So, you’re thinking about setting up a Charles Schwab banking account. I’ll hold off on my congrats; that could be a smart or frustrating decision, depending on your circumstances.
I’ve had a Charles Schwab banking account since October 2018, so I’ve been ’round the Schwab block a time or two.
Since I’m a digital nomad and Schwab has a fee-free ATM card, I wouldn’t trade my Schwab account for any other bank option currently on the market.
But that doesn’t mean I think Schwab is perfect.
If you’re short on time, here’s the bottom line: Schwab is a no-brainer choice for Americans who travel domestically or internationally. Even if you don’t fall into this category, setting up a Schwab banking account may be the right fit for you.
Schwab didn’t pay or offer me perks for writing this article. As far as I’m aware, they don’t even know I exist.
So, enjoy my 100% uninfluenced opinion 🙂
An Overview of Charles Schwab Banking
The chart below will give you a glance at some of the topics I’ll be covering in this article.
|Who can apply?
|U.S. citizens and residents
|Schwab brokerage account
|Yes. 1+ million in 200+ countries and territories
|Frequency of ATM fee rebates
|Foreign transaction fees
|Minimum account balance
Note that Schwab has country-specific restrictions. Therefore, if you’re not an American citizen or resident, you won’t be able to bank with Schwab.
The 13 Must-Knows of Charles Schwab Banking
A friend recommended Schwab to me years ago when we were living in Peru. All it took were the words “no ATM fees” to convince me to sign up for an account.
I’ve learned a lot about banking at Schwab since then. I hope the information below helps you pick the best-fit bank for your needs.
1. There Aren’t In-Person Schwab Branches
If you typed in “Charles Schwab bank near me” and are coming up with zero options, that’s because they’re aren’t any—in the traditional sense, at least.
Schwab only offers in-person brokerage and financial services at their brick-and-mortar locations; there’s no such thing as a physical Schwab bank.
However, if you need to cash a check and don’t want to do it via their mobile app, you can bring your check to a Schwab brokerage office. The staff will then deposit your check into your brokerage account (more on brokerage accounts next) and you can then transfer the money for free into your checking account.
Furthermore, Schwab doesn’t have its own network of ATMs.
Instead, they’ve partnered with several ATM networks to make it easy for their customers to withdraw money from practically any place around the globe. I’ll talk more about this shortly.
2. You Must Have a Brokerage Account
If online banking feels too millennial-oriented to you, things are about to get even wonkier: Before you can set up a Charles Schwab checking account, you must first apply and get approved for a brokerage account.
There’s open enrollment for a Schwab brokerage account, and the eligibility requirements are basic. The main requirement is that you must be an American citizen or resident.
Whether you already have brokerage services with a different company or the thought of joining investors in creating a portfolio with ETFs and mutual funds makes you queasy, rest easy. Schwab doesn’t require you to hold money in your brokerage account.
That said, their brokerage requirement feels cumbersome to those who only want a Charles Schwab banking service; you can’t apply for a checking account until you get approved for a brokerage account.
The process typically takes between five to ten business days.
You’ll then be able to deposit money, set up direct deposits, and apply for Schwab’s Platinum debit card.
Note that you’ll need to fund your checking account with $100 before being able to apply for their card. After that, there aren’t any fees if your account drops below $100.
A Cautionary Tale About Routing Numbers
Since Charles Schwab Bank is a banking subsidiary of Schwab’s investment services, your Schwab account will come with two separate routing numbers: One for your brokerage account and the other for your checking account.
It’s easy to mistakenly use your brokerage routing number when you had intended to use your checking account number.
I made this error when paying my quarterly estimated taxes. Luckily, since I have my brokerage account and all the market volatility that comes with it managed by a different company, my routing number mistake didn’t take money from my investments.
But, of course, the government didn’t care about my oversight. So, I had to pay a fine since I realized my mistake after taxes were due.
Needless to say, since you’ll have a linked account with separate routing numbers for your Schwab checking and brokerage accounts, take care to give people the right number.
3. You’ll Never Have to Pay an ATM Fee Again
Schwab’s unlimited ATM fee rebates attract many people to its checking account services. By holding a Schwab debit card, you’ll have access to fee-free cash withdrawals at over one million ATMs across more than 200 countries.
Holy moly, that’s a lot!
Even though I’ve had my Schwab bank Visa card for years, I still get excited when I see rebates land in my checking account on the last business day of each month.
Best of all, you don’t have to do anything to receive the rebate. Simply choose ATM operators that Schwab is a partner with, including:
Furthermore, the Schwab Visa card doesn’t charge foreign transaction fees. Therefore, you can use your debit card to pay for items at retail stores without worrying about surprise fees.
That said, it’s always best to pay merchants with a credit card. It’s faster to apply for a refund with your credit card company that way in the case of fraud.
Tip: Never click “accept” when an ATM abroad offers to convert your withdrawal from USD to the local currency. Let Schwab do this for you. That’ll save you money compared to letting the ATM do it.
4. Cash Deposits Are Non-Existent
You can withdraw cash using a Charles Schwab bank checking account, but you can’t deposit cash.
