[lawgolfer]

I have several accounts at Schwab which date to when it first opened for business. Over the years, I have had nothing but praise for Schwab for its low trading fees, customer service, and breadth of financial products.

That said, a few years ago, Schwab created a problem for all its customers who trade stocks and bonds when it opened the Schwab Bank. The problem is that all cash in an account is automatically "swept" into the Bank, which, for the past several years paid little or no interest. Also, there was no limit on the amount which would be "swept" into the Bank. Thus, it has been very easy for accounts at the bank to exceed the $250K limit for FDIC insurance, while, at the same time, earning little or nothing in interest.

If you have brokerage accounts at Schwab and actively trade in amounts in excess of $250K, you have to give specific instructions for your cash to be kept in a different account and not at the Bank. Probably, the best type for this is Schwab's money market fund, symbol SWVXX, which invests in a mix of U.S. Treasury notes and highly rated corporate notes. All these have short maturities and are extremely liquid. If you don't want any risk and complete liquidity, Schwab's SNOXX fund invests only in U.S. Treasuries and is 98% liquid daily and 100% weekly. Schwab has 9 money market funds, each of which invest at different ratios in U.S. Treasuries and corporate obligations, giving you an multitude of options, including funds which are tax-free both for Federal and State income taxes. Of course, no money market fund, be it one of Schwab's, Vanguard's, or any other brokerage, has FDIC insurance.