Overview of Schwab and Interactive Brokers
Charles Schwab has more client assets than Interactive Brokers and has been in the securities
business much longer. Does that mean it offers the better trading experience? Let’s have a look.
Commissions
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
|
Charles Schwab
|
$0
|
$49.95
|
$0.65 per contract
|
$0
|
$0
|
|
IB
|
$0
|
$14.95
|
$0.70 per contract
|
$0
|
$30
|
|
WeBull
|
$0
|
na
|
$0 per contract
|
$0
|
$0
|
Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
|
Charles Schwab
|
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IB
|
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WeBull
|
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Promotions
Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!
Charles Schwab: Get commission-free online stock trades.
Webull:
12 FREE stocks valued $34-$30,600 give-away at Webull.
Category 1: Investment Systems
Both Charles Schwab and Interactive Brokers offer self-directed accounts with the following list of investment vehicles:
- Stocks (foreign, domestic, and over-the-counter)
- Fixed-income securities
- Mutual funds
- Exchange traded funds
- Closed end funds
- Options
- Futures
Interactive Brokers goes a step further with even more tradable assets:
- Cryptocurrencies
- Precious metals
- Warrants
- Forex
But Schwab counters with managed accounts, something that Interactive Brokers doesn’t offer in any form. Schwab has both robo and traditional packages, with the cheapest starting at 0.0%.
Both firms offer a lot of account types, ranging from custodial accounts to trusts to business accounts and more.
Winner: Pretty close overall
Category 2: Website Trading
Interactive Brokers calls its website the client portal. Whatever you want to call it, we like it. The order ticket has 6 order types plus a price management algorithm option. There is a bracket order system at the bottom of the ticket that can add profit taker and stop loss orders.
Charts on the IB portal borrow software from TradingView. This is both good and bad. On the plus side, there are many tools, including lots of technical studies, full-screen mode, and 11 plot styles. On the downside, there is no right-click trading.
Other features on the client portal include iBot, an artificial intelligence that can answer some questions, but not all. Alerts can be established for a security, and there’s a watchlist (many more can be created).
Schwab’s website, by comparison, also has watchlists and alerts. It doesn’t have an AI, which is a bit surprising because Schwab does have one—it simply doesn’t appear on the website.
A trade bar does, however. This is something that IB’s client portal doesn’t have. The widget sits at the bottom of the screen waiting for a ticker symbol. Once entered, real-time data appears. There’s also a Chart link that will generate a small pop-up chart with multiple timeframes.
Actual trading requires an order ticket on a web page. A Trade link on the trade bar will generate this. Schwab delivers 5 order types and the same number of duration choices.
Schwab customers who think the website underperforms have a browser platform as backup. Launched from the Trading Hub link in the top-right corner of the website, this platform has very advanced charting with trade buttons in the top menu (something that Interactive Brokers doesn’t offer in full-screen mode).
In terms of navigation, the Schwab site is a little easier to use. And for self service options, Schwab has more resources that are easier to find.
Winner: Schwab
Category 3: Desktop Programs
Both broker-dealers in this investigation stand and deliver in this category. Trader Workstation is Interactive Brokers’ very advanced desktop software. It boasts some really advanced features, including:
- Full-screen charting with many tools, including right-click trading
- Several option tools
- Advanced order ticket with bracket orders and much more
- Time & sales data
Read Trader Workstation review »
StreetSmart Edge is Schwab’s desktop program. The platform’s order ticket doesn’t quite live up to the competition here. For example, it doesn’t have bracket orders, OCO, or some of the other advanced trade types that Trader Workstation has. But Edge does offer live streaming of CNBC. Interactive Brokers doesn’t have any streaming video news.
Charting on Edge is similar to charting on Trader Workstation: lots of tools and full-screen mode. Edge has more plot styles.
Both platforms have simulated trading modes that make practicing risk-free.
