Charles Schwab vs TD Ameritrade: Comparing Two Top Brokers

Charles Schwab and TD Ameritrade are two brokers able to offer different perks to their users. 

From fees to functionalities, we will analyse these two brokers in detail to give you all the information you need and to answer an important question – which is better?

Overview of Charles Schwab Broker & TD Ameritrade Broker

Charles Schwab vs. TD Ameritrade

In the world of online brokerage firms, Charles Schwab and TD Ameritrade stand out as two of the most popular and reputable options for investors in the United States. Both firms offer a wide array of investment products and services, catering to the diverse needs of individual investors, whether they are beginners or experienced traders. In this comparison, we will take a closer look at the unique features, pros, and cons of each brokerage, helping you make an informed decision on which firm best aligns with your investment goals and preferences.

Charles Schwab

Charles Schwab is a leading brokerage firm in the United States, offering a wide range of financial services, including investing, trading, and retirement planning. In this module, we will discuss the pros and cons of opening an account with Charles Schwab, specifically in the context of comparing it with TD Ameritrade, another popular brokerage firm.

Regulation Info: Charles Schwab is regulated by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) in the United States.

Charles Schwab is a strong choice for investors seeking low-cost trading options, extensive research resources, and no account minimums. However, those looking for a highly customizable trading platform or faster customer service may want to consider TD Ameritrade.

TD Ameritrade

TD Ameritrade is another top-rated brokerage firm in the United States, offering a wide range of investment and trading services. In this module, we will discuss the pros and cons of opening an account with TD Ameritrade, specifically in the context of comparing it with Charles Schwab, another well-known brokerage firm.

Regulation Info: TD Ameritrade is regulated by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) in the United States.

TD Ameritrade is an excellent choice for investors seeking an advanced trading platform, exceptional customer service, and diverse investment options. However, those looking for lower fees on specific investment products or integrated banking services may prefer Charles Schwab. Ultimately, the decision between the two brokerage firms will depend on individual investor preferences and priorities.

Fees and Commissions

Both TD Ameritrade and Charles Schwab are inexpensive for what concerns fees, but to fully understand this topic, it is important to evaluate the different financial products offered by these platforms – since fees change accordingly. 

In general, the two brokers set 0% fees and commissions for most products. Moreover, it’s free to open an account, and there are no inactivity fees or commissions to manage your account. 

A big pro of these two brokers is transparency – there are no hidden costs and all the information related to fees and commissions are clearly stated. But let’s break it down. 

Let’s start with TD Ameritrade. 

For what concerns pricing, Ameritrade offers 0% commissions for: 

• Stocks,
• ETFs, 
• Online options – which cost $0.65 per contract,
• Forex.

Commissions aren’t charged if you trade these products autonomously, but if you need the assistance of the broker, commissions range from $5 to $25. 

For what concerns mutual funds, there are generally no commissions for selling, but transaction fees can reach $74.95 for buys. 

When it comes to futures, TD Ameritrade charges $2.25 per contract, to which you need to add regulatory and exchange fees.

Moreover, you need to consider that a commission of $6.95 is applied for OTC (over-the-counter) stocks – including stocks that are not listed in the US.

The fees and commissions charged by Charles Schwab are in line with those of TD Ameritrade, but Charles Schwab also applies a $50 foreign transaction fee. 

So, for what concerns fees, the two platforms don’t differ that much, and both can meet the needs of traders with different budgets. 

Trading Platforms

TD Ameritrade and Charles Schwab offer you different platforms for your trading activity. 

TD Ameritrade offers four platforms: 

• Web platform: this is an easy-to-use platform available online. Along with trading tools, you can find news – from Yahoo! – and educational resources. 
• Thinkorswim desktop: this platform is more sophisticated, more suitable for expert traders. This platform is available for download and it’s fully customizable. Also in this case, you’ll find educational material – as well as tutorials to use the platform. 
• Thinkorswim web – also this version of thinkorswim is intuitive, and the difference with the previous platform is that thinkorswim web is available online. 
• Mobile trading platform: TD Ameritrade is extremely popular and appreciated for its mobile platform, which allows you to trade anywhere by using different devices – including wearables like the Apple Watch. 

Very similarly, Charles Swhab offers three platforms: 

• A platform available online that works as the web trading tool of Charles Schwab, 
• The trading software, fully customizable and available for download, 
• The mobile trading app. 

The main difference between the platforms offered by the two brokers lies in the level of complexity you can reach. Charles Schwab offers more sophisticated tools and indicators, and it is extremely appreciated for the quality of data you can gather and analyse thanks to the broker. It manages to collect news from different sources, and its platforms allow you to create complex and personalised tools. Moreover, its All-in-One Trade Ticket allows you to create different orders using different strategies – but always in the same window of the trading platform. 

