AP Photo/Frank Franklin II

Not paying attention to your idle balances? You might be throwing away $500 a year.

If you are like most bank and brokerage customers, you’re getting gouged on your cash holdings.

For years, there was no need to shop around. The Federal Reserve held overnight interest rates close to zero. If all you got out of your short-term savings was no-fee checking, you were getting a pretty good deal.

Now, with overnight yields above 2%, cash returns matter. If you’ve got $25,000 of idle cash between your checking and your brokerage account, and you don’t pay attention, you might get nicked out of $500 a year.

The way to extract the most from your savings is to merge your brokerage and checking into a single account. This account collects dividends, interest and direct deposits. It disburses money via checks, charge and debit cards and electronic bill paying.

Here I’ll review the plusses and minuses at four trillion-dollar institutions: JP Morgan Chase, Fidelity Investments, Charles Schwab and Vanguard. See what they have to offer and you’ll know what to ask for if you bank elsewhere.

Among the bigger firms that aren’t part of this survey but that may be worth your look: Bank of America, which has a big branch network coupled with the Merrill Edge discount brokerage; TD Ameritrade, which is good for beginners, and Interactive Brokers, which is excellent for heavy-duty traders.

Your objective is to have most or all of your cash earning decent money (close to 2%). In some cases the best way to do this is to buy and sell short-term bond ETFs or money-market funds; if so, avoiding commissions is pretty important. Bear in mind that, besides any commissions, a round trip in an ETF will cost you the spread between bid and ask prices. If you’re moving $25,000 commission-free in and out of a $50 ETF that trades at a one-penny spread, your round-trip cost is $5.

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JP Morgan Chase

This bank has a nifty deal for active traders: commission-free online trading of stocks and exchange-traded funds. You can link the brokerage account to your checking, transferring idle balances to and from the two accounts.

To get the most out of Chase, open a new You Invest account. If you already have a JP Morgan Chase brokerage account, it won’t qualify for commission-free trading. You need to start over by applying online for You Invest.

If you have at least $250,000 of assets at Chase you will get: free checking; exemption from the limits on the commission-free trading that apply to small fry; some frills related to museum tickets; a rebate of some withdrawal fees at non-Chase ATMS; a closing-cost discount on mortgages, and other goodies. The asset minimum can be met with any combination of savings and checking balances and securities positions. The securities can be moved in from another brokerage firm.

Advantages: Chase has a strong branch network with bank services like mortgages, cashier’s checks, safe deposit boxes, wire transfers, credit cards that can be rigged to automatically pay the full balance monthly, notary public, electronic money and bill paying.

Disadvantages: The sweep money market account attached to You Invest stinks (0.03% interest). So, to extract a yield from idle funds, you will be buying and selling money market funds or ETFs. There’s a two-day settlement delay with that mechanism. Also, you won’t be able to put all the cash to work because you don’t want to risk a bounced check.

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Fidelity Investments

This money manager can give you a near-bank experience built off a discount brokerage account. You have direct deposits, dividends and bond interest going in; you have checks, bill pay and other disbursements going out. Its sweep funds are a giant improvement over what Chase offers; the Treasury money fund option is now paying 1.83%.

Paper checks can be deposited by scanning them on a mobile phone. You get folding money at any bank’s ATM, and Fidelity reimburses you for the bank fee. The full integration between brokerage and bank-like assets is such that you don’t have to worry about bouncing checks; at worst, overspending runs up a margin debt. The online commission on stocks and on many ETFs is just under $5.

Advantages: Fidelity’s cash-back card (2% on all purchases) is one of the best on the planet; it has delivered $1.8 billion in rebates to customers since it was introduced in 2003. You can’t beat Fidelity’s zero-expense-ratio index funds.

Fidelity’s online Treasury bond quote board is first-class. There you can find, for example, the 2-5/8s of November 2020 trading at a microscopic $46 spread between bid and ask on a $100,000 stake. This note would be a fine place to stash cash you probably won’t need for a while.

Disadvantages: The branch network is smaller than Chase’s. There’s a 1% fee on ATM withdrawals abroad.

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Charles Schwab & Co.

This discount broker has accounts much like Fidelity’s, with $~5 trades and the usual bank-like features such as a debit card and check writing. The branch network is comparable to Fidelity’s. The main difference is that Schwab’s cash sweep feature is almost as chintzy as Chase’s, with yields between 0.3% and 0.6%. You can do better at Schwab by putting in buy and sell orders for money-market funds, but that’s a nuisance.

You can get a good look at what Schwab is up to by inspecting its 2017 annual report. The firm hauled in $4.6 billion in interest (mostly on margin loans), while remitting only $0.3 billion of this to lenders of funds (mostly, inattentive customers with idle balances).

Advantages: Foreign ATM withdrawals don’t incur a transaction fee. Schwab’s bank affiliate offers nice deals on home mortgages, especially for customers with $1 million or more in brokerage assets.

Disadvantage: Bad yield on sweep cash.

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Vanguard

This place has the best yield of all for uninvested cash, which is swept into a money fund paying 2.1%. It has most of the bank-like features offered elsewhere, except for mobile deposit of paper checks (but that is coming soon).

Advantages: Best sweep; commission-free trading of mainstream ETFs (inverse and leveraged funds don’t qualify); low commissions on stocks for customers with large assets.

Disadvantages: No branches; somewhat high commissions for stock trades by small customers.

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