Charles Schwab Bank Review
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
What Does Charles Schwab Bank Offer?
As you might expect from a financial institution of its size, Charles Schwab offers a considerable number of accounts and services.
- 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.
- 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:
- 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
- It 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 item, up to $100 per day. This is lower than average.
Certificates of Deposit
Charles Schwab acts as a virtual middleman for various 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.
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 July 2021|
|Term||Rates up to (APY)|
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
- Home loans
- Personal lines of credit
- Retirement accounts
- Small business retirement accounts
- Trust, estate and charitable accounts
- Educational accounts
- Custodial Account
Charles Schwab Customer Service
In J.D. Power’s Direct Banking Satisfaction Study, Charles Schwab Bank ranked highest in overall satisfaction in 2019 and 2020, earning an "among the best" (5-star) rating. Customers were happy with the website, in particular. However, J.D. Power did note that direct banking customers surveyed in the 2020 study reported significantly longer wait times than the 2019 data when contacting call centers, a trend from which Charles Schwab was not exempt.
Customers can reach Charles Schwab's 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.
Charles Schwab offers a mobile app allowing iOS and Android users 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. Its ranking dropped slightly in 2020, but Schwab's app still achieved a "better than most" (4-star) rating that landed it among the top five.
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:
- 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
In our review, we found that Charles Schwab is a great option for the brokerage’s current customers who want to earn a little interest on their cash reserves while receiving FDIC insurance for those funds. It’s also an attractive option for those who wish to move between liquid/cash and investments with a brokerage offering free stock and ETF trades, which also offers full service and robo-investing. In addition, those looking for a break on ATM fees, especially while traveling internationally, would benefit from unlimited ATM fee rebates. With no minimum deposits, monthly balance requirements, or account maintenance fees, both the checking and savings account options are worthwhile considerations.
Opening a savings account isn’t the easiest process for existing or new Charles Schwab customers. The savings and CD APYs aren’t competitive compared to other high-yield savings accounts.
The Balance requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy .
J.D. Power. "In Direct Bank Gold Rush, Top Performers Find Different Paths to Success, J.D. Power Finds." Accessed April 27, 2021.
J.D. Power. "Direct Banks Earn Higher Customer Satisfaction than Traditional Retail Banks, But Face Call Center Challenges, J.D. Power Finds." Accessed April 27, 2021.
J.D. Power. "Wealth Management Apps Underperform Other Consumer Financial Apps, J.D. Power Finds." Accessed April 27, 2021.
J.D. Power. "Wealth Management App Use Surges among Investors, But Satisfaction Lags, J.D. Power Finds." Accessed April 27, 2021.
FDIC, SPIC: Who’s Protecting Your Assets?
The FDIC doesn’t insure money invested in stocks, bonds, mutual funds, life insurance policies or annuities, even if these investments are purchased at an insured bank.
Investment protection. SIPC, meanwhile, protects brokerage accounts. Brokerages are required by law to keep customers’ investments separate from their own funds, but if the firm fails and customers’ assets go missing—due to theft, fraud or unauthorized trading, for example—SIPC can replace customers’ cash and securities. It doesn’t get involved until the firm has exhausted all other options, such as merging with another brokerage firm. (Look for the SIPC disclosure on a brokerage firm’s website, or check the membership directory.)
SIPC isn’t a government agency and doesn’t have the authority to investigate fraud at brokerage firms. That’s up to Finra, the industry’s self-regulatory organization, and the Securities and Exchange Commission, which refers brokerage failures to SIPC. After that, SIPC will file an application in federal district court, which will notify customers.
SIPC first divides up the broker’s remaining assets among investors, then uses its own funds—up to $500,000 per account, with a limit of $250,000 in cash—to buy the same number of shares you originally owned and replace your cash. Depending on the amount of property the brokerage is able to recover, you may receive more than $500,000, says Josephine Wang, CEO of SIPC. SIPC has been successful in making most customers whole, Wang says.
If your bank fails, you don’t have to do anything—the FDIC will mail you a check. But if your brokerage fails, you must file a claim, and you should do it as soon as possible. If your securities decline in value after you file your claim, you won’t be reimbursed for losses that occur while your account is in limbo.
Know your limits
Federal Deposit Insurance Corp. (FDIC) Insures $250,000 per depositor, per bank, for each account ownership category.
What it covers: checking, savings and money market deposit accounts, certificates of deposit, cashier’s checks, money orders.
Securities Investor Protection Corp. (SIPC) Guarantees up to $500,000 per brokerage account (with a limit of $250,000 in cash).