That might not be a big impediment for some people, especially as the world moves to more electronic services with Zelle and other online deposit methods.
Nevertheless, if you frequently have cash that you need to deposit into a bank, stop reading this article and research other banking options.
Even though I rarely have USD in cash that I need to deposit into my Schwab account, the situation occasionally arises. In those events, I’ve asked family members to write me a check in the amount of cash I give them.
I also encourage you to ask anyone who wants to give you cash to send you the money via Zelle or write you a check.
In the case of a check, you’ll have access to a Schwab mobile deposit service, which I’ll talk about shortly.
5. No Minimum Account Balance Requirements
One of the most attractive aspects of Charles Schwab banking is that they don’t have minimum balance requirements. That’s the case for both Schwab’s brokerage account (a prerequisite for banking with them) and checking account.
Although I was sold on switching my bank to Schwab when I found out about their fee-free ATM withdrawals, I was thrilled to no longer have to juggle the minimum account requirements that my old bank had.
The timing was perfect. I had just lost my job to the pandemic, and no longer having reliable monthly ACH direct deposits meant that Bank of America required me to have a minimum balance of $5,000.
Not cool, Bank of America.
Needless to say, even though there are aspects of Schwab’s banking services that are a hassle compared to traditional banks, I’m grateful that I don’t have to worry about account minimums, overdraft fees, and other service fees.
6. Jarring Balance Charts
Few things in life make my heart drop more than logging into my Charles Schwab checking account.
It’s unfortunate, given how frequently I use it.
The reason for my Schwab-induced fears is that they showcase the amount of money you have in your checking account in a graph-like form, the same way they do Schwab brokerage accounts.
That means there’s a peak in the graph every time you deposit money.
And there’s a dip every time you withdraw money.
Despite my best effort, I haven’t gotten used to seeing money meant for my living expenses in a roller-coaster ride format. Here’s an example, with the numbers erased.
Can you imagine logging into your checking account and seeing that your 6-month monthly change is down 77.61%?
If you choose to bank with Schwab, you might have to start imagining that.
Needless to say, Schwab could use a huge systems upgrade in how they showcase balances for their checking account customers. But since their main product is brokerage services, my guess is that it isn’t at the forefront of their mind.
7. The Mobile App Is Easy to Navigate
Ready for a silver lining?
You don’t need to be a tech wizard to use the Charles Schwab mobile app. All you need is a device that connects to WiFi and a cell phone or tablet.
Although you’ll see the scary-looking chart when you log into the Charles Schwab app, you’ll find tabs that make navigating to different sections of your investor checking account easy.
Schwab also makes it simple to make mobile check deposits, and they’ll send you an email confirmation once the transaction initiates.
It’s also easy to rotate between looking at the income and expenses in your checking account and checking how your stocks are doing in your brokerage account if you have them.
I almost entirely rely on a mobile connection to do my Schwab banking from my phone. They get one thumb up for me (the other thumb is reserved for if/when they take down the checking account chart).
8. Decent APY
If you ask me, the Schwab high-yield checking account is a bit of a misnomer.
Yes, Schwab offers a higher-than-average annual percentage yield (APY) compared to many of its competitors in the traditional banking space.
But when you compare Schwab’s APY to 100% online banks that don’t have any connection with brick-and-mortar companies, this APY amount seems low.
At the time of this writing, Schwab is offering a 0.45% APY for anyone keeping at least one cent in their checking account.
That said, Schwab doesn’t offer a bank guarantee that its APY number will remain consistent.
This could work in your favor if interest rates continue to rise, as the APY will increase. But what goes up must come down, so the APY will inevitably fall if you keep your bank account open long enough.
Therefore, it’s best to approach your Charles Schwab banking with the attitude that a little interest from the money sitting around your checking account is nice, but you won’t be able to retire early from it.
Since Schwab’s APY frequently changes, I encourage you to check this page for the most up-to-date APY number.
9. Savings Account
Schwab offers the option for its customers to open a Schwab high-yield savings account in addition to a checking account.
But here’s the thing: The Schwab bank high yield investor checking account APY is currently only 0.48%.
Yes, you read that right—it’s a whole 0.03% higher than their checking account.
Admittedly, these numbers fluctuate. And given that interest rates are on the rise, it works in favor of APYs in both checking and savings accounts.
But the bottom line is that if you’re looking for a high-yield investor savings account, it’s often best to turn to online banks, where the APY is often over 1%.
10. Money Transfers Move at “Bank Pace”
I frequently move money between my Schwab checking account and other bank accounts.
My goodness, it’s painful.
To be fair, having to wait multiple business days for wire transfers to clear is typical of traditional banks, regardless of whether there are periods of peak demand. Cryptocurrency, we can only hope you get your ducks in a row ASAP.
In the meantime, you’ll need to plan ahead if you want to transfer money to or from your Schwab account and a bank at another company. If you’re transferring money within your Schwab account, you shouldn’t experience this lag.
Since I use my Schwab card for ATM rebates when I travel, I only keep a small amount of money on it.
