I just opened a Charles Schwab checking account tied to my brokerage
account and recieved a Platinum VISA card to be used as a debit card.
I have great credit and am wondering rather or not to activiate it. I
remember reading or hearing that every new card you have affects your
credit because it ups your available borrowing amount. Is that right?
I really don't need the debit card. I still write checks or transfer
funds but it would be convenient to use it. Thoughts?
i have a concern with these brokerage debit cards due to them potentially having
access to so much money, in case of misuse. there are ways that pins can be
stolen. i wonder if even the noncash parts of your accounts could be grabbed...
i know a bank account holder who could draw more cash than their balance,
because the bank was happy to charge overdraft fees.
i wonder if you can just hold the card for future activation if the need came
up... something tells me they will kill it without activation soon. what i like
to do is arrange a monthly automatic xfer from brokerage to bank checking
account... does schwab brokerage web page let you set that up?
What i meant was then to use a debit card from your
checking account when convenience is desired. This
appears to put a firewall between debit cards and your
brokerage account, yet keeping auto access to its $.
Why do you care about your credit rating? unless you plan on
negotiating a large loan shortly why care if it moves a little
One extra credit card isn't gonna do much but it's true that having too
much unused credit affects your score. i doubt a unused credit card
One piece of advice: Some credit cards charge yearly fees if unused...
Read the fine print on yours.
One should always be careful with one's credit rating, though not
obsessed with it.
Nowadays, it's checked not just to get a loan, but to rent an
apartment, and sometimes even to get a job.
In Jack's case, it probably won't register at all. While brokerages
such as Schwab and Fidelity do offer associated credit cards, (ie.
Fidelity's is via FIA card services and actually has one of the best
cash-back deals I know of. Schwab used to have a similar cash back
deal but ended that a few years ago), it looks like Jack's looking at a
*debit* card, not a credit card. Debit card should have no impact at
all on your credit rating - it's not an extension of credit but rather
an instantaneous way of directly accessing your brokerage's cash
David S. Meyers, CFP®
If opening a brokerage account and having a debit card tied to that,
perhaps it'll affect credit rating if
A:) the applicant tells Fidelity or whomever they are interested in
margins or borrowing to invest
B:) There is overdraft tied into the account. Some bank accounts have
automatic overdraft of say $200 or $500 etc.
Those are two examples of maybe how a debit card can have a credit
extention but those are guesses to me...
access to so much money, in case of misuse. there are ways that pins can
i wonder if even the noncash parts of your accounts could be grabbed...
i know a bank account holder who could draw more cash than their
balance, because the bank was happy to charge overdraft fees.
something tells me they will kill it without activation soon. what i
like to do is arrange a
monthly automatic xfer from brokerage to bank checking account... does
schwab brokerage web page let you set that up?
My wife and I have investment accounts tied into our debit cards,
although they are mutual fund accounts and not stocks so transactions
are not done until the end of day. The safety we set-up was that cash
payouts are to another bank card from another bank and not an account on
the same debit card as the investment accounts are.
I see no security issues as long as your PIN is protected and stop
picking birthdays, phone numbers and 1234 as a pin.
And don't tell your co-workers your birthday. All it takes is one
unsavory thief/coworker to write down your announced birthday and steal
your social insurance number and it's potentially away to the races.
David S Meyers CFP writes:
I doubt it's so limited. It's probably rather "an instantaneous
way of directly accessing your brokerage account's 'available for
withdrawal' balance" (i.e. it can tap your margin). This is why
the one card of this type I have is kept in my safe deposit box.
(I keep the card because it's a gold AmEx and can be useful for
special ticket pre-sales).
i think a brokerage debit card is potentially the most dangerous thing to take
out of your safe. pins can be stolen by skimmers cameras, hacking, whatever.
here is an old article
its not the likelyhood of stolen pins, its the dire consequences of potential
access to your entire nest egg or even lines of margin credit. thus i dribble
the brokerage money into another little account with debit access.
That to me is the risk to consider. You get a slip at the ATM after
using one of these debit cards and it says available balance, (your
entire brokerage account) or (your entire margin limit).
Someone used the word firewall, I think that's a good analogy. You might
link brokerage to a bank account but by not having a hook right into it
from a debit card, you have a firewall between your debit card and
brokerage. In the worst-case, only your bank account gets flushed. Now,
a brokerage debit card may already work like this - linking only to a
side bank account, with no automatic overdraft from brokerage - but it's
something to check.
What doesn't get talked about enough also is the mess that an ID theft
kind of crime creates, specifically with flushed bank accounts. You
might eventually be able to get your money back but it can take a lot of
time, especially if the transaction looks valid or you arguably are at
fault for whatever reason. When a credit card is misused, you just
protest the charge and don't pay your bill.