Schwab Margin Account

Charles Schwab Margin Rates


2024 current Charles Schwab margin rates: interest fees charged on margin loan. Charles Schwab margin requirements, base lending rate (BLR), leverage, and broker lending cost.


Charles Schwab Margin Rates


Debit Balance Margin Rate
$0 - $24,999.99 13.575%
$25,000 - $49,999.99 13.075%
$50,000 - $99,999.99 12.125%
$100,000 - $249,999.99 12.075%
$250,000 - $499,999.99 11.825%
$1,000,000+ call 877-752-9749


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Margin Interest Calculator


Calculate how much you will pay Charles Schwab in margin interest with Schwab Margin Interest Calculator.


Margin Accounts and Rates at Schwab


Cash accounts are only the beginning of what Charles Schwab has to offer. The brokerage firm also has margin accounts and very good software platforms, which means the sky is really the limit here. Here’s the scoop on using margin with the broker:


Setting Up Margin at Schwab


At Schwab, an account must be opened as a margin account, or margin must be added to an existing cash account before any borrowing can take place. Either procedure is really easy to do.

On an initial application, make sure margin account is selected. On an existing cash account, log into the website (not the mobile app or trading platform) and hover over the Service tab. It’s on the right-hand side in the top menu. Next, click on Account Servicing in the drop-down window. On the page that appears, click on the link for the Options, Margin and Short Trading Application. Everything is handled online, and options trading can be added at the same time that margin is added.


Cost of Margin at Schwab


Schwab doesn’t charge anything for opening a margin account or for switching a cash account to margin. The same commission schedule applies to margin accounts, and this means $0 commissions on stocks and ETFs.

Using margin will of course come with interest charges. Interest is calculated daily and assessed to an account at the end of the month.


Margin in Individual Retirement Accounts


An IRA at Schwab can add limited margin. Because this is a retirement account, it can’t borrow against existing holdings. That’s why it’s called limited margin. But an IRA with limited margin can trade with unsettled funds. This allows IRAs to day trade at will ($25,000 account equity still required).


Rules for Margin Accounts at Schwab


In order to borrow money, a margin account at Schwab has to have at least $2,000 in marginable securities and/or cash. Before any borrowing takes place, Schwab’s software will calculate the amount of money an account can borrow. This calculation can be found on the Balances page, which is accessible through the Accounts tab.

Schwab accounts don’t have any fixed schedule to pay back borrowed funds as long as they stay within margin maintenance requirements, which we will now turn to.


Margin Requirements at Schwab


For long stock positions, Schwab has an initial margin requirement of 50%, which becomes a 30% maintenance requirement. This assumes a share price above $3. Any security below that price cannot be bought on margin.

For short positions, the initial requirement is once again 50%, although the maintenance figure varies, depending on the price of the asset. Above $16.66, the requirement is 30%. It drops to 100% at $2.50.

Leveraged exchange products have higher percentages, some as high as 90%.

As with other brokerage firms, Schwab will issue a margin call anytime an account’s equity drops below a minimum maintenance level.


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Finding Margin Details


On Schwab’s web-based trade ticket, there is a Buying Power link. Click on this to find details on margin-enabled buying ability. This number can also be found by going to the Balances detail page, which will be found under the Accounts tab.


Margin Education


Schwab has quite a few educational resources on brokerage margin. During our investigation, we found articles, graphics, and videos covering a wide variety of margin-related issues. To find these materials, hover over the Products tab in the top menu and click on the Margin link (located in the Investment Products sub-section).


Charles Schwab Overview


If you thought Charles Schwab had high commissions and was just like the other large brokerages, it is definitely time to take another look. Charles Schwab is cutting no corners in its goal to become the best online brokerage firm for both long-term investors and traders. Charles Schwab has lowered their commissions to $0 for stocks and ETFs.


