Charles Schwab Review 2021: Pros, Cons and How It Compares

Charles Schwab has the educational resources beginners will need to navigate investing, while sophisticated tools and $0 commissions will attract active traders.
Chris DavisOct 20, 2021

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Our Take

5.0

NerdWallet rating 

The bottom line: Charles Schwab stands out among brokers for its customer service, $0 trade commissions and large selection of mutual funds.

Charles Schwab

Charles Schwab

Fees

$0

per trade

Account Minimum

$0

Promotion

None

no promotion available at this time

Pros & Cons

Pros

  • Three platforms with no minimum or fees.
  • Above-average mobile app.
  • Extensive research.
  • Large fund selection.
  • Commission-free stock, options and ETF trades.

Cons

  • Low default cash sweep rate.

Compare to Similar Brokers

Merrill Edge
SoFi Active Investing
E*TRADE
NerdWallet rating 
NerdWallet rating 
NerdWallet rating 
Fees

$0

per trade

Fees

$0

per trade

Fees

$0

per trade

Account Minimum

$0

Account Minimum

$0

Account Minimum

$0

Promotion

Up to $600

when you invest in a new Merrill Edge® Self-Directed account.

Promotion

$5 to $1,000

in free stock for users who sign up via mobile app

Promotion

Get $600 or more

when you open and fund an E*TRADE account with code: BONUS21

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Full Review

Where Charles Schwab shines

Well-rounded offering: Charles Schwab caters to investors of all stripes: Beginner investors will appreciate the company's $0 account minimum, while the $0 commission for stock, options and exchange-traded funds will appeal to active traders.

Extensive research: Schwab receives high marks for its research offerings, which include Schwab’s own equity ratings, in addition to analyses and commentary from the industry’s top research firms.

Fund selection: Schwab has a large selection of funds with low expense ratios and funds that charge no transaction fees.

Where Charles Schwab falls short

Smaller selection of fractional shares: Schwab offers access to fractional shares of S&P 500 stocks. While these may be the stocks many investors are interested in, other brokers that offer fractional share trading provide a larger selection.

Charles Schwab is best for:

  • Beginner investors.

  • Advanced traders.

  • Investors seeking no-minimum index funds.

  • Investors who rely on premium research.

Charles Schwab at a glance

Account minimum

$0.

Stock trading costs

$0.

Options trades

No base commission; $0.65 per contract.

Account fees (annual, transfer, closing, inactivity)

No annual or inactivity fee; $25 for full or partial transfer out of assets, $15 if this is done online.

Number of no-transaction-fee mutual funds

Over 4,200 no-transaction-fee mutual funds.

Tradable securities

  • Stocks.

  • Bonds.

  • Fractional shares

  • CDs

  • Mutual funds.

  • ETFs.

  • Options.

  • Futures.

Crypto offering

No access to cryptocurrencies, but clients can trade crypto-based, products, such as Bitcoin futures.

Trading platform

Three platforms offered with no trade minimums or fees: StreetSmart Edge (desktop platform), Schwab.com and StreetSmart Central.

Mobile app

Two mobile apps with above-average capabilities: Schwab Mobile and StreetSmart Mobile.

Research and data

Research from 14 providers including Moody's, Morningstar, Recognia, Credit Suisse and Thompson Reuters, plus more in-house generated commentary and tools.

Customer support options (includes how easy it is to find key details on the website)

Phone, email, chat 24/7, and in-person support available at branches Monday through Friday 8 a.m. to 5 p.m. Some branches have Saturday hours.

More details about Charles Schwab's ratings

Account minimum: 5 out of 5 stars

Schwab has no account minimum, and offers access to over 4,000 funds with minimum investment requirements of $100 or less.

Stock trading costs: 5 out of 5 stars

Like many brokers today, Schwab has no commissions for stock, options and ETF trades.

Options trades: 4 out of 5 stars

Schwab doesn’t charge any per-trade commissions for options, but it does charge $0.65 per contract. This is a typical charge, and is on par with most other brokers.

Account fees: 4.5 out of 5 stars

Thanks to a change within the last year, Schwab now has some of the lowest account fees around — if you’ll have to pay them at all. Schwab doesn’t have any annual or inactivity fee, and the fee to transfer assets out of the account is $25. If you do it all online, it’s only $15.

Number of no-transaction-fee mutual funds: 5 out of 5 stars

Schwab delivers access to over 4,200 no-transaction fee mutual funds, and within its own proprietary lineup of index funds and ETFs, Schwab now offers some of the lowest expense ratios available. All told, nearly 500 funds on Schwab's platform have expense ratios of 0.50% or below.

