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Is Charles Schwab FDIC and SIPC Insured? (2025)
Is Charles Schwab FDIC protected? For how much Charles Schwab brokerage and IRA accounts'
cash, investments, and deposits have SIPC insurance coverage?
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Is Charles Schwab Insured?
Charles Schwab is one of the largest financial institutions in the U.S., and many people ask whether it is insured. The short answer is yes. Charles Schwab uses different methods to keep its customers' money safe. Depending on the services you use, your money is protected by either FDIC or SIPC.
Keep reading to learn how Charles Schwab keeps your money secure.
Regulatory Organizations
Before discussing the types of insurance Charles Schwab offers, it's important to note that having insurance is not optional.
Charles Schwab is a member of two of the largest regulatory organizations in the U.S.: FINRA and SEC.
FINRA (The Financial Industry Regulatory Authority) is a self-regulatory organization that oversees activities at brokerages and exchanges. Although it is a private group, all licensed financial industry players must follow its rules.
SEC (The U.S. Securities and Exchange Commission) is a government agency that controls brokers, exchanges, and trading activities.
Regulatory groups guide the financial industry and ensure that companies like Charles Schwab follow specific laws. One of those laws requires protecting customer accounts with insurance.
Among its many ways of protecting customers, Charles Schwab uses standard industry insurance to protect its bank and brokerage accounts.
Types of Insurance
At Charles Schwab, your money is protected by either SIPC or FDIC. The type of insurance depends on the services you use. Bank accounts are generally covered by FDIC, while SIPC covers brokerage accounts. However, there are also situations where both can apply. For example, when uninvested cash in a brokerage account is transferred to partner banks, FDIC protects the funds while they are in the ‘swept’ state.
Each type of insurance has its pros and cons, so it’s important to understand how and when the coverage applies to your account.
Is Charles Schwab FDIC Insured?
FDIC (Federal Deposit Insurance Corporation) is a government program that protects customers if a bank fails. Each account (account ownership type and account owner) is covered by up to
$250,000. If your funds are spread across different accounts, the total amount covered can be much higher because each account has its own coverage limit.
At Charles Schwab, there are different bank accounts available. You can increase your FDIC coverage by opening accounts in different categories (e.g., savings, checking, business checking, etc.) or by using the cash sweep program offered by Charles Schwab Wealth Management. Besides cash sweep, CDs and money market accounts (on the banking side) can also be covered by FDIC.
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Is Charles Schwab SIPC Insured?
SIPC (Securities Investor Protection Corporation) is another government agency that protects investors. The main difference between FDIC and SIPC is that SIPC covers lost assets in brokerage accounts. Like FDIC, SIPC is designed to take effect when a brokerage fails and can’t return invested funds to its customers.
SIPC covers up to $500,000 in securities, with half of that amount available for uninvested cash in a brokerage account.
It’s important to remember that SIPC doesn’t cover losses due to market changes. The protection only applies when a brokerage becomes insolvent.
Schwab Insurance Beyond FDIC and SIPC
In addition to FDIC and SIPC coverage, Schwab offers further insurance options. For significantly large securities accounts, Schwab has obtained a supplemental insurance policy through Lloyd's of London. This policy activates when SIPC limits are exceeded, providing coverage up to $150 million for an account, with a maximum of $1.15 million for cash. The policy has a brokerage house limit of $600 million, and beyond that, no further insurance is available.
It's important to note that Schwab does not have additional insurance for bank accounts, so FDIC protection is the only coverage available in that regard.
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Charles Schwab Insurance Summary
Understanding how your money and assets are insured is important. The same is true at Charles Schwab. You can take advantage of the protection offered by both programs, and knowing how much each account is covered can help you make better decisions to keep your money safe.
Updated on 2/22/2025.
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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