Sunday, November 19, 2006

Fidelity saga - mostly there

Correction: Cash back on a supermarket debit card purchase is simply part of the purchase and does not count as one of the five free ATM withdrawals that Fidelity allows you each month.

I have arranged for my new Fidelity brokerage account to be a replacement for almost all of the functions of my traditional bank checking account. Other than the issue of needing to arrange for payments from TreasuryDirect, I am essentially "there" and have very little need for my old bank account. I'll continue to keep the bank account for any lingering needs for a "real" bank account, but for almost all intents and purposes, Fidelity is now my "bank."

Yesterday I finally got around to using my Fidelity debit card and PIN to get cash from a bank ATM. The bank charged me $2 for the transaction, but Fidelity doesn't add on to that charge for the first five ATM withdrawals and then adds $1 for additional ATM withdrawals.

I also got around to using the debit card for a purchase in the supermarket and getting cash back at checkout. The store limited me to $20 back, but there was no fee from the store and no fee from Fidelity, even if you do this more than five times per month, since the cash is included as part of the purchase and not treated as an ATM withdrawal. I'll probably use this is my preferred method for getting my typical weekly pocket cash.

I split my company payroll direct deposit so that $100 continues to go to my old bank for fee-free ATM withdrawal and the rest goes directly into my Fidelity brokerage account where it earns about 3.20% tax-free interest from the day of deposit to the day of withdrawal.

I probably will continue to use my credit card for purchases rather than my Fidelity debit card simply to take advantage of the float on the balance.

My ShareBuilder account did in fact debit my Fidelity account last week for the modest monthly stock investment plan I have with ShareBuilder.

I still need to switch my Amazon affiliate account to pay to Fidelity.

I made my monthly installment plan payment to the IRS last week for my back taxes through EFTPS from my Fidelity account.

I only have one remaining item, which is TreasuryDirect for managing T-bill investments. I should be able to use the routing and account numbers for my Fidelity checking fine, but I need to get a form signed by a bank officer before money can be disbursed from my Treasury account to my checking account. I don't know how to do this yet since I don't deal with the real bank that Fidelity uses for checking (UMB in Missouri). Also, I may be able to do T-bill investments directly through Fidelity. I'm in no hurry to resolve this issue since it works fine in the old bank account and is such a small amount of money at present. I'll simply transfer any excess cash from the bank to Fidelity as it accumulates.

A minor task is the calculate how much excess cash to keep in "core" cash, which unfortunately pays a moderately lower interest rate, so that bills can be paid, including occasional travel without having to shuffle money around from higher-yielding accounts. Whether $1,000 or $500 or $250, it wants to be enough to avoid inconvenience, but not so much that I have to "pay" a noticeable amount in lost interest. Since I now have a normal credit card with a high enough credit limit to cover most travel that I might expect, keeping excess cash in higher-yielding accounts and manually transferring it on odd occasions seems to make sense for me. Actually, Fidelity did tell me that they will sell from my higher-yield money market fund in order to avoid a check or debit bouncing, but they said that is a "courtesy" that isn't intended to be used too frequently. Given my limited traveling and purchasing, maybe that "auto-sell" will work out well for me and I'll be able to keep excess cash in the higher-yielding money market fund.

-- Jack Krupansky

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