Charles Schwab offers several secured loan options ideal for homeowners or investors looking to unlock borrowing power through their home or investments.
You can choose between secured lines of credit and mortgages when borrowing from Charles Schwab:
Because Charles Schwab is largely focused on investments, other lending products like car loans, student loans, business loans and personal loans are off the table. However, there are several alternatives available if Charles Schwab doesn’t offer what you need.
Despite its limited offerings, borrowing with Charles Schwab does have a few benefits.
While Charles Schwab allows you to increase your borrowing power without selling off your securities, it’s not without its drawbacks.
While there are no monthly or annual fees that come with its secured personal line of credit options, you still have to pay interest on the amount you draw.
For margin loans, the APR can range anywhere from 8.07% to 9.82%, with larger loan amounts earning a lower rate. And for PALs, your APR will vary based on the one-month LIBOR index and an interest rate spread, which is determined by your available credit limit. PAL borrowers may also be charged a standard trading commission as well as a late fee if you don’t have enough funds left in your credit line to make your monthly repayments.
You may be required to maintain a certain amount of equity in your account or meet other minimum requirements while you’re borrowing on margin or with a PAL. Check with Charles Schwab and go over your contract carefully to make sure you understand the full scope of fees you might face.
Charles Schwab isn’t accredited with the Better Business Bureau (BBB) and receives a B+ rating as of May 2019. While it doesn’t have many reviews on its BBB page, what’s there isn’t good. Many customers complained of account freezes and closures without any explanation, while others had difficulties taking out a loan. Of the 14 customers who left reviews, all gave the bank a 1-star rating.
While it’s safe to use Charles Schwab’s website — it has a standard privacy policy and up-to-date encryption to keep your personal information safe online — there’s a high degree of risk that comes with some of its loans. Before you dive into borrowing on margin, using your home as collateral or opening a Pledged Asset Line, you may want to speak with a financial advisor to learn more about how a secured loan can affect your investment assets.
The application process varies based on the type of loan you want to take out.
For its Pledged Asset Line and margin loan, you’ll likely need to visit a branch to get things set up. You can request more information by calling Charles Schwab or using its online chat service.
For its home loan options, you can apply online or at your local branch.
The specific eligibility requirements vary by loan, though you’ll likely need to meet a few basic criteria at the very least:
Founded in 1971, Charles Schwab Bank is owned by the Charles Schwab Corporation and is one of the largest banks in the US. It seeks to put its customers first by offering multiple ways to manage wealth and investments. It has nearly 12 million brokerage accounts and its clients have around $3.59 trillion in assets.
Charles Schwab’s secured loans may be appealing if you’ve spent time building your investment portfolio and are looking for ways to increase your borrowing power.
Not sure it’s right for you? See how it compares to other big names in lending with our guide to personal loans from banks.
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