Brokers For Stock Investing & Online Banking

When Your Broker Is Also Your Banker

Everyone likes bundled services, including investment traders. Having multiple services handled by one service provider makes it easier to keep track of things. While many people think of bundled services in terms of being able to trade multiple investment vehicles, most are unaware that many brokers can also serve as your personal banker as well. Many online brokerages, full service firms and discount brokers offer traditional bank services such as checking and high interest savings accounts, CDs, mortgage loans, and many other types of traditional banking products to their trading customers. What’s even better is that they can actually offer better interest rates than some of their more traditional counterparts.

So, just what can your broker offer you in terms of a bank account or loan?

• Interest bearing checking and savings accounts have an earning interest rate of at least a full basis point (or percentage point) higher than what your local bank can offer. These are also usually no-fee and have low initial deposit requirements, thereby maximizing your savings potential.
• Mortgage loans can be completed (except for closing) completely online, making for an incredibly efficient application process. Mortgage loan rates are generally cheaper than with traditional banks as well because of the more efficient set up for online institutions.
• Free services such as bill pay and online banking, along with ATM fee refunds keep more of your money in your account. Having all of your money in one place makes it easy to keep track of it and convenient to transfer funds between your banking accounts and your investment accounts. Also, there are usually no fees associated with transferring money between your accounts.

Of course, having your money deposited in an account provided by your broker has a few drawbacks, too. First, many don’t have brick and mortar branches, making personalization tough. Second, while having all of your money in one place may be nice for some, for others, it may make it too easy to invest in losing investments or to participate in speculation. Making careless moves with your money can jeopardize your financial position and ultimately, your future.

Now finding the right broker for both your investment and banking needs will require a bit more homework. Some of the bigger names in the industry such as E*Trade and Sharebuilder offer traditional banking services to their customers. In most cases, a broker should be evaluated for its main investment products, with their traditional banking services recognized as bonus services.

Deciding to allow a broker to handle your banking business will take some careful consideration on your part. Many people value the comfort of having their money deposited in a local banking establishment where the tellers know their names and where their money can be accessed "only a short drive away". But, for those of us who are looking for ways to stretch each and every dollar to its fullest, depositing our money in a broker based checking or savings account or refinancing to a broker backed mortgage makes a lot of sense.