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moneysense.ca, 4/09/07
How to Quickly Fund Your Questrade account with US Dollars
Recently I transferred our investment accounts to Questrade to take advantage of commissions as low as $4.95 per trade. However, I found that funding Questrade (Read my review) with US dollars was very frustrating. First, there is no free way to fund the account other than sending a personal cheque. But if you do send a personal cheque, Questrade puts a hold on the funds for 20 business days, irrespective of when the funds actually clear. For example, I mailed a USD cheque drawn on our RBC USD account on August 9th and the money was taken out of my account on August 15th but won’t be available in my account until September 9th at the earliest.
Emil Vojkollari, Client Acquisitions Supervisor at Questrade, explained that the broker had to institute a long holding period after getting burned by bounced cheques in the past. Still, if the funds were cleared out of the bank account, clients would want it to appear in their trading account fairly soon after.
Mr. Vojkollari then suggested a workaround until Questrade implements a way to pull USD funds from the client’s account: Fax a letter with your name, Questrade account number and a copy of the online bank statement (with bank account number, name and cheque number) that shows the cheque cleared to 416-227-0078 (Attn: Accounting). To be doubly sure, I also faxed a copy of the canceled cheque and the funds were deposited in my trading account within 24 hours. Note that this process will work for personal cheques in US and Canadian dollars and only if the steps are exactly followed.
As I fund my investment account with US dollars roughly twice annually with the proceeds of the sale of shares from the ESPP program, the temporary solution is an acceptable alternative. I should also add that I was pleasantly surprised at how proactive Questrade was in finding a solution even though from their point of view, the manual process outlined above is probably quite expensive.
moneysense.ca, 4/09/07
Great tip CC! Will you be sticking with Questrade now?
FT: I’m staying with Questrade for now. Still, if I had known about TDW’s new pricing, I might have decided differently.
Some discount brokers have minimum time limits for some of their funds (e.g. must be held for 90 days without penalty).
What happens if you have a fund with, say, $5000 for the past year. Recently (within the last couple of weeks), you contribute another $1000. Then, you decide to withdraw $3000 – would the 90 day penalty apply?
Hey Joe,
I think what you’re talking about deals mainly with mutual funds, and not stocks/etfs. With mutual funds, investors could buy/sell within a short term period in order to take advantage of swings in the market.
But these buy/sell orders raise the management costs associated with managing that fund. After all it costs a commission for each buy/sell transaction.
To prevent that most mutual fund companies have what they call a short term trading fee for those people who engage in short term trading.
Hi Earl,
Thanks for the information. Your description is right, and I Understand the need for the short-term trading fees.
However, I’m wondering how it applies if you have an existing fund with money that’s been there awhile (i.e. no excessive trading fees if you were to withdraw) and then add a small amount – does that then mean you can’t withdraw any amount without penalty?
Joe: That’s a good question. I would assume that there should be no penalty since you can claim that you are only withdrawing what was there before. However, I have personally never done this and would check with the mutual fund first.
Joe, in that case the short term trading fee would only apply to the small amount that was added.
You might not be charged the fee for even the small amount if you are doing a withdrawal rather than a switch to another fund but you’d have to check with the company.
Mike
CC: have you tried setting Questrade up as a payee from your online banking. I have found that this works fairly well for Canadian Dollars. The funds show up in a few days. This might also work for US Dollars, although I have not tried it.
Rookie: Yes, I tried setting up Questrade as a payee from my RBC USD chequing account. But the payment cannot be done in US dollars but is first converted to Canadian dollars automatically before sending it to Questrade. Unfortunately, sending a cheque is the only free way to fund your USD account for now.
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On this topic, I tried sending a personal cheque on my RBC USD chequing account to TD Waterhouse. I made a mistake and sent it by mail to the local TD Waterhouse office instead of walking into a local TD Canada Trust branch. I sent the cheque on Sept 7th and it got credited into my investment account on Sept 14th. I don’t know how TD Bank deals with the bounced cheques problem but Questrade’s big competitors are extremely fast in crediting money into the account.
Would this tip work for banks that Questrade does not take direct deposits from? Currently, with HSBC, a personal cheque mailed on Sep 11 does not clear until Oct 15. That’s over 1 month of waiting. In this case, the funds were actually withdrawn on Sep 14th, if I could do the “fax” tip and have funds available 24 hours later, I would probably be much more satisfied with the service. Still a lot of running around and paperwork, but right now, a 1 month wait for a CAD cheque to clear and then a couple days for them to convert it to USD has made me put my trading on hold. If I were to try and put some cash in today, it might be available around December, I’ll just stick with my high interest savings until this is fixed.
Mr. T: Yes, my understanding is this method would work both for USD and CAD cheques as long as you can show that the funds cleared with a bank statement. I agree with you that a 1 month hold is annoying and the lost interest negates any savings on commissions.
[...] it may take as long as 20 business days for your account to be funded. While, it is true that there is an alternate way for the funds to appear in your account a little faster, it is still slow compared to TD Waterhouse. You can walk into any TD Canada Trust branch with your [...]