Charles Schwab is primarily known as an investment platform, but it also has a line of banking products including checking accounts, savings accounts and CDs. Charles Schwab CDs are available with a variety of terms and a reasonable minimum deposit requirement.
Schwab CDs
APY Range
Minimum Deposit
Terms
Our Rating
Schwab CDs
APY Range
Minimum Deposit
Terms
Our Rating
Charles Schwab CD Rates
By their nature, brokered CDs tend to be highly competitive compared to other banks. This is because Charles Schwab has access to products from across the marketplace, including exclusive brokerage-only products and deals.
Schwab offers some of the highest rates for 6-month CDs.
CD Term | APY |
|---|---|
1-3 Months | 5.51% |
4-6 Months | 5.47% |
7-9 Months | 5.44% |
10-18 Months | 5.45% – 5.35% |
How Charles Schwab CDs Work
The key difference between Charles Schwab CDs and regular bank CDs is that Charles Schwab offers brokered CDs. Essentially, this means that you can access CDs from hundreds of different banks who offer exclusive deals for brokers.
Charles Schwab CDs are available with terms of one month to five years, with the higher yields offered with the longer term CDs allowing you to lock in your rate. There is a minimum deposit requirement of $1,000 and you can invest further increments of $1,000, creating a reasonable barrier to entry. The firm can also assist you in creating CD ladders to ensure that you have CDs that mature periodically according to your investment goals.
Whether you're looking for short or long-term CDs, you can speak to a Charles Schwab specialist to obtain non commissioned, objective guidance on CD strategies including ladders and other fixed income products to choose the right investment products to meet your goals.
One of the attractive features of Charles Schwab CDs is that there are no early withdrawal penalties. If you need access to your funds before the CD matures, Charles Schwab will help you to sell your CD via its secondary market. This involves the team requesting bids for your CD and they will contact you with the highest bid.
Should you choose to accept the bid, you'll receive this amount plus any of the accrued interest. However, there are no guarantees that you will get your original investment amount back. If market conditions have changed and new issue CDs are offering higher rates, you are less likely to get back your full investment amount.
Sign Up for
Our Newsletter
Are Schwab CD Rates Competitive Compared to Banks?
When you compare Charles Schwab CD rates with the CD rates from traditional banks, you’ll notice that the rates are several times higher.
Traditional banks tend to offer less than the national average rate, which is currently 1.83%, but you can find banks such as Citi, Bank Of America, or Wells Fargo offer decent rates, but less compared to Schwab.
On the other hand, the top-rated online banks tend to offer high returns, which are comparable with Charles Schwab CD rates.
CD APY Range | Minimum Deposit | |
|---|---|---|
Marcus | 3.90% – 5.10% | $500 |
First Internet Bank | 4.14% – 5.26% | $1,000 |
Barclays Bank | 3.50% – 5.00% | $0 |
PNC Bank | 5.05% | $1 |
Quontic Bank | 4.30% – 5.05% | $500 |
PenFed Credit Union | 2.00% – 4.35% | $1,000 |
Alliant Credit Union | 5.08%-5.20% | $1,000 |
Sallie Mae | 5.00% – 5.10% | $2,500 |
Bread Financial | 4.25% – 4.75% | $1,500 |
Capital One | 3.90% – 5.00% | $0 |
Chase Bank | 3.00% – 4.75% | $1,000 |
Discover Bank | 3.75% – 4.30% | $2,500 |
CIT Bank | 0.30% – 3.50% | $1,000 |
Ally Bank | 3.00% – 4.50% | $0 |
Citi Bank | 0.05% – 4.75% | $500 |
Connexus Credit Union | 3.51% – 4.85% | $5,000 |
Merrick Bank | 4.20% – 5.40% | $25,000 |
Fidelity | 4.65% – 5.40% | $1,000 |
Charles Schwab | 5.35% – 5.51% | $1,000 |
Vanguard | 4.90% – 5.50% | $1,000 |
BMO Harris | 0.05% – 4.50% | $1,000 |
Wells Fargo | 4.25%- 4.75% | $2,500 |
Synchrony Bank | UP TO 5.10 % | $0 |
Citizen Bank | 2.75% – 5.25% | $1,000 |
TD Bank | 1.00% – 5.00% | $250 |
Navy Federal | 4.70% | $1,000 |
LendingClub | 4.00% – 5.15% | $2,500 |
Charles Schwab CD vs Savings Rates
Charles Schwab does have a savings account, but it is not particularly attractive when compared to many of the savings account offerings from online banks and some traditional banks.
