Charles Schwab vs. E*TRADE (2024)

Charles Schwab and E*TRADE are both heavyweights and early entrants into online brokerage. Their long experience in the business and very large customer base provide them both with significant resources to invest in their platforms and services. Although Charles Schwab is the larger of the two, both brokers have the size and experience to serve investors and traders of all types. They have also grown even larger in recent years, after Morgan Stanley purchased E*TRADE in 2020, and following Schwab's purchase of TD Ameritrade in the same year.

E*TRADE and Charles Schwab were quick to go commission-free for stocks and ETFs. They also offer similarly excellent tools and screeners as part of their platforms. While E*TRADE and Schwab are both very good online brokers that have many common features on their respective mobile, web, and desktop platforms, we will take a closer look at the differences between them to help you decide which is right for your investing or trading needs.

Usability

Both Charles Schwab and E*TRADE have robust platforms that offer streaming quotes and allow you to trade stocks and ETFs commission-free. The two brokers have the capability to handle conditional market orders and also overlap on other features like the ability to keep notes on individual trades and stage orders on their intuitive platforms. Charles Schwab and E*TRADE also make it easy to check balances, access fundamental and financial information, and conduct research on stocks.

Both platforms have a web version and a streaming version, with the streaming versions being the most robust. Schwab has a single mobile app offering, while E*TRADE has a mobile platform for each of its online and computer workstations that replicates the web or desktop experience. Overall, we found E*TRADE’s platforms easier to use, but this category was very close.

Trade Experience

Desktop Trade Experience

Charles Schwab has a website and its StreetSmart Edge desktop workstation, both of which have real-time data streams and stock screeners. While the website does not offer many customization options, the workstation can be customized for things such as information shown in the top account balances line, the ability to save specific stock or ETF searches, and even the ability to customize the trade ticket. While Schwab’s desktop platform supports options strategies up to four legs, such as butterfly and condor strategies, the website is limited to two-leg strategies like strangles, straddles, and vertical spreads.

E*TRADE’s offerings include a standard website that, while mostly intuitive, has a two-level menu system that can sometimes be confusing. Trading on E*TRADE is simple and straightforward: Enter a symbol, select an order type and quantity, and preview and approve. E*TRADE’s platforms allow you to create customizable watchlist views and the watchlists can be easily created from screeners.More advanced traders will lean towards the Power E*TRADE platform with powerful charts, technical pattern recognition, probability analysis, and other trading tools.

E*TRADE’s recent platform redesign has improved its options offerings, as it now uses a drop-down menu that shows the various strategies and can even help determine a strategy based on risk tolerance and sentiment on the expected price direction of the security. E*TRADE allows users to trade directly from a chart, and you can track your order visually.

While the technology was quite close and both brokers offer screening tools, portfolio analytics, news, and educational material, we feel E*TRADE provided a slightly better trading experience because of more interactive charting, more customization options, and streamlined order entry.

Mobile Trade Experience

Charles Schwab’s mobile platform is intuitive and easy to use, and you can trade the same asset classes as the desktop version. Investors and traders can see basic information such as balances and news on stocks in your portfolio. The Schwab mobile app also provides charts, Schwab’s research rating, a quote summary, news, earnings and announcements, and margin requirements for individual securities. Schwab provides an easy drop-down menu for selecting up to four leg options strategies, but the mobile app does not provide options profitability graphs or high level options analytics. The mobile platform’s inability to handle contingent orders is another notable weakness. Schwab’s mobile app will meet the needs of most investors, but active traders (especially options traders), will find the system lacking compared to the functionality and tools available on the Schwab StreetSmart desktop platform.

E*TRADE offers its customers the choice of two mobile apps corresponding to the different platforms, web and desktop. The E*TRADE mobile app is focused on watchlists, market research, quotes, and portfolio management, so it is excellent for investors, but less so for active traders. The regular E*TRADE app, just like the website, provides third-party investment research, real-time data streaming, and market news from Bloomberg TV. Now with Morgan Stanley as an owner, Morgan Stanley research is available through the app (and all platforms). The Power E*TRADE app is designed for active investors and traders, and has a deeper set of tools and functions. This includes the ability to trade stocks, ETFs, basic and complex options up to four legs, and futures all from a single trade ticket. E*TRADE's mobile apps also support contingent orders. E*TRADE’s apps do not have fixed income, so active bond investors will find that an important gap at E*TRADE.

Overall, we give E*TRADE the edge over Charles Schwab for mobile offerings because the two apps mirror the respective website and desktop platforms, allowing you to select the best match. E*TRADE’s apps are both easy to use and accommodate less active investors and more active traders with a specific offering rather than one app that attempts to do it all.

