You're wondering how much interest Charles Schwab pays, and that's a fantastic question! Understanding where your uninvested cash sits and how it's earning (or not earning) interest is a crucial part of smart financial management. Charles Schwab offers a variety of options for your money, and the interest you earn largely depends on where your funds are held within their ecosystem. Let's break down the different ways your money can earn interest at Charles Schwab, with a step-by-step guide to help you navigate it.
The Many Homes for Your Money at Charles Schwab: Understanding Interest-Bearing Options
Charles Schwab is primarily known as a brokerage firm, but they also have Charles Schwab Bank, which offers traditional banking products. This distinction is key when it comes to understanding interest. Your uninvested cash in a Schwab brokerage account often defaults to a sweep program, but you have options to potentially earn more.
Step 1: Identify Your Current Cash Position - Where is Your Money Right Now?
Before we dive into the numbers, let's figure out where your uninvested cash is currently residing at Charles Schwab. This is the most important first step, as it directly impacts the interest you might be earning.
- Are your funds in a Schwab brokerage account? This is the most common scenario for many Schwab clients. When you deposit money into a brokerage account and haven't invested it yet, it's typically "swept" into a default cash option.
- Do you have a Charles Schwab Bank account (e.g., Investor Checking or Investor Savings)? These are separate from your brokerage account and function more like traditional bank accounts.
- Have you specifically invested in a money market fund or a CD through Schwab? These are deliberate investment choices within your brokerage account designed to earn interest.
Take a moment to log into your Schwab account and check your cash balances and where they are held. This information will be crucial as we proceed.
Step 2: Understanding the Default: Charles Schwab Bank Sweep Program
For most brokerage accounts, uninvested cash is automatically "swept" into the Charles Schwab Bank Sweep Program. This means your cash is deposited into Schwab Bank, and it's FDIC-insured.
Sub-heading: The Interest Rate for Sweep Funds
As of June 13, 2025, the Annual Percentage Yield (APY) for cash in the Schwab Bank Sweep Program for brokerage accounts is 0.05%.
- What does this mean for you? It means that while your money is safe and readily available for trading or withdrawals, it's earning a very low rate of interest. This rate is variable and can change without notice.
Step 3: Exploring Higher-Yielding Alternatives for Your Cash
While the default sweep program offers a minimal return, Charles Schwab provides several other avenues to potentially earn a higher interest rate on your uninvested cash. These options require a more proactive approach.
Sub-heading: Charles Schwab Bank Investor Savings™ Account
If you're looking for a more competitive rate on your savings while maintaining liquidity, a Schwab Bank Investor Savings™ account is a good consideration.
- As of June 13, 2025, the Schwab Bank Investor Savings™ account offers a 0.15% APY.
- This account is FDIC-insured up to $250,000 per depositor, per ownership type.
- It offers features like unlimited ATM fee rebates worldwide and no monthly service fees.
- You can easily transfer funds between your Schwab One® brokerage account and your Investor Savings account.
Sub-heading: Charles Schwab Bank Investor Checking™ Account
For your day-to-day spending and checking needs, the Schwab Bank Investor Checking™ account also pays interest, though typically at a lower rate than savings accounts.
- As of December 27, 2022 (latest readily available information), the Schwab Bank Investor Checking™ account offered a 0.45% APY. It's important to note that this rate can be lower now, as checking account rates generally fluctuate more.
- This account is known for its unlimited ATM fee rebates worldwide and no monthly service fees.
Sub-heading: Schwab Money Market Funds
Money market funds are a popular choice for investors seeking a higher yield on their cash while maintaining liquidity and relative safety. These are mutual funds that invest in short-term, low-risk debt securities.
- Schwab offers various money market funds, including Prime, Government, and Treasury-focused options.
- As of June 13, 2025, some Schwab money market funds like the Schwab Prime Advantage Money Fund – Investor Shares (SWVXX) had a 7-day yield of 4.12%. Other options like Schwab Government Money Fund – Investor Shares (SNVXX) yielded 4.02%.
- Key consideration: While money market funds are generally considered very low risk, they are not FDIC-insured like bank deposits. They are instead protected by SIPC, which covers securities up to $500,000, including $250,000 for cash.
Sub-heading: Certificates of Deposit (CDs) through Schwab CD OneSource®
For money you don't need immediately and are willing to lock up for a fixed period, Certificates of Deposit (CDs) can offer higher, fixed interest rates. Schwab offers brokered CDs from various banks through its CD OneSource® platform.
- As of June 6, 2025, CD rates available through Schwab CD OneSource® can be quite competitive. For example:
- 3-Month CDs: Up to 4.27% APY
- 1-Year CDs: Up to 4.35% APY
- 2-Year CDs: Up to 4.40% APY
- Important: While Schwab facilitates the purchase, the CDs are issued by FDIC-insured banks. This means they are FDIC-insured up to $250,000 per depositor, per issuing bank, subject to aggregation rules.
