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A common response to my questions is "why exactly do you need to know this". So I'll start by saying that I am a US expat with money in the US. Recently, many banks started requiring 2FA from a US phone number. I was looking for a solution, and many people suggested buying a voip phone number, or claiming that I live with a US relative, and use the relative's phone number. I do not what to do anything misleading when it comes to banking. I was looking for an account where I can be upfront about me not living in the US nor having a US phone number. One possible solution I found was to store money in a Schwab One International broker account .

I do not plan on using the money I place in the broker account for investment. I am looking for a place to park money, be able to send and receive money, pay off US credit card bills, write and deposit checks, and possibly other similar things. I am okay with missing out of the few dollars I might earn in bank interest per year.

So now for my question, what is the difference for an end user between a US bank account, and a US brokerage account that only stores the money in "cash"? All of the things I listed above can be done with my brokerage account. It looks like the money is insured like with a normal bank account . I tried calling support to see if they knew the answer, but the representative was confused by my question and just said that while it would offer all of the services that I asked about, it wasn't a bank account.

What is the difference?

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  • As far as 2FA, just get a free Google Voice number and see if that works. Some banks or web services don't like Google Voice/VOIP numbers but others treat them just like any other number. Oct 24, 2023 at 15:25
  • "many people suggested buying a voip phone number". This (over a VPN) is exactly what I'd do if I were an expat. It would be even easier if I were in Canada, Mexico, the Bahamas, etc, since I wouldn't need the VoIP number...
    – RonJohn
    Oct 24, 2023 at 15:42
  • @RonJohn Canada, Mexico, the Bahamas, etc, while participating in the same numbering scheme (except for Mexico, which has a weird double system), still have explicitly separate set of area codes and can be identified as international. VoIP numbers are for most parts restricted in 2FA, many banks don't allow Google Voice/Skype numbers.
    – littleadv
    Oct 24, 2023 at 16:26
  • Let me clarify, I do not want to use a VOIP number to "spoof" that I reside in the US. While it may technically be legal, it feels to me like misleading the bank, and I do not want to do that.
    – HanMah
    Oct 24, 2023 at 16:34
  • @littleadv my daughter is an expat in Mexico, but has her old phone number.
    – RonJohn
    Oct 24, 2023 at 20:22

2 Answers 2

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So now for my question, what is the difference for an end user between a US bank account, and a US brokerage account that only stores the money in "cash"?

You'll need to read the account terms and conditions. I was "yelled at" by Fidelity reps for using their brokerage account as a bank account without making any investments for a while.

Both Schwab and Fidelity do have a cash management account, which is not a brokerage account and is more akin to a traditional bank account. Generally you should be able to get checks and ATM access with these accounts, and IIRC they even refund ATM fees.

The main difference is regulatory: brokerages are not banks and follow somewhat different rules. For example, bank accounts are insured by FDIC while brokerage accounts are insured by SIPC. This is probably not the most important difference.

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  • "I was "yelled at" by Fidelity reps for using their brokerage account as a bank account without making any investments for a while." I called a Schwab rep and explicitly said that my intention was to treat it as a bank account (the Schwab bank account requires US residency). Who knows what the next rep will say, but at least I recorded this one.
    – HanMah
    Oct 24, 2023 at 16:47
  • @HanMah they yelled at me because I was moving large amounts (for a house purchase) on a newly opened account (they offer free transfers and relatively fast ACHs). So I guess it was more of a security concern for them. I don't think I violated any ToS. Both Schwab and Fidelity advertise their cash management accounts as a bank alternative, so I don't think you should be concerned.
    – littleadv
    Oct 24, 2023 at 16:53
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I have a Schwab brokerage account and their Schwab Bank Investor Checking account (which is just a regular checking account with a APY).

The brokerage account has no interest IIRC, and is not federally insured. It's just an account that you put cash in to invest, or to withdraw from investments. It's not really designed to be a checking account, and it likely lacks the liability protections (like say for fraud) that normal checking accounts would have. There's no debit/ATM card for the brokerage account, like there is for the checking account.

You can transfer money between the brokerage and the investor checking, but normally you don't really use the brokerage account unless you're putting money into it to invest, or getting money from investments out.

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  • "There's no debit/ATM card for the brokerage account, like there is for the checking account." As per the rep on the phone, they will provide a debit card that can directly withdraw from the "cash" of that account. They also give a check book for that matter.
    – HanMah
    Oct 24, 2023 at 16:39
  • @HanMah I knew about the brokerage account checkbook, but had no idea they could give you a debit card... interesting, thanks! Nov 21, 2023 at 17:03

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