The rate is low compared to Charles Schwab CDs, but you have the flexibility to add and withdraw funds to the account as you please. You’ll even have an ATM card with unlimited rebates for ATM fees worldwide. The account also has no monthly fees or account minimums.
So, while the rate is far lower than the Charles Schwab CD rate, if you’re looking to build a savings fund, the savings account is a more appropriate product. However, it may be worth your while to shop around, as there are online savings accounts offering similar feature sets and higher rates.
About Charles Schwab
Charles Schwab is a multinational finance company that is best known for Charles Schwab investment platform, but it does have a limited banking product line, including checking and savings accounts, home loans, and credit cards.
The institution has a history dating back almost 70 years. Unfortunately, it does not have a great reputation with consumers. The current Trustpilot rating for Charles Schwab is poor and there are numerous complaints about customer service issues and product problems.
So, unless you are an existing customer of Charles Schwab, you may want to think carefully about whether Charles Schwab CDs are the right choice for you.
FAQs
Does Charles Schwab Offer No Penalty CDs?
No, as Charles Schwab CDs are brokered CDs, which means that if you need to release your funds, you can sell your CD on a secondary market without paying a standard fee. You can check out other no penalty CDs.
Does Charles Schwab offer promotions on CDs?
Charles Schwab offers access to CD products from across the marketplace, so while there are no official promotions, you may be able to access promotional rates from various banks.
Do Charles Schwab CDs come with a grace period?
When your CD matures, the funds will be released into a settlement account, so there is no grace period.
Once the funds are in your settlement account, you can choose to withdraw the funds or reinvest into another CD.
How is Charles Schwab CDs interest calculated?
The interest on Charles Schwab CDs is not compounded, since many products are designed to offer an income.
This means that you can have interest disbursement on a monthly, quarterly or annual basis depending on the CD term.
How does the Charles Schwab early withdrawal penalty work?
There is no early withdrawal penalty as such, since you can sell your CD on the secondary marketplace.
However, there are no guarantees that you will get your initial investment sum back, as the bids will depend on the current market conditions. You’ll receive notification of the highest bid and then you can decide if you wish to sell.
Related Posts
How We Rate Certificates of Deposits: Our Methodology
The Smart Investor team has thoroughly examined certificate of deposit (CD) offerings from various banks, considering multiple factors to provide a comprehensive evaluation. Here's how we rated them across four key categories:
-
CD Rates (50%): We meticulously analyzed the interest rates offered by each bank on their certificate of deposit (CD) products. Higher ratings were awarded to banks offering competitive rates that provide maximum returns for customers' investments. Factors such as the yield curve, current market conditions, and consistency of rates were considered to assess the attractiveness of each bank's CD rates.
-
CD Features (30%): This category evaluated the features associated with each bank's certificate of deposit offerings. Factors considered include the variety of terms available, early withdrawal penalties, minimum deposit requirements, and any additional features or benefits. Higher ratings were given to banks offering a diverse range of CD terms, reasonable early withdrawal fees, and flexible options to meet customers' investment needs.
-
Customer Experience (10%): A positive customer experience is paramount, even when investing in CDs. We assessed each bank's performance in this area, considering factors such as the ease of opening a CD account, the responsiveness of customer service, and overall user satisfaction. Higher ratings were assigned to banks with efficient account opening processes, helpful customer support, and a track record of satisfying customers.
-
Bank Reputation (10%): The reputation of a bank is a critical consideration when investing in CDs. We evaluated each bank's reputation based on factors such as financial stability, regulatory compliance, and public perception. Higher ratings were given to banks with a solid reputation for reliability and trustworthiness, ensuring customers' investments are safe and secure.
By considering these categories and assigning appropriate weights to each, our review aims to provide valuable insights to help individuals make informed decisions when investing in certificate of deposits.