To compare the platforms offered by TD Ameritrade and Charles Schwab, we can say that TD Ameritrade performs better for traders and investors who are at the beginning of their journey: despite the broker can help you to reach different levels of complexity, TD Ameritrade tends to value more intuitiveness and essentiality. 

Charles Schwab can better accompany traders and investors on their journey – they can be beginners, professionals, or just willing to use the same tool as they enhance their skills.

Investment Options

Also when it comes to the products and services offered, the two platforms are very similar, but Charles Schwab gives you a wider amount of products and markets to access. 

Both brokers offer stocks, ETFs, Mutual Funds, Options, Fixed Income, Futures and Forex. In both cases, it is not possible to directly buy and sell cryptocurrencies – you can get exposure to crypto markets via other products like stocks in crypto and blockchain companies or thanks to derivative products. 

For what concerns Forex, TD Ameritrade offers a higher number of pairs to trade when compared to Charles Schwab – 70 vs. 8 pairs. 

But when it comes to mutual funds, Charles Shwab far exceeds TD Ameritrade: while the first broker offers more than 20,000 funds, TD Ameritrade doesn’t reach 4,000 funds. 

Moreover, Charles Schwab has a more international vocation: while TD Ameritrade offers access to the US and Canada markets, and you necessarily need the assistance of the broker to reach different markets, Charles Schwab normally offers access to 12 different international markets – 30 different countries can be reached thanks to the assistance of the broker. As we discussed in our fees and commissions section, the assistance of the broker has a cost – this is why it is more probable to save on commissions when using Charles Schwab. 

So, if you’re mostly a forex trader, TD Ameritrade can be the most suitable option for you, but in general, Charles Schwab performs better when it comes to products and services offered. 

Customer Service

Both brokers take customer service into high consideration. They’re constantly available for any kind of issue experienced by customers or for any questions. 

Customers can contact TD Ameritrade via: 

• Phone call – TD Ameritrade uses different numbers, also to help international clients and hearing impaired, 
• Facebook and Twitter chat,
• Fax and mail, 
• You can also visit one of the TD Ameritrade’s branches. 

Charles Schwab’s customer can contact the broker: 

• Via phone call, 
• By visiting one of its branches,
• Or via the live chat available on the official website of the broker. 

In conclusion, both brokers offer high quality customer services able to meet all the needs of their users. 

Security

When it comes to security, both brokers use several methods to keep you and your funds safe. 

To protect its customers, TD Ameritrade mainly uses two methods. After giving you all the information you need to know to navigate the web safely in general, and the platform in particular, TD Ameritrade offers: 

• Additional security products – for free or at a low price, 
• It cooperates with different third-parties to guarantee you special prices in case you want to use a security product not produced by the broker. 

When it comes to your funds, the broker offers you the Asset Protection Guarantee: if you lose your funds because of an unauthorised activity, you will be reimbursed by TD Ameritrade. The broker also shares special contacts you can use if you detect any suspicious activity or any vulnerability. 

Also Charles Schwab offers strong security measures, in line with the complexity of the products it provides: 

• Data are encrypted, 
• Accounts are constantly monitored to send users immediate alerts if any suspicious activity is detected, 
• The employees involved in the management of data are trained to follow the best practices, 
• Users are provided with extensive educational resources to understand both investments and all the functionalities of the platform, 
• Support is offered on-line and in-person, but the identity of the users is always verified first,
• As a stronger security measure, voice identification is available,
• Funds lost for unauthorised activity are refunded. 

Despite the security measures taken by the two brokers, both were hacked in the past – TD Ameritrade in 2007,  and Charles Schwab in 2022. 

Generally speaking, both can be considered top brokers for what concerns security. 

Conclusion

Both Charles Schwab and TD Ameritrade are well-established and reputable brokerage firms in the United States, offering a wide range of investment options and services to cater to different investor needs. While both firms have their own advantages, the choice between the two will ultimately come down to individual preferences and priorities.

When comparing the two, it is essential to consider factors such as trading fees, platform features, customer service, and the availability of diverse investment options.

Charles Schwab excels in providing lower trading fees for certain investment products, extensive research and educational resources, and no account minimums. These features make Charles Schwab an appealing choice for cost-conscious investors or those seeking comprehensive research tools.

On the other hand, TD Ameritrade offers a highly customizable trading platform, faster customer service, and a broader range of investment options. These features make TD Ameritrade an attractive choice for investors who prioritize advanced trading tools and responsive customer support.

FAQ