Charles Schwab versus TD Ameritrade - compare IRA, commissions, investing fees, trading tools, account differences, pros and cons. Which online broker is better?

Overview of Schwab and TD Ameritrade

If you’re considering opening a brokerage account soon, you’ll definitely want to take a look at Schwab and TD Ameritrade. They are very competitive in most areas, although there are some important differences. Here’s what we learned in our research:

Broker Fees

Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
TD Ameritrade $6.95 $49.95 $6.95 + $0.75 per contract $0 $0
Charles Schwab $4.95 $76 ($0 to sell) $4.95 + $0.65 per contract $0 $0

Services

Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
TD Ameritrade
Charles Schwab

Mutual Funds and ETF’s

TD Ameritrade provides access to many fund families. Schwab does the same while offering its own funds. Using Schwab’s mutual fund screener, we found 63 Schwab products. The company also manages its own lineup of 22 ETF’s. These exchange-traded products are commission-free, and so are 200 other ETF’s from 15 fund families. TD Ameritrade offers more than 300 ETF’s commission-free from 9 families.

The TD Ameritrade mutual fund screener reveals more than 11,200 securities available for purchase. On this list, there are nearly 4,000 with zero load and zero transaction fee. Schwab, by comparison, delivers a much smaller list of 5,845. Nevertheless, there is a good number of no-load, no-transaction-fee products (slightly north of 3,400).

If you buy an NTF mutual fund at TD Ameritrade and sell it in under 180 days, you have to pay a short-term trade fee (it’s $49.99). Schwab has the same rule, although the numbers are 90 days at $49.95.

Range of Offerings

Both brokerage houses offer a wide variety of investment vehicles. At Schwab, we found stocks, options, bonds, CD’s, funds (including closed-end funds), annuities, and futures. The company also has an emphasis on global investing with access to 30 foreign markets. Because Schwab operates a bank, mortgages are available through the broker as well. We found 529 savings plans, too.

TD Ameritrade customers can buy and sell a lot of the same investments, including CD’s and closed-end funds. In addition to futures, TD Ameritrade also offers forex, which Schwab fails to deliver. TD Ameritrade offers 529 college savings accounts, but doesn’t offer as much as Schwab in the global investing category.

Cash Management Tools

The banking features at each firm differ considerably. The biggest difference is that Schwab has its own FDIC-insured bank (TD Ameritrade is an independent company with TD Bank as its largest shareholder).

Schwab brokerage clients who need cash management tools can open a checking account that comes with free checks and a Visa debit card. This is a separate bank account that is linked to the brokerage account. At TD Ameritrade, the company simply adds checks and a Visa debit card to a pre-existing investment account. There is not a second account involved.

Because free cash balances at TD Ameritrade are swept into TD Bank and TD Bank USA, the funds are protected by the FDIC, and the standard $250,000 backstop is doubled. Schwab only provides the normal amount of insurance.

While TD Ameritrade offers ATM fee refunds inside the United States, Schwab customers get reimbursed for worldwide withdrawals.

In addition to the debit accounts, Schwab and TD Ameritrade both offer credit cards. TD Ameritrade has a Visa Signature card, while Schwab offers two American Express cards. The Visa card has no annual fee, while one of the AmEx cards charges $550 per year.

Portfolio Management

If you plan to hire a professional to make trading decisions in your account, Schwab and TD Ameritrade have several choices. The former broker offers traditional packages that start at 0.20% with a $1,000,000 balance. The fee increases for smaller balances, where the floor sits at $25,000.

TD Ameritrade charges 0.60% for a balance of $250,000, with a minimum of $25,000. Its robo-advisory service trades low-cost ETF’s for 30 basis points per year.

Schwab also has a digital advisor. The broker manages to offer it for free by making money through cash balances and the ETF’s that are traded. A hybrid human-robo service is available for 0.28%.

Software

If you’re not going to take advantage of either broker’s investment advisory services, you’ll want to know what software is available to self-directed accounts. Schwab offers a very user-friendly website with a trade bar at the bottom of the screen. Our biggest complaint is that it doesn’t have the ability to place trades (there’s a link to a trade ticket on a web page).

The order ticket offers an automatic DRIP enrollment. And charting comes with a lot of nice tools. If you prefer a desktop program, Schwab offers StreetSmart Edge, where just about everything is more advanced.


StreetSmart Edge


TD Ameritrade also provides a desktop program. Called thinkorswim, it offers 400 technical studies, futures and forex trading, direct-access routing, and a host of other fantastic tools.


TD Ameritrade Thinkorswim


The broker’s website itself is sufficient for most trading routines. SnapTicket is the broker’s trade bar, and it can submit orders for stocks, ETF’s, and options (bonds and mutual funds have order tickets on the website). TD Ameritrade’s site has charting comparable to Schwab.

Skills for Amazon Echo devices are available through both companies. It’s possible to get market updates, quotes, and watch lists. TD Ameritrade’s skill has trading capability.

Mobile Trading

These two powerhouses haven’t forgotten about mobile devices. Schwab’s app offers Touch ID, a convenience that we really appreciate. The trading ticket offers 4 order types and several timing choices. Options and mutual funds can be traded on the platform, which isn’t always the case in the brokerage world.


Ameritrade vs Schwab


Roughly 20 technical studies are integrated with Schwab’s charting, and a graph can be displayed horizontally. There are 7 chart styles. We like the amount of market news on the app, and this includes live streaming of CNBC.

TD Ameritrade has 3 apps. One can trade mutual funds, while another is designed for stocks, futures, options, and currencies. This is the thinkorswim mobile platform, and its charting is fantastic. The order ticket provides direct-access routing and complex order types. One feature we really like about this software is a simulated trading login, which Schwab doesn’t offer.


Schwab vs Ameritrade


Customer Service

Customer service is easily forgotten...until you need it. Agents can be reached 24 hours a day, 7 days a week at either company in our survey. The TD Ameritrade site has a robo chat service that is able to answer a lot of questions. For every answer it delivers, a link to a human chat service is included, just in case you didn’t get a decent answer.

If you don’t care for phone or online assistance, you can head over to your nearest TD Ameritrade branch, which is probably closer than you think. With over 360 locations, the broker has pretty much the entire country covered.

Schwab has 345 brick-and-mortar centers. While this figure is pretty close to what’s available through TD Ameritrade, the Schwab website does not have a digital assistant. This failure is replaced with a human chat service. During a trial of it, we received a wrong answer; so the quality is questionable.

One final note is that both companies offer Chinese language service, which probably is an indication of where the futures of these two lie.

Promotions

TD Ameritrade: Trade free for 60 days + get up to $600.

Charles Schwab: Make $100,000 deposit and get 500 commission-free online equity and options trades.


Recommendation

If you want the best software, we recommend TD Ameritrade. thinkorswim is at a professional-level, whereas StreetSmart Edge is designed to be more user-friendly.

If you plan to go the managed route, then we propose Schwab. It has a wider variety of services and lower fees.

For retirement savers and small investors, it’s not possible to suggest one broker over the other. They are both even in these areas.

For mutual fund investors, we recommend TD Ameritrade due to its larger selection and great fund resources.

TD Ameritrade has a much more generous new account promotion offer that essentially allows customers to create portfolio for free.

TD Ameritrade vs Charles Schwab Summary

Although they are even in many areas, this article can help you pick the right broker for your investment needs.

Open TD Ameritrade Account


Open TD Ameritrade Account

Open Charles Schwab Account


Open Charles Schwab Account


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