Charles Schwab is a bank and brokerage firm founded in 1971, and is now one of the biggest banks as well as one of the biggest brokerage firms across the United States. The company provides services through registered investment advisers and online investment services. On the other hand, Scottrade is a discount brokerage firm that operates both at branches and online. It was founded in 1981, but was purchased by TD Ameritrade and TD Bank in 2017. It has an electronic trading platform for purchasing and selling financial securities. See the comparisons between Charles Schwab vs Scottrade below!
Fees and Minimums
The first thing that we will compare between Charles Schwab vs Scottrade is their trading fees. This is an important factor to consider, especially if you are going to trade frequently. A high trading fee will reduce the total profit that you can get from a trade. In general, Charles Schwab is better in this category because it has lower trading fees for stocks and options.
Charles Schwab has a commission fee of $4.95 for stocks and ETFs, and a commission fee of $4.95 + $0.65 per contract for options. The commission fee for futures and futures options is $3.50 per contract. For mutual funds that are outside the OneSource no-transaction-fee group, the commission fee is up to $76 per buy. Automated phone trades usually have a service charge of $5.00, whereas broker-assisted trades come with a service charge of $25.00. See also: TD Ameritrade vs Charles Schwab.
On the other hand, Scottrade has a commission fee of $6.95 for stocks and ETFs, and $6.95 + $0.70 per contract for options. There are no-load no-transaction-fee (NTF) mutual funds which carry no trading fee, but mutual funds that don’t belong to the NTF group have a commission fee of $17 per buy/sell. Broker-assisted trades have a commission fee of $32. There is also a touchstone IVR phone system which carries the same commission fee of $32.
Charles Schwab is generally more accessible to a wider range of investors because it has a lower account minimum. It only requires at least $1,000 for the initial deposit. This requirement can be waived if you open a trading account along with a checking account. On the other hand, Scottrade requires at least $2,500 for the initial deposit.
If you want to trade mutual funds, it is recommended that you trade only the NTF mutual funds in order to reduce your expenses and maximize your profit. Charles Schwab features the OneSource collection of ETFs and mutual funds which carry no trading fee. There are more than 3,500 mutual funds that belong to the OneSource collection, so you have plenty of choices.
Nevertheless, mutual funds that have a transaction fee are indeed very expensive, as Charles Schwab charges $76 per buy. On the good side, these mutual funds are free to sell.
On the other hand, Scottrade has almost 3,000 no-load no-transaction-fee mutual funds. Although the selections are fewer, this is not a problem if the funds in which you are interested are available. The trading fee for mutual funds that don’t belong to the NTF category is lower here. It is only $17 per buy/sell.
Charles Schwab vs Scottrade come with different features for investing and banking. Charles Schwab has the Global Investing Services department which allows investors to trade stocks in foreign markets just by using a regular account. There is also an international account where investors can trade stocks using 8 currencies in 12 foreign markets.
For banking, Charles Schwab has its own FDIC-insured bank. If you make a checking account here, you can get a Visa debit card and checks, both of which are free of charge. Each account has an insurance of $250,000. ATM fees are internationally reimbursed.
On the other hand, Scottrade does not provide global investing opportunities. But it has another attractive feature, which is the Flexible Dividend Reinvestment Program. This feature enables its clients to invest their dividends into the stocks of any company. Scottrade also has its own FDIC-insured bank with similar benefits, but you are required to have at least $500 in your Scottrade brokerage account in order to create a Scottrade bank account.
Education and Research Tools
Charles Schwab is superior in this aspect because it comes with free third-party tools and resources. You are given education and research tools without any additional charge. In addition, it also has the Schwab Equity Ratings, which analyze more than 3,000 US equities and assign them a grade which may range from A to F. This rating is very useful for beginners.
On the other hand, Scottrade does not provide any research tool. You need to use a separate tool to research the market. But it does have some education resources in the Knowledge Center. In this section, you can find various articles and videos which cover a wide range of securities and investment topics.
When choosing between Charles Schwab vs Scottrade, don’t forget to consider about the customer service. You will need to contact the customer service when you come across a problem that you can’t solve by yourself.
Charles Schwab has an excellent customer service which is reachable 24/7 via the phone line. There are international phone numbers for clients travelling abroad. It provides services in multiple languages, including Chinese.In addition, it also has at least 325 physical branches across the United States.
On the other hand, Scottrade’s phone line is not available 24/7, but it has numerous brick-and-mortar locations. Currently, it has at least 500 branches spread throughout the United States. You can just visit one of the branches for more in-depth support.
|- $4.95 for stocks/ETFs, $4.95 + $0.65 per contract for options, $76 per buy for mutual funds||- $6.95 for stocks/ETFs, $6.95 + $0.70 per contract for options, $17 per buy/sell for mutual funds|
|- $1,000 minimum initial deposit||- $2,500 minimum initial deposit|
|- More than 3,500 NTF mutual funds in the OneSource collection||- Almost 3,000 NTF mutual funds|
|- Provides global investing opportunities||- Has no access for foreign markets|
|- Great education and research tools||- Doesn’t have resources for research|
In general, Charles Schwab is better than Scottrade. Charles Schwab is superior in multiple aspects. It has lower trading fees for stocks and ETFs, more NTF mutual funds, and also the ability to trade in foreign markets. It comes with great education and research tools, and the customer service is reachable 24/7 from multiple countries around the world.