What it covers: stocks, bonds, mutual funds and cash that’s on deposit to purchase securities.
Account Protection at Schwab
website builders We are an independently owned and operated wealth management firm. We are not affiliated with Schwab or any other custodian. We use Charles Schwab as the primary custodian for most of our service levels.
We often receive questions from clients regarding the account protection measures provided by Schwab.
The Account Protection page on Schwab’s website explains the two levels of account protection it offers for investment accounts.
The first level includes protection for most securities and cash provided by the Securities Investor Protection Corporation (SIPC), a federally mandated, non-profit, member-funded U.S. corporation created under the Securities Investor Protection Act (SIPA) of 1970 that mandates membership of most U.S.-registered broker-dealers. SIPC provides up to $500,000 of protection for securities and $250,000 of protection for cash.
It’s important to note that SIPC protection does not cover commodity interests or cash in futures accounts and does not cover the decline in the value of securities due to bad investment advice or market fluctuations.
SIPC coverage is determined by separate capacity, meaning each account with separate capacity is eligible for the $500,000 ($250,000) coverage. For example, if a married couple has a joint brokerage account with $500,000 and each individual also has an individual brokerage account with $500,000, all three accounts are eligible for full SIPC protection. However, if a married couple has two joint accounts held at the same custodian with a combined value greater than $500,000, only the first $500,000 is protected by the SIPC.
Fortunately, Schwab provides another level of protection through Lloyd’s of London, a corporate body governed by the Lloyd’s Act 1871 and subsequent Acts of Parliament. This excess coverage becomes available in the event that SIPC limits are exhausted. Combined with SIPC coverage, Lloyd’s of London provides protection of securities and cash up to an aggregate of $600 million for all claims, with a limit of $150 million for securities and $1.15 million for cash per client.
In addition, Federal Deposit Insurance Corporation (FDIC) coverage of up to $250,000 per owner is available for all deposit accounts held at Schwab-affiliated banks. As stated in Schwab’s Trusted providers of banking services brochure, this includes:
- Bank Sweep deposit accounts for uninvested brokerage cash,
- Charles Schwab Bank High Yield Investor Checking® (linked to a Schwab One® Brokerage Account), and
- Charles Schwab Bank High Yield Investor Savings®
As a U.S. agency, the FDIC protects depositors against the loss of their deposit account in the event of the failure of an FDIC-insured bank.
These extensive account protection measures are one of the reasons we use Schwab as the primary custodian for most of our service levels.
Is My IRA or Roth IRA FDIC-Insured?
When an economic crisis hits and the stock market plunges, people get fearful about their money and how to keep it safe. If you have a retirement account, such as a traditional IRA or a Roth IRA, you may be thinking, is it protected by FDIC insurance?
To back up, the Federal Deposit Insurance Corporation, or FDIC, is a government-run agency that provides protection against losses if a bank or savings and loan association fails. Created in 1933, the FDIC's original mission was to offer peace of mind to banking customers after the financial disaster and crash of the stock market that took place in 1929.
While the coverage itself has changed over time, the FDIC has remained true to its initial objective in keeping banking customers safe from losing money in deposit accounts, up to $250,000 per account in most cases today. As of 2020, the FDIC covers customer deposits held at FDIC-insured banks or savings and loan associations, including assets held in savings, checking, money market, certificates of deposit, and IRA accounts.
The FDIC has assured consumers that during the economic crisis, FDIC-insured banks are the safest place to keep their money.
So far, so good. But to answer the original question: Not all traditional IRA and Roth IRA accounts are treated in the same manner under FDIC protection. Here's a look at why.
- FDIC insurance covers customer deposits held at FDIC-insured banks or savings and loan associations, including assets held in IRA accounts.
- Deposit accounts such as checking and savings accounts, money market deposit accounts, and certificates of deposit can all be held in traditional IRAs and Roth IRAs and are eligible for FDIC insurance.
- The limit on FDIC insurance is $250,000 per depositor, per institution, so it is important to know how much money you have in different accounts within one institution to be sure your funds are fully covered.
Types of IRAs Covered
An IRA, whether Roth or traditional, is an individually held retirement account that carries with it specific tax benefits and contribution and distribution restrictions. IRAs were created in an effort to help individuals accumulate savings to be used during their retirement years.
While a traditional IRA and a Roth IRA are suitable for different individuals based on their time horizons, tax brackets, and other considerations, both IRA types follow the same guidelines when it comes to what can be held within them. Deposit accounts, or those offered through a bank or savings and loan association, are all available to be held within a traditional or Roth IRA. These deposit accounts include checking and savings accounts, money market deposit accounts, and certificates of deposit—all of which are covered under the FDIC.
