Charles Schwab is a multinational financial services company founded in 1971 and headquartered in San Francisco, California.
Charles Schwab has an array of products and services that it offers to both retail and institutional clients encompassing commercial banking, stock brokerage, and wealth management advisory services.
As of February 2023, they have 34 million active brokerage accounts, 1.7 million bank accounts and roughly $7.38 trillion (yes, with a T) in total client assets.
For the purposes of this review, we will focus on the brokered CD (certificate of deposit) rates offered through Charles Schwab.
To see if their CDs are right for you, continue reading our review below.
Charles Schwab Brokered CD Rates + Account Details
It is important to keep in mind that Charles Schwab does not issue CDs themselves, but rather brokers (or re-sells) bank CDs issued by FDIC-insured banks and financial institutions.
Charles Schwab CDs require a minimum deposit of $1,000 and you may increase your investment size by increments of $1,000.
CD Rates
| Term | APY |
| 1-3 Month | 5.20% |
| 4-6 Month | 5.27% |
| 7-9 Month | 5.33% |
| 10-18 Month | 5.35% |
To put these offers in perspective, the current national average on a 12 month CD and a 60 month CD sit at just 1.49% and 1.35% APY, respectively, according to recent FDIC data.
Brokerage Fees
For all new issue CDs a selling concession is already included in the overall price for both online and broker assisted trades.
For all CDs purchased on the secondary market through Schwab CD OneSource, a $1 transaction fee per $1,000 is applied. This comes with a $10 minimum and a $250 maximum.
If you need a broker’s assistance for the trade you will also be charged an additional $25 as a trade service charge.
FDIC-Insurance
All of the brokered CDs offered through Schwab OneSource are federally insured by the FDIC through the partner bank. Thus the same coverage extends to you and can even exceed the $250,000 maximum if you choose to open more than one CD with more than one bank.
For example, if you open two CDs from two different banks through Schwab OneSource, you will get FDIC coverage of $250,000 from one bank and then $250,000 from the second bank. Assuming you have no other deposits at those banks, you’re covered for $500,000.
Compounding Interest
Interest on brokered CDs is not compounded as it would be with a bank or credit union as it requires immediate distribution. If you want compounding interest on a brokered CD you will need to reinvest your interest payments into a different account.
Grace Period
The exact grace period for your Charles Schwab CD can be found by contacting the issuing banking institution. Your broker can help you access this information.
In general, banks and credit unions typically offer a 7 – 10 calendar-day grace period in which the deposit holder may add or withdraw funds penalty-free before the CD automatically renews into a new CD with the same term and the going APY at that time.
Early Withdrawal Fees
Early withdrawal fees do not exist with brokered CDs. If you need funds prior to maturity, your Charles Schwab broker will help you sell it on the secondary market.
You may lose money on this sale depending on where interest rates are at that time. Learn more in the section below.
Drawbacks and Risks
The main risk in purchasing a brokered CD through Charles Schwab (or any brokerage firm for that matter) is if you need your funds prior to maturity. As mentioned above, in this case you will need to sell your CD on the secondary market. Depending on the interest rate environment at that time it is possible to sell your CD for either less or more than you purchased it for.
Consider the following: You purchase a 2 year CD and need to cash out unexpectedly after the first year. During this time CD rates have also risen substantially. At this point you will likely need to sell your CD at a lower price than you purchased it for because much more attractive rates are being offered on new issue CDs.
Final Thoughts
Charles Schwab CD rates are getting more competitive each month as the Fed continues to increase rates to combat inflation. Vanguard, Edward Jones and Fidelity have also seen their CD rates rise this year as well.