Charles Schwab Bank Overview
Charles Schwab Bank is a subsidiary to the Charles Schwab Corporation. Schwab Bank is what is referred to as an online bank.
This is representative of the fact that the only physical bank location is in Reno, NV. Accordingly, Schwab Bank offers two main banking products
amongst an array of mortgage products. These two products are as follows: Schwab Bank High Yield Investor Checking Account and Schwab Bank High Yield
Investor Savings Account. As a result of the abovementioned fact of Schwab Bank being an online bank, the biggest downfall to Schwab bank’s accounts is
not being able to go to a branch and take out cash, albeit he or she could travel to Reno, NV. What is more, account holders cannot deposit physical cash into the accounts.
Benefits to Schwab Bank Products
Despite the pitfalls of using Schwab’s online bank, the added benefits to follow more than make up for the aforementioned dilemmas. First and foremost both
of the Schwab bank accounts have unlimited worldwide ATM fee reimbursement once a month. This makes up for the problem of not being able to take out cash at
a local branch. Countless times one will find himself or herself needing cash and realize he or she can get the funds from any local ATM as the fees will be
100% reimbursed. Second, funds can be deposited through direct deposit from most sources of income, including Social Security. Additionally, if an account
holder owns a smart phone, the account holder can apply for mobile deposit and take pictures of the front and back of a check and easily deposit the check
through their phone. Third, the bank boasts to maintain a competitive level of interest rates. The current APY (i.e., Annual Percentage Yield) for the
Investor Checking Account is .10% and the current APY for the Investor Savings Account is .12%.
These rates are a variable rate and were substantially
higher when the interest rate environment differed. Fourth, the accounts are free to open and do not carry any service fees or account minimums.
In order to open an account, one must open a Schwab One Brokerage Account which will be linked to the underlying Investor Checking Account. This process
can be completed online. Having a banking account can be a nice benefit when it is linked to a brokerage account. For instance, if one has an IRA,
he or she may take their Required Minimum Distribution by simply transferring cash into one of their bank accounts. What is more, if an account holder
fancies a stock trade, mutual fund trade, or other security trade, he or she can transfer funds instantly from their Investor Checking Account into their
brokerage account and have cleared funds ready instantaneously; given this transfer occurs during business hours. Fifth, the account owner receives free
standard checks, a free Visa Platinum debit card, and access to free online bill pay. Finally, Schwab bank products are FDIC insured and grant the depositor
protection up to $250,000.
Schwab International Account Features
For those individuals that have international financial affairs, Schwab Bank has features to cater to those needs as well. For example, if an account
holder needs to receive a wire transfer that is denominated in a foreign currency, Schwab has intermediary banks throughout the world to receive such
transactions and convert the foreign currency to US dollars. Specifically, if an account holder needed to wire Pounds Sterling to their Schwab account,
he or she could do that by using Lloyds Bank in London, the intermediary bank, to complete the conversion to dollars and transfer free of charge.
This is a nice feature as some banks will complete wire transfers free of charge if they’re local transfers. The aforementioned example exhibits a local
transfer. Or, if the account holder prefers check, a check denominated in a foreign currency can be brought to a local Schwab branch (i.e., Charles Schwab
brokerage branch) where it can be sent for conversion and dollars will be deposited in their account.
Schwab vs Etrade Banking Comparisons
In a direct comparison with Etrade Financial’s Max-Rate Checking,
notably Schwab’s greatest competitor, Schwab Bank’s Investor Checking seems to
clearly have the upper hand. Etrade offers a tiered APY that starts at .01% for balances below $5,000 and .05% for balances above $5,000.
Moreover, Etrade has a $100 minimum to open an account coupled with a $5,000 minimum balance to avoid a $15 monthly fee. Etrade does offer
other opportunities to have the fee waived. These scenarios include: direct deposit totaling greater than $200 per month, or $50,000 in asset
value with linked Etrade accounts.
The following chart depicts some of the most competitive online checking accounts available:
Schwab Online Checking Accounts
|
Charles Schwab |
Etrade |
Ally Bank |
CapitalOne360 |
| Rate |
0.10% |
0.01% < $5,000 > 0.05% |
0.4% < $15,000 > 0.75% |
0.2% < $50,000 > 0.8% > $100,000 > 0.85% |
| Minimum Balance |
n/a |
$5,000 |
n/a |
n/a |
| Account Service Fees |
n/a |
$15/Month |
n/a |
n/a |
| ATM Fees |
Reimbursed |
Reimbursed |
Reimbursed |
40,000 Free ATMs |
|