But that strategy has almost gotten me into a pickle on several occasions when I’m in destinations that don’t accept credit cards and misjudge how long it will take for a wire transfer to reach my Schwab account. #lessonnotlearned
11. Excellent Security Measures
I feel comfortable keeping my money in a Charles Schwab checking account, and I know I’d feel the same if I managed my investments with them too.
As with other legitimate banks and brokerage companies in the U.S., Schwab has the following qualifications:
- Member FDIC
- Member SIPC
- Equal Housing Lender
I have peace of mind when wandering around the globe, knowing that my Schwab app is protected with biometric screening, preventing unauthorized access if someone were to try to access my account.
If you’re on the fence about Charles Schwab banking, this also might make you feel at ease: Schwab has a security guarantee policy.
The policy states that should unauthorized activity lead to fraud and a loss of money, Schwab will cover your affected funds.
12. Responsive Customer Service
In the rare cases when I’ve needed to contact Schwab’s customer service, I’ve always had an excellent experience.
Since I’m usually abroad, it’s easiest for me to ask questions about my Charles Schwab bank account via chat. Schwab’s customer service is open 24/7, so time zone differences aren’t a hindrance either.
13. Easy to Expand Your Banking
If you enjoy having all of your banking, investing, and lending needs met with one company, Schwab is a strong contender. Aside from their checking, savings, and brokerage accounts, they can also help you set up:
- Small business retirement
- Credit cards
I don’t have the Charles Schwab American Express card, but it’s on my radar. You can view the full list of Schwab’s account services here.
Schwab calls the combination of having multiple accounts with them a Schwab One account. So, you’ll automatically be part of Schwab One if you have a checking account since you’ll also have a brokerage account.
Aside from applying for a Schwab credit card down the road, I don’t plan on using Schwab for lending services, investment services, or their other offerings.
I’m grateful that my Schwab debit card saves me money when I travel. But in the mid to long run, I have my hopes set on online banking startups.
Is It Worth Having Two Bank Accounts?
Many people, myself included, choose to bank with Charles Schwab because of the money you can save in ATM fees when traveling. However, you may find it best to treat Schwab as a secondary account.
That’s especially the case if you need to deposit cash frequently or want to go to an in-person bank branch.
That said, if you’d like Schwab to be your go-to stop for your banking needs and you have investments elsewhere, it might be worth speaking with an investment manager about transferring your brokerage funds.
Since you’ll have a linked investor checking account to your Schwab brokerage account, transferring money between your checking and brokerage accounts would be easy.
FAQs About Charles Schwab Banking
Below are answers to common questions people have who want to open a Schwab bank account. If I don’t answer your question here, leave it in the comments and I’ll do my best to help.
Why should you choose Charles Schwab?
Charles Schwab is a great choice for people wanting an FDIC-insured bank with no monthly fees and zero minimum balance charges. It’s an excellent banking option for travelers, for you’ll receive unlimited rebates in ATM fees in over 200 countries.
Is it free to open a Charles Schwab account?
It’s free to open a Charles Schwab account. You’ll need to open both a brokerage and checking account, both of which are fee-free, even if you keep a $0 balance.
For whom is Charles Schwab bank best for?
Charles Schwab bank is best for travelers, people who want to invest without moving their money between banks, and those seeking financial advisory services. Schwab bank isn’t a good option for people who need to deposit cash often and enjoy visiting a bank in person.
How much money do you need to open a Charles Schwab account?
You don’t need any money to open a Charles Schwab account. However, you must be able to prove that you’re a U.S. citizen or resident.
How do I deposit money into my Schwab account?
To deposit money into Schwab, log into your online account and click on “Deposit.” A prompt will ask if you want to deposit into your brokerage or bank account. Select “bank account,” and a page will appear where you can electronically submit a check.
Alternatively, you can deposit money into your Schwab account via an ACH direct deposit or wire transfer. In both cases, you’ll need to provide the sender with your account and routing numbers.
How long does it take Schwab to approve an account?
Schwab states that it takes five to ten business days to approve an account. From my experience, it took them longer to approve my brokerage account than my checking account. Remember, you’ll first need to open a brokerage account before you can apply for a checking account.
Schwab doesn’t immediately approve applications because your information undergoes rigorous screening to prevent fraud.
Is my money safe in a Charles Schwab account?
Although one should never say never, your money should be very safe in a Charles Schwab account. Schwab is a household name with U.S.-approved licenses to operate in the United States.
Should it be proven that fraud occurred with your account at no fault to you, Schwab’s FDIC insurance should help you recoup your funds.
Is Charles Schwab Banking Right for You?
The Schwab bank investor checking account isn’t perfect. But it could be the best bank service currently on the market if you travel frequently or want brokerage products where you keep your spending money.
If you’re interested in learning the nitty-gritty details about what makes Schwab so great for travelers, check out my article on the Charles Schwab Debit Card for Travel.
I’ve also put together a guide highlighting 21 Pros & Cons of the Charles Schwab Debit Card.
Since Schwab’s Visa debit card is one of the biggest perks to its checking account offerings, both of these articles will help deepen your understanding of how it operates and whether it’s worth it for your situation.
Do you have questions about banking at Charles Schwab? Leave a comment and I’ll be happy to help.