- CDs have a fixed maturity date, and withdrawing money before maturity often incurs penalties.
Step 4: Evaluating Your Needs and Making a Choice
Now that you understand the different interest-bearing options, it's time to decide which one (or combination) best suits your financial goals and risk tolerance.
Sub-heading: Factors to Consider
- Liquidity: How quickly do you need access to your funds?
- Sweep program and checking accounts offer immediate access.
- Savings accounts offer easy access, typically with minor transfer times.
- Money market funds are highly liquid, generally allowing daily transactions.
- CDs are the least liquid, as your money is locked up for the term.
- Interest Rate: How important is earning a higher return?
- For maximizing interest, money market funds and CDs currently offer the highest rates.
- Risk Tolerance: Are you comfortable with a slight increase in risk for a potentially higher return?
- Bank deposits (sweep, checking, savings, CDs) are FDIC-insured, offering the highest level of safety.
- Money market funds are generally very safe but are not FDIC-insured.
- Investment Horizon: How long do you plan to hold the cash?
- For short-term needs or emergency funds, highly liquid options are better.
- For funds you won't need for several months or years, CDs can be a good fit.
Step 5: Taking Action to Optimize Your Interest Earnings
Once you've decided on the best strategy, it's time to move your money!
Sub-heading: How to Move Funds to a Higher-Yielding Option
- For Schwab Bank Investor Savings/Checking:
- Log into your Charles Schwab account.
- Navigate to the "Move Money" section.
- Initiate a transfer from your brokerage account to your Schwab Bank Investor Savings or Checking account.
- For Money Market Funds:
- Log into your Charles Schwab brokerage account.
- Search for money market funds (e.g., SWVXX, SNVXX) using the "Research" or "Trade" functions.
- Place an order to buy shares of the desired money market fund. You can typically set this up as a sweep option if you prefer.
- For Certificates of Deposit (CDs):
- Log into your Charles Schwab brokerage account.
- Go to the "Bonds & Fixed Income" section.
- Explore Schwab CD OneSource® to view available CDs, terms, and rates.
- Select the CD that fits your needs and place an order to purchase it.
Remember to always review the current rates and terms directly on the Charles Schwab website or by contacting a Schwab representative, as rates are subject to change.
10 Related FAQ Questions
Here are 10 frequently asked questions about earning interest at Charles Schwab, with quick answers:
How to check my current interest rate at Charles Schwab?
You can typically find the interest rate for your specific account (brokerage sweep, savings, checking) by logging into your Charles Schwab account online and navigating to the account details or "Cash Solutions" section.
How to get a higher interest rate on uninvested cash at Charles Schwab?
To get a higher interest rate, you can proactively move your uninvested cash from the default sweep program into a Schwab Bank Investor Savings account, a Schwab money market fund, or purchase Certificates of Deposit (CDs) through Schwab CD OneSource®.
How to transfer money to a Schwab Bank Investor Savings account?
Log into your Schwab account, go to "Move Money," and select the option to transfer funds between your Schwab accounts, choosing your brokerage account as the source and your Investor Savings account as the destination.
How to buy a money market fund at Charles Schwab?
From your Schwab brokerage account, search for the desired money market fund ticker (e.g., SWVXX) and place a buy order like you would for any other mutual fund.
How to find Charles Schwab CD rates?
You can find current CD rates by logging into your Schwab brokerage account and navigating to the "Bonds & Fixed Income" section, then looking for Schwab CD OneSource®.
How to know if my Schwab account is FDIC insured?
Schwab Bank accounts (Investor Checking, Investor Savings, and cash held in the Schwab Bank Sweep Program) are FDIC-insured up to $250,000 per depositor, per ownership type. Money market funds are generally not FDIC-insured but are protected by SIPC.
How to understand the difference between APY and interest rate?
APY (Annual Percentage Yield) takes into account the effect of compounding interest, giving you a more accurate representation of the annual return, while a simple interest rate does not.
How to set up direct deposit to a Schwab Bank account?
You can typically find your Schwab Bank account's routing and account numbers within your online banking portal, which you can then provide to your employer or other payors for direct deposit setup.
How to compare Schwab's interest rates to other banks?
You can use online financial comparison websites (like Bankrate, NerdWallet, etc.) to compare Schwab's savings and CD rates with those offered by other financial institutions.
How to minimize uninvested cash in my Schwab brokerage account?
To minimize uninvested cash, you can set up automatic investments into money market funds, or regularly review your cash balance and proactively invest it in higher-yielding options or other securities.