The selection is also easy to navigate. Schwab's ETF Select List helps narrow the choices, featuring picks for the best fund in selected categories (more on this below). You can sort the list by feature, including expense ratio, Morningstar category and benchmark index. There's also the Personalized Portfolio Builder tool, designed to help you create a diversified portfolio based on your financial goals, risk tolerance and time horizon.

Tradable securities: 4 out of 5 stars

Charles Schwab has a large selection of tradable securities, including mutual funds, ETFs, index funds, bonds, options and futures. It doesn’t, however, offer forex trading, as some comparable brokers do.

Schwab Stock Slices offer access to fractional shares, so investors can buy a small slice of a stock rather than paying the full share price. For example, if a stock costs $100 a share, and you buy a $10 slice, you’d own 10% of a share. Single slices are available for as little as $5, and investors can buy up to 10 slices at a time. However, this feature is only available for stocks of S&P 500 companies. Similar brokers that offer fractional trading, like Fidelity and Interactive Brokers, don't have such restrictions on their fractional share offerings.

Crypto offering: 2 out of 5 stars

Charles Schwab clients aren't currently able to trade cryptocurrencies directly. However, the broker does offer access to over-the-counter crypto-based products, such as Grayscale Bitcoin Trust.

Trading platform: 5 out of 5 stars

In addition to the basic trading capabilities on Schwab's website, the broker offers several robust trading platforms, all of which are free and available to all trading services clients.

Its premier offering is StreetSmart Edge, a customizable platform available with downloadable software or accessible via cloud-based technology online. It also has a suite of programs called StreetSmart Central for options trading. Finally, the broker offers mobile trading, available on either the Schwab or StreetSmart Mobile apps.

Both StreetSmart and Schwab.com provide access to research and robust tools catering to various types of traders. Basic trades can be placed on Schwab's website, while the other platforms offer more sophisticated features.

StreetSmart Edge is designed for efficiency, with simple navigation and customization that's designed to match your trading style. The many advanced features include robust charting tools, the ability to trade multiple securities in the same order window (and with a variety of order types) and tools to monitor your market exposure. The customizable features of this platform are notable, including the Balance Bar, which gives you a quick overview of your account and buying power, along with the ability to create and edit multiple trading layouts.

Finally, you can quickly research a symbol, view streaming market data and enter an order.

Schwab.com lets traders monitor their portfolio and the markets, access research and view technical data. It features an intuitive trade ticket for stock, ETF and options orders that incorporates current market information.

Mobile app: 5 out of 5 stars

Schwab offers two mobile apps: Schwab Mobile and StreetSmart Mobile. It should be noted that while Schwab’s mobile app is for the most part highly rated, the StreetSmart Mobile app lags among user reviews, especially compared to the Schwab Mobile app.

Research and data: 4.5 out of 5 stars

Schwab provides its own equity ratings, along with reports from Morningstar, Credit Suisse, MarketEdge, Ned Davis and others. In addition to real-time news and earnings reports, the broker offers a variety of research reports and market commentary authored by in-house experts, as well as a quarterly magazine free of charge.

Schwab’s investment screeners are easy to use and let you save your screens. Select Lists, like the previously mentioned one for ETFs, are compiled by the company’s experts and released quarterly to give you a pre-screened selection of mutual funds and ETFs. The funds on the list are divided by category, so you can easily see the company’s picks for, say, large-cap stock mutual funds.

The company is also integrated with Google Assistant — you can ask Google for stock quotes, general market updates and more — and has an Amazon Alexa skill that provides similar information, including the ability to create and get updates on a watch list.

Customer support options: 4.5 out of 5 stars

Customers have plenty of ways to get in touch. Phone, email and online chat are all available 24/7. If you prefer to speak to someone in person, there are more than 400 Charles Schwab branches around the country, with some even open on Saturdays.

Is Charles Schwab right for you?

Schwab checks the boxes of every type of investor: Stock traders will appreciate $0 trading commissions and sophisticated platforms, research and tools; beginner and fund investors will benefit from the wide selection of inexpensive and low-minimum mutual funds and index funds. For those who want investment management, Schwab has a robo-advisor and financial advisor offering, Schwab Intelligent Portfolios.

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Each factor can involve evaluating various sub-factors. For instance, when gauging the investment selections offered by robo-advisors, 80% of the score is based on the potential for diversification (how well-diversified a resulting portfolio of investments could be) combined with the availability of specialty portfolios and level of customization for investors. Expense ratios form an additional 10% of the score, and low or no management fee the remaining 10%.

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INFORMATION UPDATES

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Disclosure: The author held no positions in the aforementioned securities at the original time of publication.