Charles Schwab is mostly known for investment management, but its banking arm, operating under Charles Schwab Bank, offers interest-bearing checking and savings options. The firm started more than 40 years ago, in April 1971 as First Commander Corporation with a corporate name change to Charles Schwab & Co., Inc in 1973.1 Today, most customers may use Schwab’s online options, although there are over 360 brokerage branches, primarily concentrated in California, Arizona, and Connecticut.
- PROS AND CONS
- COMPANY OVERVIEW
Pros
- No monthly fees or minimum opening balance requirement for checking and savings accounts
- Unlimited ATM fee rebates worldwide and no foreign transaction fee for checking and savings accounts
- Easy to move money between investments, savings, and checking accounts
- More banking services (including home loans) than some other online trading platforms
Who Is Charles Schwab Bank Best For?
Charles Schwab Bank calls itself the “bank for investors,” and should appeal to those hoping to move money between different types of accounts, including savings, checking, and brokerage. It may also be a good fit for customers who want to:
- Travel abroad and access their funds without paying expensive ATM and foreign transaction fees
- Earn some interest in checking accounts
- Receive unlimited ATM fee rebates
- Active investors who want a combination of liquidity, $0 equity trades and more than 13 different investment products
As you might expect from a financial institution of its size, Charles Schwab offers a considerable number of accounts and services.
What Does Charles Schwab Bank Offer?
Charles Schwab Bank offers several different accounts and services.
Accounts
- Savings account
- Checking account
- Certificates of deposit (CDs)
- Credit cards
Schwab Bank High Yield Investor Savings Account
The high yield savings account offered by Charles Schwab pays 0.05% APY for all customers.2
- No minimum deposit required for opening
- No monthly fee and no minimum balance requirements.
- Unlimited ATM fee rebates worldwide
- Mobile check deposit
- FDIC-insured up to $250,000
Schwab Bank High Yield Investor Checking Account
When you open the High Yield Investor Checking account, you’ll simultaneously open a linked Schwab One brokerage account, to ease the transfer of funds, but you’re not obligated to fund the brokerage account. Your checking account also comes with these features:3
- Unlimited ATM fee rebates worldwide, and no foreign transaction fees
- Withdraw up to $1,000 per day from ATMs, and spend up to $15,000 per day
- Can be used with Apple Pay, Google Pay, and Samsung Pay
- Free standard checks and unlimited free check writing
- Bill pay options
- Ability to avoid overdrafts through Schwab’s “Target Balance Transfer” feature
- FDIC insured up to $250,000 in the event of a bank failure
- The checking account pays 0.03% APY (variable), which isn’t as attractive a rate as that offered by high yield savings accounts, but it’s decent for a checking account with no fees, no minimum balance, deposit requirements, or tiers to keep up with.
Insufficient funds fees are $25 per day, up to $100 per day. This is lower than average.4
Certificates of Deposit
Charles Schwab acts as a virtual middleman for a variety of CDs from other banks; Schwab customers can use the Schwab CD OneSource online to compare rates and terms and purchase CDs. However, the CD rates are far lower than what you’d find with other online banks.
Deposits start at $1,000 and increase in $1,000 increments with terms ranging from one month to 20 years. You’ll receive a notification when your CD reaches maturity so you can access your funds or reinvest into a new CD.5
Many financial institutions allow you to withdraw from a CD with a penalty, if you need your funds before maturity. However, Schwab requests bids on your CD and contacts you with the highest bid offered plus interest. You may not receive the amount you originally paid for the CD.
The bank includes a selling concession in new issue CDs for online and broker-assisted trades. Secondary trades are charged a $1 transaction fee per $1,000 CDs. Broker-assisted trades are charged the online price of $25 per trade service charge.
Like your checking account deposits, CDs are FDIC-insured at each bank up to $250,000. You can extend your FDIC coverage by buying CDs across multiple banks through Schwab.
| Charles Schwab Bank CDs as of 8/20/2020 | |
|---|---|
| Term | Rates up to (APY) |
| 1-3 Month | 0.05% |
| 4-6 Month | 0.10% |
| 7-9 Month | 0.10% |
| 10-18 Month | 0.15% |
| 1.5-2.5 Year | 0.25% |
Credit Cards
Charles Schwab offers just two credit cards—a premium credit card for investors and a travel credit card.
- Schwab Investor Card from American Express
- American Express Platinum Card for Schwab
Other Financial Products From Charles Schwab
Charles Schwab also has a wide range of other offerings:
- Brokerage accounts
- Margin loans
- Robo-investing
- Home loans
- Personal lines of credit
- Retirement accounts
- Small business retirement accounts
- Trust, estate and charitable accounts
- Educational accounts
- Custodial Account
- Annuities
Charles Schwab Customer Service
In J.D. Power’s 2019 Direct Banking Satisfaction Study, Charles Schwab Bank ranks highest in overall satisfaction among direct banks, earning an “among the best” rating. Customers were happy with the website, in particular.6 Customers can reach customer service by using the online chat or calling a toll-free number.
Dedicated financial consultants are available for those with $250,000 or more invested with Schwab. Additional fees and commissions may apply, and the consultants are paid through a base salary and commissions on service and solutions offered, and are not fee-only advisors.7
Charles Schwab offers a mobile app allowing both iOS and Android to manage their accounts, deposit checks, transfer funds between accounts, execute trades, and more. Charles Schwab tied with Wells Fargo for the best wealth management app in J.D. Power’s 2019 Wealth Management App Study.8
How to Bank With Charles Schwab Bank
New customers can open an individual or joint checking account online or by calling 1-800-540-6718 and make the initial deposit in the following ways:9
- Mobile check deposit
- Transfer from a linked Schwab One brokerage account
- Direct deposit
- Transfer from another bank
- Mailed check using a free postage-paid envelope
- Wire transfer from another bank