Schwab's Cash Investment Options: What You Need To Know

Charles Schwab offers a range of cash investment options, including savings and investment cash products, everyday cash products, and money market funds. The company provides access to competitive cash solutions for both short- and long-term needs, with the potential for higher yields, principal preservation, and easy fund access. Schwab's money market funds include prime, government, and municipal funds, while their everyday cash products enable clients to trade, invest, and manage daily expenses. Schwab also offers savings accounts and certificates of deposit (CDs) with FDIC-insured banks, providing a fixed rate of return and strong security for investors. However, some customers have expressed concerns about Schwab's cash management options, particularly regarding settlement times for utilising cash and missed investment opportunities.

Schwab Money Funds

There are several types of Schwab Money Funds:

• Prime Money Funds: These invest in high-quality, short-term money market securities issued by U.S. and foreign entities, including corporations, financial institutions, and the U.S. government. They are considered retail money funds and are only available to natural persons.
• Government and Treasury Money Funds: These funds primarily invest in short-term U.S. government debt securities. They are available to all investors.
• Municipal Money Funds: These funds invest in short-term municipal money market securities issued by states, local governments, and other municipal agencies. They pay interest that is generally exempt from federal income tax and are considered retail money funds available only to natural persons.

Schwab Bank Investor Savings

The Schwab Bank Investor Savings™ account offers a competitive yield on savings and is designed to keep liquid savings growing. It is FDIC-insured up to $250,000 and has no monthly account service fees. The account offers unlimited ATM fee rebates worldwide, and the Schwab Bank Visa® Platinum Debit Card can be used at any Plus® or Visa ATM worldwide.

The Schwab Bank Investor Savings™ account can be opened by downloading and completing an application form, which can then be mailed back or submitted online via secure messaging. Alternatively, you can call 800-540-6718 for assistance.

The account offers powerful mobile apps to access your account or transfer money, and check deposits can be made from anywhere with Schwab Mobile Deposit™.

In addition to the Investor Savings™ account, Schwab also offers the Investor Checking™ account, which is a checking account with no monthly service fees, no foreign transaction fees, and unlimited ATM fee rebates worldwide. The Investor Checking™ account is linked to a Schwab One® brokerage account, which allows for easy transfers between the two.

Schwab Bank Investor Checking

The account has no monthly service fees or overdraft fees, and offers unlimited ATM fee rebates for cash withdrawals worldwide with no foreign transaction fees. It also provides enhanced security features, including the ability to lock your card if it's lost or stolen. You can manage your checking and investing in one place, transferring cash between your brokerage and checking accounts instantly.

The Schwab Bank Investor Checking™ account is FDIC-insured up to $250,000 per depositor. To open an account, you can apply online, call their support line, or download a paper application.

Schwab Brokerage Accounts

Savings and Investment Cash

• Prime, government, and municipal money funds with investment minimums as low as $11 and no transaction fees.
• Certificates of Deposit (CDs) from Schwab CD OneSource®, which offer FDIC insurance and fixed-rate returns.
• Schwab Bank Investor Savings™, which offers a competitive yield regardless of balance and is FDIC-insured up to $250,000.

Everyday Cash

Uninvested cash in a Schwab Brokerage Account can be used for everyday expenses, such as paying bills, and is also available for purchasing investments such as stocks and bonds. This cash is accessible through features like unlimited ATM fee rebates, free checks, a debit card, and online Bill Pay.

Cash and Cash Investments

The "Cash & Cash Investments" tab in a Schwab account provides information on the net cash balance. It also includes unsettled funds, which can be used for most types of trading activity but are not reflected in the authorization limit until they are cleared. Additionally, the "Cash & Cash Investments (to Trade)" balance represents the maximum amount of money in the account that can be used for trading without creating a request for additional funds.

Schwab CD OneSource

Through Schwab CD OneSource, you can open and manage multiple CDs from different banks using Charles Schwab's online platform or through an Advisor Bond Specialist. The minimum deposit amount is generally $1,000, but this may vary depending on the issuing bank. There are no additional commission charges for buying CDs through Schwab CD OneSource, although there may be costs associated with early redemption.

If you need to access your funds before the maturity date, your Schwab broker can help you sell the CD on the secondary market. However, you may lose money on this sale, depending on the interest rate environment at the time. It's important to note that brokered CDs may be callable, meaning the issuing bank can redeem the CD at a specified date or at their discretion.

Overall, Schwab CD OneSource provides a convenient way to invest in CDs from multiple banks, offering flexibility and the potential for higher returns compared to traditional bank CDs.

Frequently asked questions