Accounts Not Covered
While the FDIC provides coverage to deposit accounts held within a traditional or Roth IRA at an FDIC-insured financial institution, not all IRA accounts fall into this category. Saving for retirement can be a daunting task, and the IRA annual contribution limits can make it an even greater challenge.
To combat this, IRA account-holders are allowed to invest in securities in an attempt to earn a higher rate of return than what may be offered by conservative bank products. Investments held in a traditional or Roth IRA can include mutual funds, exchange traded funds (ETFs), individual stocks, bonds, annuities, or money market funds.
Because each of these investments is based on market performance, the individual who holds these non-bank securities in an IRA account bears all the risk if the securities lose value over time. The FDIC does not insure such investments held within a traditional or Roth IRA, even if the account was established and trades were placed through an FDIC-insured institution.
FDIC Coverage Limits
The FDIC increased the amount of coverage on deposit accounts for banking customers in the wake of the Great Recession that began in 2007. For an individual account, the FDIC provides insurance protection up to $250,000, per depositor, per FDIC-insured bank, per ownership category. The FDIC spells out these ownership categories here.
It is possible to have more than $250,000 of deposit insurance coverage at one FDIC-insured bank because different ownership categories (such as single, joint, and certain retirement accounts) are separately insured.
If, for instance, a banking customer has a certificate of deposit with a bank with a value of $125,000, and a money market deposit account with a value of $215,000 at the same institution, and both are in the same name, his account balances are added together and collectively covered by the FDIC—up to $250,000 (even though they total $340,000). So, in this scenario, $90,000 of his money is uncovered in case of a bank failure. The same limits are applied for checking and savings accounts held at FDIC-insured financial institutions.
The FDIC also offers insurance protection up to $250,000 for traditional or Roth IRA accounts. Again, all your IRAs are combined for insurance purposes. If the same banking customer, for example, has a certificate of deposit held within a traditional IRA with a value of $200,000 and a Roth IRA held in a savings account with a value of $100,000 at the same institution, the accounts would collectively be insured for $250,000; $50,000 is left exposed.
However, IRA deposit accounts and non-IRA deposit accounts fall into different classifications, which means that they are insured separately—even if held at the same financial institution by the same owner. That means if our customer's accounts consisted of an IRA (holding a CD) worth $200,000 and a regular savings account worth $100,000, they would both be insured up to $250,000—meaning that, if the bank failed, he would be reimbursed his full $300,000.
The Bottom Line
The FDIC is an important factor in protecting banking customers, but it does not cover all assets equally. For IRA owners, it is important to understand which types of accounts are covered and to what extent.
Insured fdic schwab is bank
Charles Schwab Review: Online Banking
Charles Schwab has been part of the financial landscape in America for more than 40 years. As a brokerage firm, Charles Schwab offers a multitude of investment accounts, including stocks, bonds, ETFs, mutual funds, annuities and more. It also provides various retirement account options, like both Roth and Traditional IRAs.
Charles Schwab is also an online bank, with both checking and savings accounts available. Other banking services include home loans and an asset line of credit. Unfortunately, customers looking for a complete banking solution may be disappointed in what Charles Schwab has to offer.
This review will focus specifically on personal banking solutions offered by Charles Schwab Bank.
Charles Schwab’s banking accounts are limited to two options: a checking account and a savings account. For checking, customers open a Schwab Bank High Yield Investor Checking account. There’s nothing flashy about this checking account, but it does come with 0.03% APY.
Because Charles Schwab does most of its business as a brokerage firm, when you open a checking account, you also get a Schwab One brokerage account. If you’re not interested in opening a brokerage account, another online bank may be a better choice for you.
A High Yield Investor Checking account comes with free standard checks and a Schwab Bank Visa Platinum Debit Card. As part of the Visa family, the debit card is accepted nearly anywhere in the world. It’s a great option when traveling outside the U.S. since it carries no foreign transaction fees.
One of the biggest perks with Charles Schwab’s checking account is unlimited ATM fee rebates worldwide. No matter where you go, you’ll always get reimbursed for any ATM fees you incur. You’ll receive refunds at the end of the same month in which you’re charged ATM fees.
Charles Schwab checking accounts have no account minimums or service fees. You can open an account online or by filling out and mailing a paper application. You also can drop off your application at a local Schwab branch if you live near one.
