Charles Schwab Pledged Asset Line (SBLOC) Review (2025)

Item: Charles Schwab Pledged Asset Line
Rating: 4
Author: Chad Morris

Charles Schwab Pledged Asset Line review: SBLOC interest rates, borrowing money with securities collateral, risks of lending.

Schwab Bank's Pledged Asset Line®

Key Ideas:

• Schwab investors can get a line of credit using their investments as collateral, called a Pledged Asset Line (SBLOC).

• Schwab customers can borrow money with this line of credit and use their investments as security.

• If Schwab clients have enough money in their accounts, they can get lower rates on their Pledged Asset Line.

Schwab customers can use their investments as security to get loans. The interest rates are okay, but not the lowest. Here’s how it works:

Overview of Securities-Based Lending at Charles Schwab

Charles Schwab has a program called the Pledged Asset Line® (PAL). With this service, you can borrow money by using your investments as collateral. Like any other loan, you have to pay interest, and there are some rules to follow.

Schwab’s PAL is an uncommitted line of credit. This means Schwab does not have to approve every loan or withdrawal; it could say no if there are issues in the market or if it doesn’t have enough money to lend at the time.

This line of credit can be used for any reason. It’s a revolving line, so you can borrow, pay back, and borrow again, up to your limit. The smallest line of credit Schwab offers is $100,000. The first time you borrow, you must take out at least $70,000, but you can pay any part of it back the next day. After the first withdrawal, there is no minimum amount you have to borrow.

Eligible Collateral

All loans with Schwab’s PAL must be backed by investments. These can be cash or certain securities. You can’t use futures or forex to back a PAL loan.

Not all types of investments are allowed as collateral.

Preferred stock
Leveraged ETFs
Annuities
Stocks under $3
Options
Restricted or control stock
Bonds from The Charles Schwab Corporation

You also can’t use money or investments in retirement accounts as collateral.

To see if a certain asset can be used as collateral for a Schwab line of credit, go to Schwab’s Advance Rate Lookup tool. Enter the ticker symbol, and the tool will show if the asset is eligible.

Free Charles Schwab Account

Visit Schwab Website

Risks Associated with Securities-Based Lending

Before using your investments as collateral for a loan, it’s important to know the risks. The biggest risk is that Schwab can sell any investment you used as collateral, without telling you, if you don’t pay back the loan on time. Schwab will choose which investments to sell. Selling investments could also mean you pay taxes you didn’t expect. But, sometimes a PAL can help you avoid taxes because you might not need to sell your investments to get cash.

Setting up the PAL at Schwab

If you’re comfortable with the risks, setting up a PAL is simple. First, you need a regular Schwab brokerage account. It can be individual, joint, trust, or for an organization. Move all cash and investments you want to use as collateral into this account. Then, change the account to a Pledged Account. The account number stays the same, but features like margin, options trading, check writing, bill pay, and debit cards will be removed.

To do this, log in and go to the PAL conversion page. Scroll down and click the blue button to start. Follow the instructions to convert your account to a Pledged Account.

Schwab Pledged Asset Line

If you have an organization account to convert, or want to use several accounts as collateral, you can’t use the online form. You need to call Schwab at 888-725-3630 and complete the process over the phone.

Schwab PAL Interest Rates

After your Pledged Account is set up and you’ve put enough collateral in it, you can borrow money. The interest rate depends on how much you borrow. Rates start at 8.42% and go as low as 6.42% for loans over $2.5 million.

If you have more than $250,000 at Schwab (in both bank and investment accounts), you can get a discount. The discount starts at 0.25% and goes up to 1.00% if you have more than $10 million.

Getting Help

Schwab has a special contact form to reach a loan specialist. Fill out the form and a Schwab loan officer will get in touch to answer your questions about the Pledged Asset Line.

Charles Schwab Website