Charles Schwab Bank Review

Charles Schwab is one of the most trusted and well-known names in investments, but many people don’t think of it as a bank. Perhaps they should, though, because  Charles Schwab bank has a high-yield checking and savings options that may far outperform your current bank.

Both the Charles Schwab bank and investment brokerage were originally founded in 1971 in San Francisco, where it is still based today. Schwab is on the list of the top 15 of the largest banks in the United States and offers a diverse number of banking services. It’s also a J.D. Power award winner for highest in overall customer satisfaction.

Charles Schwab at a glance

Bank Min Savings Deposit Max Savings APY 1-Year CD Rate J.D. Power Survey Score Key Benefit
Charles Schwab No minimum 0.23% 1.75% Highest in overall satisfaction No ATM fees anywhere

What we like about it

One of the biggest pluses to banking with Charles Schwab is its ATM fee refund policy. You can use any ATM worldwide, and if that ATM charges you a fee, the bank will refund it. The other big benefit is the high-yield checking account this bank offers. It would be tough to find a similar account, especially with a relatively high APY and no minimum balance requirements.

There are also very few fees associated with Schwab accounts. This is in part because the bank makes its money on the brokerage and investment side, so it’s not nearly as reliant on banking fees as other large banks are. Plus there are only 340 Charles Schwab branches in the United States, which means lower overhead.

Things to consider

The first major downside to Charles Schwab is that they will do a hard credit check as soon as you open your account, and that can have an impact on your credit score. You also have to open a Schwab One Brokerage account before you can open a checking account. You don’t have to actually use it, but you do have to have one. When you open a checking account, you will be assigned a different account number.

Opening a savings account is even more challenging. You have to download an application and send it back via snail mail to the bank. It’s a bit old-fashioned and takes longer than opening other accounts. Once your savings account is open, the interest you’ll earn is a little lower than the interest you will get elsewhere. The fact that this bank has no minimum balance requirement and fees offsets this, though, but it is something to be aware of.

Finally, it is difficult to deposit cash. Without branches or its own ATM network with deposit capabilities, you’ll have to convert your cash to a check or money order before you can make a deposit. The alternative is to deposit cash into a connected account, and then make a transfer.

Charles Schwab checking accounts

When it comes to checking at Charles Schwab, this bank offers a single type of account, which is high-yield checking. What sets it apart is the stellar interest with no minimum balance and no fees. The ATM fee refund policy mentioned above is another great benefit. No matter where you need to access cash, you can do so, and if there is a fee, it will be refunded to you.

This applies not only in the U.S., but also worldwide. That makes this account a great choice if you travel abroad often. It is easy to deposit checks — even without direct deposit — thanks to the mobile deposit feature in the app, which is well designed and simple to use.

Charles Schwab savings accounts

Just like with checking accounts, Schwab offers a single type of high-yield savings account. While the yield is not that high, there are no fees and there is no minimum balance. Transfers to and from your checking and brokerage accounts can be easily done through the mobile app.

If you are looking for higher-yield savings, you may find better options elsewhere, but you may be looking at the hefty amount of restrictions that often come with those accounts.

Charles Schwab money market accounts

Charles Schwab offers a money-market account, and rates vary from 1.3% to 2.23%, which is very good compared to standard checking accounts. There is no minimum balance to open one, but you must have at least a $1 balance to earn interest. Like other Schwab accounts, one of the biggest advantages to this account is that there are no fees.

Charles Schwab CDs

Another area where Schwab shines is in certificates of deposit. The APY is often over 3%, and terms vary from one month to 10 years. The only drawback is the $1,000 minimum balance, since many other banks offer similar products with no minimum.

Brokered CDs generally earn higher interest rates than those at other banks. It’s a big plus, especially if you need an option for short- or long-term investments.

Charles Schwab IRA accounts

When it comes to IRAs, you can imagine that a brokerage would and should do well. Charles Schwab offers both traditional and Roth IRA accounts. You need a minimum of $1,000 to open an IRA, but trading and commission fees are pretty reasonable and close to the industry standard. You can have the $1,000 minimum requirement waived if you agree to deposit at least $100 monthly.

The big plus, though, is that Schwab offers several transaction-free mutual funds and even some commission-free ETFs. That means that smart investors can often  get nearly fee-free investing by sticking with those funds. They include Charles Schwab’s own funds and those managed by other companies. This makes Schwab IRAs a great retirement investment.

Charles Schwab credit cards

Charles Schwab does offer an Investor Card that is issued by American Express. It offers a great interest rate and some cash-back options. You’ll need to have a Schwab One investment account and good credit to qualify.

You can access and manage your card account through your Charles Schwab dashboard, so keeping track of spending and payments is easy.

Charles Schwab investing

Investing with Charles Schwab is, of course, really what this bank is all about, and with a full-service brokerage at your disposal, the investment options are endless. From mutual funds to stocks and bonds, to futures and forex investments, you can handle them all. Trading fees are reasonable and there is a ton of advice available via their app and website.

The bottom line

Charles Schwab is a great bank for investors who do not need to deposit cash often and don’t need a physical branch. If you choose to bank with Charles Schwab, it will help quite a bit to be tech-savvy. Even though there are Schwab brokerages in many cities, most cannot handle banking transactions and functions; those need to be handled online.

This bank may not be right for you if you don’t maintain high balances, need to deposit cash often, and if you have very simple banking needs. Overall, Charles Schwab is a great broker and a full-service bank with a good reputation, great interest rates, and perhaps best of all, very few fees, most of which can be avoided.

 

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