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What are the regulatory limitations [in Wisconsin, US] that prohibits one from paying one's Credit card bills directly from one's brokerage account?

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    I greatly simplified the question, since "Is money transfer from brokerage to Credit card account possible?" is highly misleading, based on the fact that you "just" want to pay the bill. If you don't like it, you can revert it.
    – RonJohn
    Feb 22 '20 at 23:18
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This is a feature that a broker can offer, it's broker specific. I just signed into my (broker) account and see a 'Pay Bills' tab that allows me to enter the details for any bill I wish to pay, pretty similar to how I pay from my regular Bank Checking.

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  • Thank you for pointing out. I would like to know which brokerage allows 'Bill Pay' options. For example, Chase asks to open a separate savings account and pay bills thru that even if one's brokerage and credit card accounts are with Chase. Feb 20 '20 at 17:08
  • I use multiple brokers. Schwab is the one I looked at this morning for BillPay Feb 20 '20 at 19:40
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Is it a technical limitation?

Sort of. I'm guessing that your brokerage requires a routing number and account number for electronic transfers (in or out) and so does your credit card. Since neither your brokerage account nor your credit card account have routing/account numbers (these are typically just for bank checking/savings accounts) there's not a mechanism that can connect the two electronically.

Obviously the solution is to use a bank account as an intermediary - transfer the money from your brokerage to your bank account, and once it clears, use the bank account to make a payment on your credit card.

I would add that some brokerages (like mine) will let you set up additional accounts that can be used like bank accounts (with checks, routing numbers, etc.) So one shortcut might be to transfer from your investment account to a "bank" account within the same broker (which may be instantaneous) and then use that account to pay your credit card.

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  • I see. This hop transfer is what I'm trying to avoid. I'd like to pay a CC bill directly from cash in the brokerage account. Feb 20 '20 at 17:10
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The difficulty with this question is that "transfer money" can mean many different things, in practice. Sometimes those differences matter.

You asked, specifically,

What are the regulatory limitations [in Wisconsin, US] that prohibits one from paying one's Credit card bills directly from one's brokerage account?

There are no regulatory limitations. There aren't really even any technical limitations. It really just boils down to the manner in which your broker and the bank that issued your credit card choose to operate. It also depends on what you mean by "transfer money" since that can mean lots of different things:

  • An actual ACH transfer, which requires a routing number (to identify the bank) and an account number. Your broker likely has a tool to facilitate sending money via ACH, but some credit card issuing banks don't make this information public (even if it exists) or may not even implement their systems in a way that supports it.
  • A "Bill pay" transfer. "Bill pay" is really just a fancy abstraction layer that some banks (and brokerages) implement as a way to send money out of your account. Usually, these payments go to a third party who then slices and dices them before actually sending out any money, in order to determine the best actual method to use for transferring money. Many bill pay transactions end up as ACH. Some end up as a one time "debit card" with a PAN the merchant enters in order to pull money from your account. Still others get dropped to paper and end up as a literal check in the mail. Bill pay offers a lot of flexibility in that the payment isn't constrained by the receiver implementing (or not) a specific channel, but it is, of course, dependent on your originating bank (or brokerage) actually implementing the functionality.
  • Some banks that don't literally accept "transfers" to credit cards will still have an implementation option that instead of moving money directly to your credit card account, uses another account you have at that issuer as a pass through. This is most common at issuing banks that want to be your primary financial institution (versus being primarily a credit card issuer) since it's a way to make you "more sticky" by incenting you to have a deposit account at the bank to pass the transaction through.

So, ultimately, there is nothing (regulatory or technical) that strictly prevents this, it really just boils down to choices made at your brokerage and your card issuing bank. If you inquire at both and are told it's not possible, and this is a feature you're really interested in, you may want to set up your own workaround (open a deposit account somewhere, move money from the broker to the deposit account and then from the deposit account you can pay your credit card bill) or just find an institution that already allows this directly.

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  • Yes, I'm inquiring only about Credit card bill pay from a brokerage account. Feb 20 '20 at 19:33

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