vanguard is a great way to go.

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