Charles Schwab is a brokerage and banking company that lets you invest, trade, and manage money without a financial advisor

Charles Schwab is a publicly traded company that makes money by holding your cash and investments, charging you for certain trades or services, and lending money. They are not a bank in the traditional sense — they do not take deposits the way your local bank does — but they offer banking-like services including checking accounts, savings accounts, and debit cards. The company operates online and through physical branches in most U.S. cities.

Schwab started in 1971 as a discount brokerage when most people bought stocks only through expensive financial advisors. The founder, Charles Schwab, wanted to let ordinary people invest directly without paying high commissions. The company has grown into one of the largest investment platforms in the United States, with millions of customers and hundreds of billions of dollars under management.

Key Takeaways

  • Charles Schwab lets you buy and sell stocks, bonds, mutual funds, and exchange-traded funds (ETFs) without needing a financial advisor or paying per-trade commissions.
  • They offer checking and savings accounts with no monthly fees, no minimum balance requirements, and ATM access through their network.
  • Schwab makes money from interest on cash balances, advisory fees on managed accounts, and lending products like margin accounts and mortgages.
  • The company acquired TD Ameritrade in 2020, combining two of the largest retail investment platforms into one.
  • Schwab is regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), the same bodies that oversee other brokerages.

How Schwab Makes Money

Charles Schwab does not charge you a commission every time you buy or sell a stock — that changed in 2019 when most brokerages eliminated per-trade fees. Instead, they make money in several ways. When you hold cash in a Schwab account, they pay you interest on that balance, but they also use your cash to lend to other customers or invest it themselves, keeping the difference.

If you use Schwab's advisory services — where a person or algorithm manages your portfolio — you pay an annual fee based on how much money you have with them, typically between 0.25% and 0.50% per year. Schwab also makes money from margin accounts, where they lend you money to buy investments and charge you interest on the loan. They offer mortgages, personal loans, and other financial products that generate revenue through interest and fees.

What Services Schwab Offers

Schwab's core service is a brokerage account where you can buy and sell investments. You can trade stocks, bonds, mutual funds, ETFs, options, and futures. The platform includes research tools, stock screeners, and educational content to help you make decisions. You can set up automatic investments, reinvest dividends, and monitor your portfolio through their website or mobile app.

Beyond investing, Schwab offers banking services. Their checking account comes with a debit card, online bill pay, and access to over 30,000 ATMs nationwide through partner networks. Their savings account earns interest, though the rate changes based on Federal Reserve decisions. They also offer individual retirement accounts (IRAs), 401(k) rollovers, and custodial accounts for minors.

For people who want professional management, Schwab offers robo-advisor services where an algorithm builds and rebalances a portfolio based on your goals and risk tolerance. They also have financial advisors available for phone consultations, though this service typically requires a minimum account balance.

The Acquisition of TD Ameritrade

In 2020, Charles Schwab completed its acquisition of TD Ameritrade, one of its largest competitors. The deal combined two major retail investment platforms. Schwab has been integrating TD Ameritrade's customers and technology into its own systems over several years. If you had a TD Ameritrade account, your account was moved to Schwab, though your investments and account history remained intact.

This acquisition made Schwab even larger and reduced competition in the retail brokerage space. For customers, the integration meant access to Schwab's platforms and services, though some TD Ameritrade-specific tools and features were phased out or changed.

How Schwab Compares to Banks and Other Brokerages

Charles Schwab is not a bank, but it offers some services that banks offer. A traditional bank takes deposits, makes loans, and is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per account holder. Schwab's cash balances are not FDIC-insured in the traditional sense, but Schwab sweeps uninvested cash into partner banks that are FDIC-insured, so your cash is protected up to $250,000 per bank partner.

Compared to other brokerages like Fidelity or E-Trade, Schwab offers similar services — commission-free trading, low account minimums, and research tools. The differences are usually in the details: which research tools they emphasize, how their mobile app works, what educational content they provide, and the quality of customer service. Most major brokerages have eliminated trading commissions, so the choice often comes down to which platform feels easiest to use and which features matter most to you.

Regulation and Safety

Charles Schwab is regulated by the Securities and Exchange Commission (SEC), which oversees investment companies and brokerages. Schwab is also a member of the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization that sets rules for brokers and handles customer complaints. This means Schwab must follow strict rules about how it handles your money, what it can charge you, and how it must disclose risks.

If Schwab fails or goes out of business, your investments are protected by the Securities Investor Protection Corporation (SIPC) up to $500,000 per account (with a $250,000 limit on cash). This protection covers the value of your stocks and bonds, not market losses. Your cash holdings are further protected by FDIC insurance through Schwab's partner banks.

Who Should Use Schwab

Schwab works well for people who want to invest on their own without paying an advisor, people who want low fees, and people who value research tools and educational content. It is also a good fit if you want banking services and investing in one place. Schwab's low account minimums and no-fee checking account make it accessible to people starting out.

Schwab may not be the best fit if you want hands-on advice from a financial advisor — their advisory services require higher account balances — or if you prefer a traditional bank for all your financial needs. If you are an active trader who makes hundreds of trades per month, you might find more specialized platforms useful, though Schwab's tools are solid for most people.

Frequently Asked Questions

Is my money safe at Charles Schwab?

Yes. Your investments are protected by SIPC up to $500,000 per account, and your cash is swept into FDIC-insured partner banks. Schwab is regulated by the SEC and FINRA, which means they must follow strict rules about how they handle your money and what they can charge you.

Does Charles Schwab charge fees for trading stocks?

No. Schwab eliminated per-trade commissions in 2019. You can buy and sell stocks, ETFs, and most mutual funds without paying a commission per trade. Some services like options trading or certain mutual funds may have fees, but basic stock and ETF trading is commission-free.

Can I use Schwab as my main bank?

Yes, many people do. Schwab offers a checking account with no monthly fees, no minimum balance, and a debit card with access to over 30,000 ATMs. You can also set up direct deposit and pay bills online. However, Schwab has fewer physical branches than traditional banks, so it works best if you are comfortable banking mostly online.

What is the difference between Charles Schwab and TD Ameritrade now?

TD Ameritrade no longer exists as a separate company. Schwab acquired it in 2020 and has been moving TD Ameritrade customers to Schwab's platform. If you had a TD Ameritrade account, it was transferred to Schwab, and you now use Schwab's website and apps.

Do I need a lot of money to open a Schwab account?

No. Schwab has no minimum balance requirement to open an account. You can open a checking account, savings account, or brokerage account with any amount of money, even if you start with just a few dollars.