Customers can make deposits into the checking account in several ways:
- Transfer from your Charles Schwab brokerage account
- Mobile deposit through the Charles Schwab app
- Direct deposit
- Transfer from another bank account
- Mail a check to Schwab Bank
- Wire transfer from another financial institution
There’s one thing to note if you already have a Charles Schwab brokerage account. Some brokerage accounts come with a debit card, along with check-writing and bill pay capabilities. If you have this type of account and open a checking account, all of those features are transferred to your checking account and are no longer available with the brokerage account.
For savings, Charles Schwab has the Schwab Bank High Yield Investor Savings account. It earns 0.05% APY, well below the best online savings accounts’ rates. Unlike its checking accounts, Charles Schwab savings accounts do not come with a linked brokerage account.
There are no service fees or minimums on savings accounts. There’s no minimum opening deposit requirement, either. If you don’t open a Charles Schwab checking account, you can receive a debit card to use with your savings account. It has the same unlimited ATM fee rebate promise as with checking accounts.
Opening a savings account requires filling out and submitting an application, which can be done by mail, in person at a Schwab branch, or uploaded online (if you’re an existing customer). Customers make deposits to savings accounts in similar ways as checking accounts:
- Transfer funds from your Charles Schwab brokerage account or checking account
- Direct deposit
- Mobile deposit through the mobile app
- Mail a check to Schwab Bank
- Wire transfer from another financial institution
While you’ll earn more at other online banks, Schwab Bank High Yield Investor Savings accounts may offer a better rate than many of your local brick-and-mortar banking options.
Other Banking Accounts
Unfortunately, banking options are limited to just checking and savings accounts with Charles Schwab. No Certificates of Deposit (CDs) or money market accounts are available outside of its brokerage offerings. For an all-in-one banking solution, customers must look elsewhere. The only other services offered under Charles Schwab’s banking umbrella are home loans and an all-purpose line of credit secured by assets.
Access on the Go
While banking options are limited at Charles Schwab, there are tons of ways to stay connected and manage your accounts. Schwab Mobile is its mobile banking and investment app. All Charles Schwab accounts are accessible within the same app and have the same login. The mobile app is available on iOS and Android. It has a rating of 4.8 out of 5 stars on the App Store and 4.0 out of 5 stars on Google Play.
Using Schwab’s mobile app allows you to seamlessly transfer money between accounts, make mobile check deposits and see an overview of your portfolio. The app also gives you access to tools like notifications and custom alerts, bill pay and several security features.
Charles Schwab also has local branches, but they are strictly investment centers. There are no banking services offered at Charles Schwab branches.
As mentioned before, Charles Schwab refunds all ATM fees charged to your accounts. This is great news, since it doesn’t have its own ATM network.
- Unlimited ATM fee rebates worldwide
- No monthly fees
- No minimum opening deposit or required balance
- No foreign transaction fees
- Mobile check deposit
- Connected to brokerage accounts
- APY earning on checking accounts
- Below-average rate on savings accounts
- No CDs
- No money market accounts
- No banking services at branches
- Checking account requires a linked brokerage account
- No ATM network
How Charles Schwab Stacks Up
Compared to other online banks, Charles Schwab doesn’t offer as much to excite potential customers. You can earn interest with a checking account, but that doesn’t make up for a lower rate on its savings accounts. Banking services are limited at best. You’ll need to pair another bank with your Schwab accounts if you want to maximize savings through CDs and money market accounts.
It might make sense to open a checking or savings account if you’re already a Charles Schwab customer or want to open a brokerage account through the company. Having those accounts linked together adds an element of convenience not offered from most online banks.
Charles Schwab is good if most of your banking is done online, on your phone or through ATMs. Local branches have no banking services or even ATMs, but all ATM fees you incur are refunded. And there are no foreign transaction fees.
In the end, your bank choice depends on what’s important to you as a consumer.
Frequently Asked Questions (FAQs)
Is Charles Schwab FDIC insured?
Yes, all Charles Schwab bank accounts are FDIC insured (FDIC # 57450) up to $250,000 per depositor, per account ownership category, in the event of a bank failure.
Is Charles Schwab Bank safe?
Charles Schwab employs several security measures to ensure customer accounts, transactions, and personal information are secure at all times. These include the latest encryption technology, Voice ID, notifications and alerts and card lock/unlock through its mobile app.
Charles Schwab also has a security guarantee in place, which provides 100% coverage of any losses in your bank accounts due to unauthorized activity.
Does Charles Schwab offer money market accounts?
No, there are no money market accounts available through Charles Schwab Bank.
Does Charles Schwab offer CDs?
No, there are no CDs available through Charles Schwab Bank.
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