Schwab Bank's Pledged Asset Line®
Key Ideas:
• Schwab investors can access a securities-based line of credit (SBLOC), which Schwab calls a Pledged Asset Line.
• By using eligible securities as collateral, Schwab customers can borrow through a secured line of credit.
• Schwab clients with enough qualifying assets in eligible bank and investing accounts may receive discounts on SBLOC rates.
Investors at Charles Schwab can use eligible securities as collateral for a secured line of credit with variable interest rates. Here’s the full story:
Overview of Securities-Based Lending at Charles Schwab
Charles Schwab offers a securities-based lending program known as the Pledged Asset Line® (PAL). Through this service, customers can borrow against eligible non-retirement assets without immediately selling those investments. As with any borrowing arrangement, interest charges and important restrictions apply.
Schwab’s PAL is an uncommitted demand line of credit. This means Schwab is not required to approve every loan request under the program, and it can demand repayment at any time for any reason or no reason.
The SBLOC is a non-purpose program, which means the proceeds can be used for many financial needs, but they cannot be used to buy securities, pay down margin loans, or be deposited into any brokerage account. It is also a revolving line of credit, so a maximum credit limit is assigned. Currently, Schwab requires enough eligible collateral to support a minimum credit facility size of $100,000. Schwab’s current FAQ says there is no minimum draw requirement.
Eligible Collateral
Every loan through Schwab’s PAL must be supported by investment holdings. Schwab determines which assets qualify as collateral, and eligible collateral generally can include cash, certificates of deposit, many bonds, most mutual funds and ETFs, and marginable stocks priced at $3 or more.
And not all securities are eligible, either:
- Preferred stock
- Leveraged ETFs
- Annuities
- Stocks below $3 in price
- Options
- Restricted or control stock
- Bonds issued by The Charles Schwab Corporation
In all cases, retirement assets cannot be pledged as collateral for Schwab’s securities-based line of credit.
To check whether a particular holding may be eligible as collateral for Schwab’s securities-based line of credit, you can use Schwab’s Advance Rate Lookup tool; enter a ticker symbol, and the tool can show whether the security is generally eligible.
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Risks Associated with Securities-Based Lending
Before pledging investments as collateral for a loan, it is important to understand the risks. One major risk is that Schwab can sell securities in the pledged collateral account without further notice if the collateral is not sufficient or if obligations are not met. Schwab can choose which securities to sell. Any forced sale could also create unwanted tax consequences. On the other hand, using a PAL may help avoid selling investments right away, which can potentially delay or avoid taxable sales.
Setting up the PAL at Schwab
If you decide that the risks are acceptable, setting up a PAL at Schwab can be fairly simple. You first need an eligible Schwab brokerage account, such as an individual, joint, trust, or organization account. You must hold the cash and securities intended as collateral in the Schwab brokerage account or accounts that will be pledged. During the application process, eligible Schwab brokerage accounts can be converted into Pledged Accounts. Ineligible account features are removed or limited. These limitations include no margin capability, no check writing, no bill pay, no debit card privileges, and limited options trading.
To complete this required step online, log into the website and go to the PAL conversion page. On this page, scroll down to the bottom and click the blue button to get started. Follow the on-screen prompts to convert your brokerage account into a Pledged Account.
If you have an organization account that you want to convert into a Pledged Account, or if you want to use a combination of existing brokerage accounts, you can’t use the online conversion form. Schwab says only individual, joint, and trust accounts can be pledged through the online application. For other application types, call a Schwab Banking Professional at 888-725-3630 or contact your Schwab Financial Professional.
Schwab PAL Interest Rates
Once the Pledged Account has been set up and enough eligible collateral is in it, borrowing can begin.
Every loan obtained through Schwab’s PAL is subject to a variable, tiered interest-rate schedule that begins at
8.09% and ends at 6.09% (for loans above $2.5 million).
Schwab clients with at least $250,000 in qualifying Schwab brokerage and Schwab Bank assets may qualify for an Investor Advantage Pricing discount on the PAL rate schedule. The discount begins at 0.25% and tops out at
1.00% for qualifying assets of $10 million or more. Organizational borrowers are not currently eligible for this discount.
Getting Help
Schwab has a securities-based lending contact form that can be used to reach out to a loan specialist. Scroll down to the bottom of the page and fill out the form; a loan officer at Schwab will contact you to answer any questions you have about Schwab’s Pledged Asset Line.
Updated on 4/24/2026.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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