Yes, Charles Schwab offers certificates of deposit through its brokerage platform

Charles Schwab sells CDs from its own bank (Charles Schwab Bank) and from other FDIC-insured banks through its brokerage account. You can buy them directly in your Schwab account without opening a separate bank account or leaving your brokerage. The CDs Schwab offers range from short-term (a few months) to long-term (five years or more), and rates vary depending on the term length and the issuing bank.

Schwab's CD offerings sit between traditional bank CDs and brokered CDs sold by other brokerages. You get the convenience of buying them alongside stocks and bonds in one account, but you also face the same trade-offs as any CD investor: your money is locked up for a set period, and early withdrawal usually costs you interest.

Key Takeaways

  • Charles Schwab Bank issues its own CDs, and Schwab also offers CDs from other FDIC-insured banks through its brokerage platform.
  • CD rates at Schwab change daily and depend on the term length and the issuing bank, so comparing rates across different terms is worth doing before you buy.
  • All CDs sold through Schwab are FDIC-insured up to $250,000 per depositor per bank, which protects your principal if the bank fails.
  • You can sell a brokered CD before maturity on the secondary market, but the price you receive depends on interest rate movements and may be less than you paid.

How to find and buy CDs through your Schwab account

Log into your Schwab brokerage account and navigate to the Fixed Income section, where you will find a link to CDs. Schwab displays available CDs by term length (three months, six months, one year, two years, and so on) and shows the current rate for each. You can filter by term, issuing bank, or yield to narrow your choices.

Once you select a CD, you enter the amount you want to invest and confirm the purchase. The money moves from your Schwab cash account into the CD, and you receive a confirmation showing the rate, maturity date, and what happens at maturity (usually automatic renewal or return to cash). The entire process takes a few minutes and requires no separate application.

Rates, terms, and what affects your return

Charles Schwab Bank's CD rates are set by the bank and posted on Schwab's platform. Rates change daily based on what the Federal Reserve does and what other banks are offering. A one-year CD will typically pay more than a three-month CD, and a five-year CD will pay more than a one-year CD—this is called the yield curve, and it reflects the fact that you are locking your money up longer.

The rate you receive depends on when you buy. If you buy a one-year CD today at 4.50%, and rates drop to 3.50% next week, your CD still pays 4.50% for the full year. If rates rise to 5.50%, your CD still pays 4.50%—you do not benefit from the increase. This is the trade-off of a CD: you know exactly what you will earn, but you give up the chance to earn more if rates go up.

Schwab also offers CDs from other banks, and those rates may differ from Schwab Bank's rates. Shopping across the available options before you buy is worth a few minutes of your time, because a difference of 0.25% on a $10,000 CD over one year is $25 in extra interest.

FDIC insurance and how your money is protected

Every CD sold through Schwab is issued by an FDIC-insured bank and carries FDIC protection. This means if the bank fails, the FDIC will return your principal and accrued interest up to $250,000 per depositor per bank. If you own CDs from two different banks through Schwab (for example, one from Charles Schwab Bank and one from another bank), each is insured separately up to $250,000.

If you have more than $250,000 to invest in CDs, you can spread the money across multiple banks to stay within the insurance limit for each. Schwab's platform makes this easy because you can see which bank issued each CD and how much you have with each one.

What happens when your CD matures

On the maturity date, your CD stops earning interest. Schwab typically gives you a grace period (usually seven to ten days) during which you can decide what to do. You can let the CD renew automatically at the current rate, move the money to a different CD with a different term, or move it back to your cash account. If you do nothing during the grace period, Schwab will renew the CD at whatever rate is current on that day.

Check your Schwab account a week or two before maturity to see what the renewal rate will be. If rates have dropped significantly and you do not want to renew at the lower rate, you can move the money elsewhere. If rates have risen, renewing may still make sense, or you might shop for a better rate at another bank.

Selling a CD before maturity on the secondary market

Unlike a traditional bank CD, a brokered CD can be sold before maturity through Schwab's secondary market. This means if you need the money before the CD matures, you have an option beyond just breaking the CD and paying an early withdrawal penalty. However, the price you receive depends on interest rates at the time you sell.

If interest rates have risen since you bought the CD, the CD's market value will be lower than what you paid, because new CDs are now paying more. If interest rates have fallen, the CD's market value will be higher. You might receive more or less than your original investment, depending on rate movements. Schwab charges a transaction fee to sell a CD on the secondary market, so factor that into your decision.

This secondary market option is useful if your circumstances change and you need access to the money, but it is not a reason to buy a CD in the first place. If you think you might need the money before maturity, a CD is probably not the right tool for that money.

Comparing Schwab CDs to other options

Schwab CDs compete with CDs from traditional banks, online banks, and other brokerages. Traditional banks often pay lower rates than online banks or Schwab because they have more branch overhead. Online banks and Schwab often have similar rates, but Schwab's advantage is convenience—you can buy a CD without leaving your brokerage account.

If you are already using Schwab for stocks, bonds, or cash management, buying a CD there saves you from opening another account and logging into another platform. If you do not use Schwab for anything else, you might find a slightly better rate at an online bank, but the difference is usually small enough that convenience matters more.

High-yield savings accounts are another alternative to CDs. They offer lower rates than CDs but give you access to your money anytime without penalty. If you are not sure you can leave the money untouched for the CD's term, a high-yield savings account might be the safer choice.

Frequently Asked Questions

Can I buy a CD through Schwab if I do not have a brokerage account?

No. You need an active Schwab brokerage account to buy CDs through the platform. If you only have a Schwab Bank savings account, you would need to open a brokerage account to access their CD offerings. However, you can buy CDs directly from Charles Schwab Bank's website without a brokerage account if you prefer.

What happens if I need my money before the CD matures?

You have two options. You can sell the CD on the secondary market through Schwab, though you may receive less than you paid if rates have risen. Or you can break the CD early and pay an early withdrawal penalty, which is typically a certain number of months of interest. Check your CD's terms to see what the penalty is before you buy.

Are Schwab CDs FDIC insured?

Yes. Every CD sold through Schwab is issued by an FDIC-insured bank and covered up to $250,000 per depositor per bank. If you own CDs from multiple banks through Schwab, each bank's CDs are insured separately.

How often do Schwab CD rates change?

Rates change daily based on market conditions and what the Federal Reserve does. The rate you lock in when you buy is the rate you keep for the entire term, so timing matters if you are trying to catch a high rate. You cannot change the rate mid-term.

Can I use CDs as collateral for a loan at Schwab?

Yes. Schwab allows you to borrow against CDs you own, though the loan rate and terms depend on your account and current conditions. Contact Schwab directly to learn what options are available for your situation.