Charles Schwab is a brokerage and banking company that lets you invest, trade stocks, and manage money online

Charles Schwab is a publicly traded financial services company that operates as both a brokerage firm and a bank. The company lets you open accounts to buy and sell stocks, bonds, mutual funds, and exchange-traded funds (ETFs). It also offers banking products like checking accounts, savings accounts, and debit cards. Most of Schwab's services run through its website and mobile app, though you can also visit physical branch locations in many cities.

Schwab makes money by charging trading commissions on some transactions, earning interest on cash balances in your account, and collecting fees for certain services like financial advisory consultations. The company is regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) because it handles securities trading. It is also a bank holding company, which means the Federal Reserve oversees certain parts of its banking operations.

Key Takeaways

  • Charles Schwab operates as both a brokerage (for stocks and investments) and a bank (for checking and savings accounts), all accessible through one online platform.
  • You can open a brokerage account to trade stocks and funds, or a banking account for everyday checking and savings, or both at the same company.
  • Schwab is regulated by the SEC and FINRA for investment activities and by the Federal Reserve for banking activities, which means your deposits and investments have legal protections.
  • The company charges no commission on stock and ETF trades but may charge fees for certain services, account types, or advisory services.
  • Schwab owns TD Ameritrade and StreetSmart Edge, and is in the process of integrating those platforms into its main service.

How Schwab's brokerage side works

When you open a Schwab brokerage account, you can buy and sell stocks, bonds, mutual funds, ETFs, and options. You fund the account by transferring money from your bank, and that cash sits in your Schwab account until you use it to buy investments. Schwab does not charge a commission when you trade stocks or ETFs, meaning you pay no fee to buy or sell those securities. Some other investment products, like certain mutual funds or bonds, may carry transaction costs depending on the fund or the bond itself.

Schwab also offers fractional shares, which means you can buy a portion of a stock rather than having to buy a whole share. This makes it possible to invest smaller amounts of money. The platform includes research tools, stock screeners, and educational content to help you research investments before you buy them.

How Schwab's banking side works

Schwab Bank offers checking and savings accounts separate from its brokerage accounts. A Schwab checking account comes with a debit card, online bill pay, and access to a large ATM network. The company reimburses ATM fees charged by other banks, which is useful if you travel or live far from a Schwab branch. Schwab savings accounts earn interest, though the rate varies and changes over time based on market conditions.

You can link your Schwab banking accounts to your Schwab brokerage account, which makes it straightforward to move money between them. Some people use Schwab primarily for banking, others primarily for investing, and many use both services together.

Account types Schwab offers

Schwab offers several account structures depending on your situation. An individual account is owned by one person. A joint account is owned by two people who can both access and trade. An IRA (Individual Retirement Account) is a tax-advantaged account for retirement savings, and Schwab offers both traditional and Roth IRAs. A SEP IRA is for self-employed people or small business owners. A 401(k) rollover account lets you move retirement money from a previous employer's plan into Schwab.

Schwab also offers custodial accounts for minors, trust accounts, and accounts for businesses. The account type you choose depends on your situation and your tax goals. Schwab's website walks you through which type makes sense for you.

How Schwab protects your money

Schwab is a member of the Securities Investor Protection Corporation (SIPC), which protects brokerage accounts if the firm fails. SIPC coverage protects up to $500,000 per account, with a limit of $250,000 for cash. This protection applies to stocks, bonds, and mutual funds held in your account. It does not protect you against investment losses — if you buy a stock and it drops in value, SIPC does not reimburse you. It only protects you if Schwab itself becomes insolvent and cannot return your securities or cash.

Schwab Bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor per bank. This means if you have a Schwab checking account with $100,000 and a Schwab savings account with $100,000, both are covered up to $250,000 each. If you have a joint account, each owner gets separate FDIC coverage.

Schwab's acquisition of TD Ameritrade and what it means

In 2020, Charles Schwab announced it was buying TD Ameritrade, another major brokerage firm. The acquisition closed in 2023, and Schwab is now integrating TD Ameritrade's customers and platforms into its own system. If you had a TD Ameritrade account, your account was moved to Schwab, and you now use Schwab's website and app to manage it.

Schwab also owns StreetSmart Edge, a trading platform designed for active traders. This platform is being integrated into Schwab's main offering as well. The company has said it plans to consolidate these platforms over time, though existing customers can continue using their current platforms during the transition.

How to get your free guide with Schwab

To open a Schwab account, you visit the company's website and choose the account type you want — brokerage, banking, or both. You provide personal information, verify your identity, and fund the account by linking a bank account or transferring money. The process usually takes a few minutes to complete online. Once your account is open and funded, you can begin trading or banking when ready.

Schwab offers educational resources, webinars, and customer support to help new users learn how to use the platform. You can contact support by phone, email, or through the website. If you prefer in-person help, many Schwab branch locations offer consultations with financial consultants, though some services may carry a fee.

Frequently Asked Questions

Is Charles Schwab a bank or a brokerage?

Charles Schwab is both. It operates as a brokerage firm where you can trade stocks and investments, and it also operates a bank where you can hold checking and savings accounts. You can use one service, the other, or both together in the same company.

Do I have to pay commissions to trade stocks at Schwab?

No. Schwab charges no commission on stock and ETF trades. Some other investment products like certain mutual funds or bonds may carry costs, but those are typically part of the product itself, not a Schwab fee.

What happens to my money if Schwab fails?

Brokerage accounts are protected by SIPC up to $500,000 per account (with a $250,000 cash limit). Banking accounts are protected by FDIC insurance up to $250,000 per account. These protections cover the return of your securities and deposits, not investment losses.

Can I move my money out of Schwab if I want to switch brokerages?

Yes. You can transfer your investments and cash to another brokerage or bank at any time. Schwab can help you with the transfer process. Some brokerages offer to reimburse transfer fees, so it is worth asking your new firm if they do.

Does Schwab offer financial information?

Schwab offers educational resources and tools for self-directed investing at no cost. It also offers consultations with financial consultants for a fee, and robo-advisory services (automated portfolio management) at different price points depending on your account balance and the service level you choose.