The Best Index ETFs and Mutual Funds in the Business


Charles Schwab isn't only reducing the cost of its account-holders via commissions. Charles Schwab also offers the lowest expense ratio for a total market index ETF and mutual fund in the industry, tying only with iShares. Charles Schwab has lowered expense ratios on all their index funds, which you can trade, commission- free, on their platform. No other competing broker has a lower cost way to invest your money in the broad market. If you are a long term-investor, this is a huge benefit as your money will compound even faster. Note that Charles Schwab doesn't require you to have higher amounts of money to take advantage of the lower expense ratios their mutual funds offer. See below for a partial listing of Charles Schwab's mutual fund offerings. To see the complete listing as well as their ETF comparison, please click here.


Charles Schwab Intelligent Portfolios


Have you ever heard of Betterment or Wealthfront? If you have considering using these robo-advisors, consider Charles Schwab as well. Charles Schwab's Intelligent Portfolios© may not be as well-known among the masses but it is a superior service is on key way – it's free! Charles Schwab Intelligent Portfolios© charge you no management fee or any annual fee. Betterment will charge you .25% of your assets each year. That's $2,500 a year if you have a portfolio of one million dollars! That is on top of what the funds charge via their expense ratios. With Charles Schwab Intelligent Portfolios©, you'll only pay the expense ratios of the funds you are in which are the lowest in the industry. Not to mention, with Charles Schwab Intelligent Portfolios© you can call anytime 24/7 for free support and advisory help. If you're like most people and don't want to spend a lot of time thinking about your investments, this can be a solid choice.


Common Fees


Charles Schwab has adopted the pricing of a "discount brokerage" without making the cutbacks associated with discount brokerages. Fees are low across the board, even when you aren't talking about their low $0 trading commission. Charles Schwab has no inactivity fees and no maintenance fees for both regular and retirement accounts. Even their global trading accounts have no annual fees of any kind.

You can easily do all your investing at Schwab and never pay a fee to Charles Schwab. The only area that has what can be considered a high fee is the purchase of a mutual fund with a transaction fee. That will set you back $49.95. There are over 3,000 no-transaction-fee mutual funds however so finding a no-transaction fee mutual fund shouldn't be an issue. If you ever decide to transfer your account out of Charles Schwab, it will cost you $50 for a full transfer and $25 for a partial transfer.


Charles Schwab Mutual Fund Fees


Investors at Schwab have good mutual fund resources. The broker has a very large selection of no-load, no-transaction-fee funds. More than 3,200 in fact carry no charge to trade. This is one of the largest lists of NTF funds in the industry. The broker calls them OneSource funds. They do carry a short-term redemption charge of $49.95 when they are sold less than 90 days after purchase. This policy is introduced to discourage short-term trading, which increases a mutual fund's expenses. Remember that Charles Schwab's redemption fee is in addition to any charge applied by the fund itself. Fortunately, there are some exceptions to this fee. All Schwab funds are exempt, although they may charge separate short-term fees. Other funds that are intended to be short-term investments are also exempt.

The Schwab OneSource selection is compiled by the broker's investment professionals and is reviewed quarterly. It is composed of several fund families, including American Century, Credit Suisse, Matthews Asia, and more.

Besides the OneSource list, the broker also offers the Income Mutual Fund Select List, which contains funds that offer a regular stream of income. Schwab created the collection for retirees and investors nearing retirement, who need to focus more on consistent income rather than capital appreciation. All of the funds on the Income list also have no load and no transaction fee.

Using an automated phone system for mutual fund trades costs nothing extra at Schwab, although using a live broker tacks on an additional $25. This is more expensive than Firstrade, which charges nothing for broker-assisted orders of load funds and only $10 for no-load funds.

The Schwab mutual fund screener displays more than 5,300 products. They can be sorted by several attributes, including average annual total return, load status, and Sharpe ratio, among others. Search criteria include gross expense ratio, inception date, 30-day SEC yield, and many more.

All mutual funds at Schwab have a minimum investment amount of at least $100, and the majority of them have that exact minimum. Some funds are at $2,500, however; and some mutual funds are as high as $10,000,000. These minimums apply to both taxable brokerage accounts and retirement accounts. Subsequent investment amounts can be as low as $1 or as high as $500, depending on the fund.


Updated on 2/5/2024.


About the Author
Arthur Chachuna is a professional personal finance blogger, and the owner of Brokerage-Review.com. He has been an avid investor for 25 years, and has a background in both applied math and programming.