Read StreetSmart Edge review »
Winner: Trader Workstation is best for advanced trading, while StreetSmart Edge is more user-friendly
Category 4: Mobile Apps
Schwab customers get two apps, one regular app and a StreetSmart Mobile app. The latter one is designed for futures trading but can be used for other asset classes. During our trial of it, we found the StreetSmart app to be rather buggy.
Schwab’s regular app has many great resources, including a video library, mobile check deposit, and a lot of market news. The app can be used to trade options and mutual funds, but not futures.
Interactive Brokers has one app, which we think is more convenient. It can be used to trade futures, forex, bonds, and more. It has a very advanced order ticket, and charting is also on a high level. But IB’s app lacks video news and doesn’t have much emphasis on market news.
Winner: The Interactive Brokers app is better for trading
Category 5: Day Trading
Shorting: It’s possible to short securities at either firm. StreetSmart Edge has a discrete sell short button, while Trader Workstation just has a sell button (for both entry and exit). The latter platform shows whether a stock is shortable, how many shares are available, and what the cost will be. Schwab’s software does not display these intricate details.
Level II quotes: Multi-level quotes are available at both firms. Only Schwab offers them for free.
Direct-access routing: Both firms have order routing on their desktop platforms. On Edge, we counted 3. On Trader Workstation, we counted 23.
Routing fees and rebates: Only Interactive Brokers has fees and credits for removing and adding liquidity.
Winner: Interactive Brokers
Category 6: Margin Borrowing
Interactive Brokers famously has some of the lowest margin rates in the investment world, even
for IBKR Lite customers. Currently, they pay a flat
3.08% on any amount borrowed. IBKR Pro clients are on a tiered schedule from 0.83% to 1.83%.
Schwab is in a totally different league here. Its tiered schedule ranges from
9.825% to
8.075%.
Trader Workstation, but not StreetSmart Edge, shows margin details on any entered ticker symbol (click on the advanced tab on the order ticket and then select Check Margin).
Winner: Interactive Brokers easily
Category 7: Miscellaneous Services
IPO availability: Only at Schwab.
IRAs: Both firms have several IRA types. Schwab has the SIMPLE IRA, which Interactive Brokers doesn’t offer.
Banking tools: Interactive Brokers has a debit card. Schwab has a debit card and much more.
Fractional-share trading: Schwab offers 500 stocks for whole-dollar investing with a $5 minimum. Interactive Brokers offers the entire U.S. marketplace with a $1 minimum.
Dividend reinvestment program: DRIP is available at Interactive Brokers for stocks only. Schwab customers can enroll stocks and exchange traded funds.
Extended hours: Available at both brokers. IBKR Lite customers get the same hours as Schwab clients (IBKR Pro has an extra 3 hours).
Winner: Even
Our Recommendations
Beginners: Schwab, either in robo or self-directed mode, is easier to use.
Stock/ETF trading: Both firms certainly have good software. IB’s fractional-share service gives it a slight advantage.
Small accounts: Because Schwab’s automated service requires a $5,000 deposit, we can’t endorse it for small accounts. For self-directed traders, either Schwab or Interactive Brokers on the IBKR Lite schedule will work.
Mutual fund trading: Schwab has much better fund research tools, including report cards, in-depth profiles, and a list of recommended funds.
Long-term investors and retirement savers: Although both firms have IRAs, only Schwab offers annuities, target-date mutual funds that are easy to find, robo accounts, individual 401(k) accounts, long-term care insurance, and financial planning. Easy choice.
Promotions
Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!
Charles Schwab: Get commission-free online stock trades.
Webull:
12 FREE stocks valued $34-$30,600 give-away at Webull.
Interactive Brokers vs Charles Schwab Outcome
These two firms are powerhouses with lots to offer. Day traders and other advanced traders will
be better served at Interactive Brokers, while mutual fund investors and beginners will be better
off with Schwab.
Anyone looking for the top-rated brokerage firm on the market
should go with TD Ameritrade
or read TD Ameritrade review.
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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.
Updated on 4/9/2022.
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