Charles Schwab Review
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice, and in 2017 he received the SABEW Best in Business Award.
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Schwab is a consistent advocate of the individual investor. It has aggressively slashed fees on its mutual funds, removed common account fees, and eliminated its per-trade commissions, making it one of the most affordable places to open an account and trade stocks, ETFs, and funds.
In the Charles Schwab review below, we’ll show you how the brokerage compares on commissions, fees, margin rates, trading platforms, and more.
It's also worth mentioning that Schwab has agreed to acquire rival broker TD Ameritrade, so some of the information contained in this review may change once that deal is complete.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Charles Schwab has aggressively slashed fees on its mutual funds and ETFs, eliminated common account fees, and eliminated its commissions, making it one of the least expensive brokers.
$0 per trade
Top perks of a Charles Schwab brokerage account
A few of Charles Schwab's services and perks are what truly differentiate it and make it one of the best stock brokers in the game.
- No commissions: Offering $0 stock and ETF trades, Charles Schwab is one of the least expensive online discount brokers for basic stock and ETF trades. That said, most of the major discount brokers now offer commission-free trading.
- No account minimums: Schwab recently eliminated account minimums on its retail brokerage accounts, making it one of the best stock brokers for beginners.
- International access: If you’d like to trade stocks on foreign markets, Schwab can help. It offers trading in more than 30 global markets. Sign up for a Schwab Global Account to be able to trade stocks online in 12 of the top-traded foreign markets, each with real-time quotes during market hours.
- Customer service: One advantage of working with Charles Schwab is that it has a branch network of more than 340 locations across the country. It’s one of a handful of discount brokers that offer in-person help when you need it, which is a compelling advantage.
Above all else, we think low costs and a large selection of funds are Schwab’s major advantages in the discount brokerage world. Investors who simply want to manage a low-cost portfolio of low-cost ETFs and mutual funds will find that Schwab offers a large assortment of funds and ETFs that you can buy and trade without paying a commission, load, or transaction fee.
Charles Schwab was the first big brokerage to eliminate commissions on online stock and ETF trades, and it sparked the commission-free revolution of late 2019. Nearly all of Charles Schwab's competitors followed suit, slashing commissions to zero.
Here are Charles Schwab’s trading fees based on the type of investment:
|Stocks and ETFs||Options||Mutual funds|
|$0||$0 + $0.65 per contract||$49.95 per purchase|
Schwab’s mutual fund fee of $49.95 sticks out like a sore thumb in its commission schedule, but keep in mind that this charge is easy to avoid. Schwab offers thousands of no-load, no-transaction-fee mutual funds (as well as commission-free ETFs), which allow investors to buy diversified funds without paying a fee to do so. Besides, the fee only applies to purchases, whereas other brokers with lower fees charge a fee to buy or sell a mutual fund.
Buying mutual funds
Fund investors will find that Charles Schwab boasts a massive selection of mutual funds, including mutual funds that can be purchased without paying a load, transaction fee, or commission.
|Total mutual funds||More than 10,100|
|No-load, no-transaction-fee mutual funds||More than 4,300|
Charles Schwab's trading platform
This discount broker has several platforms aimed at different types of investors. In addition to a basic browser-based solution, Charles Schwab offers a streamlined web trading tool (Trade Source) plus a desktop platform (StreetSmart Edge) for advanced traders and sophisticated investors.
- Trade Source: Think of Schwab’s Trade Source as a dressed-up browser-based trading tool. The key features include streaming quotes, clean charts, quick access to news on all of your portfolio holdings, plus the ability to quickly switch between ticker symbols thanks to its use of tabs. In addition, you can also link other financial accounts (even non-Schwab accounts) to Trade Source, allowing you to view your total financial picture from one screen, which makes it easier to see how all of your accounts (not just your Schwab accounts) are performing from day to day or month to month.
- StreetSmart Edge: This is Schwab’s platform for active traders. As a desktop-based platform, it offers more functionality than you’d expect from a true trading platform: advanced stock charting, quick access to fundamental research, an all-in-one trade ticket (for placing conditional orders), and a customizable layout so you can modify your screen to show only what’s most important to you. Notably, the platform can also be fired up from the cloud, allowing you to open it through a browser if you’d prefer not to install another program on your desktop or laptop computer.
- Mobile apps: Schwab offers mobile apps for iOS, Android, and Windows devices that give users streaming data and the ability to place complex trades (e.g., multi-leg options trades). The website also scales for smaller screens, so mobile users don’t have to install the app to check their balance or place a trade.
