Interactive Brokers vs Charles Schwab

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Contributor, Benzinga
August 5, 2024

The main difference between Interactive Brokers (IBKR) and Charles Schwab is their target audience and features.

While IBKR is renowned for its advanced tools and low-cost trading, ideal for seasoned investors and day traders, Charles Schwab offers a more comprehensive suite of financial services and educational resources, catering to a broader range of investors including beginners.

Interactive Brokers

Best For:

  • Advanced traders
  • Low-cost trading
  • International market access
  • Margin traders

Pros:

Cons:

  • Complex platform
  • Inactivity fees for smaller accounts
  • Steep learning curve
  • Limited customer support

Charles Schwab

Best For:

Pros:

  • No account minimums
  • Excellent customer service
  • Comprehensive educational resources
  • Wide range of investment products

Cons:

  • Higher fees on some services
  • Limited advanced trading features
  • No direct international stock trading
  • Less competitive margin rates

Interactive Brokers vs. Charles Schwab: Which Is Better?

Choosing between IBKR and Charles Schwab depends on your trading needs and experience level. Let’s dive into the specifics to help you make an informed decision.

Accounts and Features

Interactive Brokers is known for its extensive range of account types and features, catering to professional traders and investors. IBKR offers Individual, Joint, Trust, Retirement and Institutional accounts along with a vast array of investment options, including stocks, options, futures, forex and bonds. Their sophisticated tools like the Trader Workstation (TWS) and PortfolioAnalyst offer advanced analytics and reporting capabilities, making it a top choice for experienced traders.

On the other hand, Charles Schwab provides a more traditional and user-friendly approach. Schwab’s platform includes Individual and Joint accounts, Custodial accounts, 529 College Savings Plans and various retirement accounts like IRAs. Schwab also offers managed portfolios through its Intelligent Portfolios® robo-advisory service and has an impressive range of mutual funds and ETFs. The Schwab platform is intuitive and accessible, perfect for those new to investing or who prefer a more guided experience.

The Better Platform: It’s a tie, depending on your needs. IBKR shines for advanced traders while Schwab is excellent for beginners and long-term investors.

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Charles Schwab platform

Commission and Fee Structure

Interactive Brokers is famous for its low-cost trading, boasting some of the lowest commissions in the industry. For example, IBKR charges $0.005 per share for U.S. stocks with a minimum of $1 per order and no maximum. As of March 2024, IBKR Lite and IBKR Pro accounts have no inactivity or maintenance fees. Interactive Brokers also has a referral program

Charles Schwab offers commission-free trading on U.S. stocks, ETFs and options. Options trades are subject to a $0.65 per contract fee. Schwab also offers access to more than 4,000 no-transaction-fee mutual funds. While Schwab's fees may be higher in some areas, they compensate for it with comprehensive service offerings and no account minimums.

The Better Platform: Interactive Brokers, for its lower trading fees.

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IBKR fee structure

Online and Mobile App 

Both Interactive Brokers and Charles Schwab offer online and mobile trading platforms. IBKR’s Trader Workstation is highly customizable and has advanced features like algorithmic trading and complex order types. Their mobile app is equally powerful, offering real-time monitoring and trading capabilities.

Charles Schwab’s platform is more straightforward and user-friendly. Schwab’s StreetSmart Edge® offers a seamless trading experience with intuitive tools and customizable features. Their mobile app provides full account management, trading and access to educational resources.

The Better Platform: Interactive Brokers for advanced trading tools and flexibility.

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IBKR’s TraderWorkstation

Ease of Use

Interactive Brokers, while feature-rich, can be overwhelming for beginners due to its complexity. The platform requires a steep learning curve, which might deter novice investors. Once mastered, it offers unparalleled trading capabilities.

Charles Schwab is known for its user-friendly interface and easy navigation. Schwab’s platform is designed to be accessible to all investors regardless of experience level. The educational resources and guided portfolio management options make it an excellent choice for those who want a straightforward investing experience.

The Better Platform: Charles Schwab, for its user-friendly approach.

Customer Support

Interactive Brokers offers customer support through phone and email but lacks the robust support infrastructure that some competitors provide. Their support is generally considered adequate but not exceptional.

  • By phone: 877-442-2757
  • Online chat: Online chat assistance is available 24 hours a day, Monday - Friday.
  • Email: You can send an email request to IBKR by filling out an inquiry form.

Charles Schwab excels in customer service, offering 24/7 phone support, live chat and in-person consultations. Schwab is known for its responsive and helpful customer service, making it a standout in this category.

  • By phone: 800-435-4000
  • Live chat: On the Charles Schwab website
  • Visit a branch location: There are hundreds of locations across the U.S.

The Better Platform: Charles Schwab, for superior customer support.

Educational Resources

Interactive Brokers provides a range of educational materials, including webinars, tutorials and a knowledge base. These resources are more suited to advanced traders looking to refine their strategies.

Charles Schwab goes above and beyond with its educational offerings. Schwab provides a comprehensive suite of resources, including articles, webinars, workshops and one-on-one guidance. Their extensive library covers everything from investing basics to advanced trading techniques.

The Better Platform: Charles Schwab, for extensive educational resources.

Safety

Both Interactive Brokers and Charles Schwab are reputable, established firms with strong regulatory oversight. They offer SIPC insurance, protecting up to $500,000 for securities and cash in case of broker failure. They use advanced security measures, including two-factor authentication and encryption, to protect client accounts.

The Better Platform: It’s a tie, as both offer strong safety measures.

The Overall Winner

In the Interactive Brokers vs. Charles Schwab battle, the winner ultimately depends on your specific needs as an investor. Interactive Brokers is your go-to if you're an advanced trader looking for low-cost trading and access to international markets. Charles Schwab is the clear choice if you value a user-friendly platform, excellent customer service and comprehensive educational resources. Evaluate your priorities and choose the best platform for your investment goals.

Frequently Asked Questions 

Q

Should beginners use Interactive Brokers?

A

Beginners may find Interactive Brokers challenging due to its complex interface and advanced tools.

Q

Is Charles Schwab good for day trading?

A

Charles Schwab offers solid tools for day trading but may not be as feature-rich as Interactive Brokers for active traders.

Q

Is there a monthly fee for Interactive Brokers?

A

Not for most accounts, but broker accounts may have a monthly maintenance fee of $2,000 starting the 9th month after an initial deposit of $10,000.

Q

Does Charles Schwab have forex trading?

A

Yes, Charles Schwab offers forex trading on its thinkorswim platform.