Charles Schwab

Is Charles Schwab safe?

For most savers and investors, yes. Schwab is a brokerage with banks attached, and both sides are strongly protected: its banks have a CET1CET1 ratioA bank's highest-quality capital (mainly shares and retained profits) as a share of its risk-weighted assets. Higher means more room to absorb losses.More in the glossary capital ratio far above the requirement and mostly insured deposits, while client securities in the brokerage are kept apart from Schwab's own assets. We score it 79/100. The main catch is complexity, because cash can sit in four different places with four different rules. Schwab also paid $187 million in 2022 to settle SEC charges over its robo-adviser. The brokerage itself, Charles Schwab & Co., is scored on our Charles Schwab broker page.

Where is my cash at Schwab, and how is it protected?

FDIC insurance and SIPC protection are different things. FDIC pays out if an insured bank fails. SIPC helps only when a failed broker cannot return customers' securities and cash because something is missing, and it does not cover a fall in the market. Schwab's main bank, Charles Schwab Bank, SSB, held $225 billion of deposits in June 2026 and has two smaller sister banks. If you hold several Schwab bank products, check which bank each one uses.

How strong is Schwab's capital?

Very strong on the regulatory measure. The Charles Schwab Corporation reported a CET1 ratioCET1 ratioA bank's highest-quality capital (mainly shares and retained profits) as a share of its risk-weighted assets. Higher means more room to absorb losses.More in the glossary of 24.4% at 30 June 2026 and Charles Schwab Bank 30.1%, against a group requirement of 7.0%. That is a far bigger cushion than at Morgan Stanley or U.S. Bank.

There is a caveat. Like other banks of its size, Schwab leaves unrealised losses on its bond portfolio out of regulatory capital. Those losses were about $10 billion after tax at mid-2026. Counting them, we estimate the CET1 ratio would be about 18%, still well clear of the requirement. Regulators proposed in March 2026 to make banks like Schwab count these losses, phased in over five years. The parent's senior debt is rated A2 by Moody's, A- by S&P and A by Fitch, a notch or two below the strongest US banks.

What happened to Schwab in 2023?

When rates rose fast, Schwab clients moved cash out of low-paying sweep accounts into money market funds and Treasury bills. Schwab had invested its deposits in long-dated bonds when rates were low, and after Silicon Valley Bank failed in March 2023, markets worried about the same mix of bond losses and shrinking deposits. Schwab covered the outflows with Federal Home Loan Bank advances and brokered CDs instead of selling bonds at a loss.

The difference from SVB was the depositors. Schwab's deposits come from millions of retail brokerage clients, and more than 80% of bank deposits were FDIC-insuredDeposit insuranceA government-backed scheme that repays bank customers up to a set limit if their bank fails, such as the FDIC in the US or the FSCS in the UK.More in the glossary at mid-2026. Average Federal Home Loan Bank borrowing fell from $9.8 billion in Q2 2025 to $126 million in Q2 2026, and the liquidity coverage ratioLiquidity coverage ratioA bank's cash and easy-to-sell assets compared with the money that could flow out in a 30-day crisis. It must be at least 100%.More in the glossary averaged 135%.

The robo-adviser case

The SEC found that from 2015 to 2018 Schwab Intelligent Portfolios, marketed as having no advisory fees, held 6% to 29.4% of client portfolios in cash. Schwab told clients the cash level came from a "disciplined portfolio construction methodology". The SEC said it was set by how much Schwab wanted to earn by sweeping the cash to its bank and lending it out, and that Schwab's own analysis showed clients would earn less in most market conditions. Three Schwab units paid $187 million in June 2022, without admitting or denying the findings.

How to keep your money safe at Schwab

• Look up which bank holds your sweep cash in your account documents, and count any direct deposits at that bank, including TD Bank, against the same $250,000 limit.
• If you keep large cash balances, compare the sweep rate with Schwab's money market funds and Treasury bills. They are not FDIC-insuredDeposit insuranceA government-backed scheme that repays bank customers up to a set limit if their bank fails, such as the FDIC in the US or the FSCS in the UK.More in the glossary, but they are held in your name.
• Turn on two-step verificationTwo-factor authenticationSigning in with a second proof of identity on top of your password, such as a code from an app, a security key or a passkey.More in the glossary and never share log-in codes. The Security Guarantee does not cover losses if you gave someone access.
• Crypto held through Schwab has neither FDIC nor SIPC cover.

How we scored it

Capital (84) is Schwab's strongest factor, even after allowing for unrealised bond losses. Conduct (70) is the weakest because of the 2022 SEC case, and stability (75) reflects the 2023 stress. Deposit protectionDeposit insuranceA government-backed scheme that repays bank customers up to a set limit if their bank fails, such as the FDIC in the US or the FSCS in the UK.More in the glossary (82) is good but loses points for the split between Schwab banks, TD Bank and SIPC-covered brokerage cash. For an investment bank with a deposit arm, see Goldman Sachs.