As long-term buy-and-hold investors, we don’t actively trade our accounts and therefore don’t need many of the bells and whistles. If a robust platform is especially important to you, we’d recommend using a demo account to try a broker’s platform out for yourself. Ultimately, whether a platform is "good" or "bad" comes down to personal preference more than anything else.
Investors who use margin as a key part of their trading or investing strategy will find that Schwab’s margin rates put it toward the middle of the brokerage pack, although it’s one of only a handful of brokers whose rates start at less than 10% for smaller balances.
Like many brokers, Schwab prices margin based on a sliding scale whereby the rate declines as your margin balance increases.
|Margin balance||Interest rate|
|Less than $25,000||9.325%|
|$25,000 to $49,999||8.825%|
|$50,000 to $99,999||7.875%|
|$100,000 to $249,999||7.825%|
|$250,000 to $499,999||7.575%|
|More than $500,000||Call for more information|
The margin rates in the chart above are accurate as of 1/2/2020 but vary over time with prevailing market rates.
Since most investors who invest for retirement with a brokerage account or IRA sign up for cash accounts in which investments can be purchased only with cash on hand, rather than borrowed money, Schwab’s margin rates are irrelevant for most long-term buy-and-hold investors.
Customer service and support
Discount brokers can offer cutthroat commission prices because they eliminate many of the expenses associated with traditional brokerages. But big brokers still provide all the customer service you might need, whether over the phone, online, or through a branch office.
Schwab offers 24/7 support over the phone, as many discount brokers do. But thanks to its vast brick-and-mortar branch network, customers can also get help in person at offices scattered across the U.S. It has more than 340 branches in 46 states, so the vast majority of Americans live within a short drive of one of its offices.
Whereas large wirehouse brokers have large research arms to supply their research internally, most discount brokers instead offer research from third-party services like Morningstar and S&P, for example. Below, we’ll run through a few notable research and screening tools available to Schwab brokerage customers.
- Several equity research reports: Schwab has research from several major providers. Brokerage customers get access to Schwab ratings and research, plus access to research from Argus, Credit Suisse, Morningstar, MarketEdge, and Reuters, among others.
- Daily market reports: Tap into a wealth of information by reading daily market reports, including Credit Suisse First Edition, Morningstar Morning Notes, Market Edge Daily Commentary, and more from your online account.
- Screeners: Charles Schwab is no slouch when it comes to fundamental and technical screeners for stocks, ETFs, and funds. Notably, its screening tools are available on its website and through its SmartEdge desktop trading platform.
To be sure, most large discount brokers offer more research and screening tools than ever before. It’s fair to say that if you wanted to spend hours each day reading stock market research or tinkering with screeners, you wouldn’t run out of research to read or screeners to toy with, a statement that applies to virtually any of the household-name discount brokers.
This brokerage account is right for you if:
We think Schwab has a product offering that will suit the needs of most investors. If the following statements apply to you, then Schwab may be a good fit for your portfolio:
- You use mutual funds and ETFs in your portfolio. Charles Schwab’s fund offerings are a particularly compelling reason to open an account. It offers its own line of low-cost mutual funds and index funds, in addition to thousands of mutual funds you can buy without paying a commission or transaction fee. Plus, with minimum investments of $100 or less, its mutual fund assortment is a great solution for investors who are just getting started.
- You want to minimize trading costs and commissions. At $0 per stock and ETF trade, Schwab’s commission prices won’t break the bank. That said, Schwab’s options fees ($0.65 per contract) are firmly in the middle of the online brokerage pack, so it may not be a grand bargain for people who use options extensively.
- You want online banking access. Schwab is more than just a brokerage and asset manager -- it’s also an online bank. Given this is a Charles Schwab brokerage account review, we haven’t spent any time talking about its online banking functionality, but its bank offers a key feature that separates it from many online banks: unlimited ATM fee reimbursements around the world. If you like the convenience of keeping all of your accounts in one place, Schwab makes the short list of brokers that offer a fully featured bank and brokerage in one place.
- International stock trading is important to you. Few investors need access to international markets, since many large-cap foreign stocks are available on U.S. markets or over the counter on the "Pink Sheets." That said, Schwab offers easy online trading in 12 of the largest foreign markets when you have a Schwab Global Account. Note that international trading often comes with a higher commission, which varies by market.