Range of Offerings

Charles Schwab and E*TRADE both have very similar offerings. Neither of them offer direct exposure to cryptocurrency, but you'll find a wide range of assets at either broker.

Order Types

The Charles Schwab and E*TRADE platforms both provide multiple order types. Schwab offers one-triggers-other (OTO), one-triggers-two orders (OTT), one-cancels-other (OCO), market-if-touched (MIT), market-on-open (MOO), and orders contingent on spread price, price, volume, and time on its desktop platform. StreetSmart Edge, Schwab’s desktop workstation, also offers traders an opportunity to enter more sophisticated orders, such as a limit order with an OCO contingent order and stop loss and profit taking levels.

E*TRADE offers contingent, bracketed, OTO, OCO, one-triggers-a-one-cancels-other (OTOCO) on its website and desktop platforms, and contingent and OTO orders on its mobile platforms. We give Schwab the slight edge because of the specialized orders available through its desktop application.

Trading Technology

Schwab provides price improvement on more than 96.8% of its orders by using its own proprietary order routing system with average execution speed of 0.03 seconds and a savings to investors averaging $14.32 per order (500-1,999 share trades in S&P 500 shares). E*TRADE also uses its own system for order routing and the average time to fill an order is approximately 0.14 seconds with price improvement of $5.38 per order (100-9,999 share trades in S&P 500 shares). These are not apples-to-apples comparisons. In our analysis, we found that Charles Schwab generally saw $0.0190 per share in price improvement and E*TRADE came in a lower at $0.0079 per share. In terms of payment for order flow (PFOF), something both brokers accept, E*TRADE was higher with $0.0014 per share to Charles Schwab's $0.0006 in the period we looked at. These are nowhere near the industry leaders in PFOF, but still worth noting.

Both firms offer portfolio margining, but Schwab offers fractional shares while E*TRADE only offers fractional shares in its dividend reinvestment and robo-advisor offerings. Both fill their orders quickly, but Schwab gets the small edge over E*TRADE for trading technology.

Costs

Both Schwab and E*TRADE were quick to adopt commission-free trading, so neither company charges commissions for stock and ETF trades. E*TRADE charges options traders with less than 30 trades per quarter $0.65 per contract and $0.50 per contract for active traders with over 30 trades. Schwab charges $0.65 per options contract for all traders. For those trading over-the-counter stocks, Schwab charges $6.95, while E*TRADE charges $6.95 for less active investors and $4.95 for more active account holders. Neither company charges inactivity or minimum fees, and both charge $25 for broker assisted trades.

In fixed income, Schwab does not charge commissions for T-Bills, Notes, bonds, TIPS, and new certificate of deposit (CD) issues. At E*TRADE, secondary market transactions for CDs and corporate, municipal, agency, and zero-coupon bonds are $1 per bond, with a $10 minimum and $250 maximum commission. E*TRADE is less expensive for trading mutual funds outside of the no transaction fee program, with E*TRADE charging $14.95 per trade compared to $49.50 at Schwab.

At Schwab, margin rates are slightly lower than E*TRADE’s. E*TRADE charges 13.20% for account balances of $10,000, and Schwab comes in at 12.825%. As the balances go up, the difference remains roughly consistent, with Schwab charging 11.325% at $100,000 to E*TRADE's 11.95%.

While it is a bit of a mixed bag in regards to which products you specifically trade, Schwab offers lower margin rates and fixed income fees, giving it the edge in costs. E*TRADE may still appeal to lower-balance account holders that want robo-portfolios. Traders focusing on options trading are likely to find Schwab and E*TRADE pricey in comparison to lower cost brokers catering to this market.

Account and Research Amenities

Both E*TRADE and Schwab have excellent research, news, account analytics, screeners, calculators, and tax reporting tools for account holders. E*TRADE has seen a jump in the amount of quality research available across platforms with integration of Morgan Stanley's offerings and ratings. We found Schwab to have the better ETF screener, but both brokers had strong screeners in addition to options-specific screeners. E*TRADE’s charting offering is better than Schwab’s because it has better drawing tools and you can visually see orders and positions on charts. While you can open a trade ticket from charts on Schwab, it’s really just opening an order ticket, with no levels, orders, and no integration with the chart. E*TRADE’s charting also had more technical studies. We give E*TRADE the edge here because of the better charting, but both platforms have strong offerings for customers relative to account and research amenities.

Portfolio Analysis

Both Schwab and E*TRADE have excellent suites of analytics for accounts, margin, and buying power, in addition to calculators covering retirement and long term planning. They also offer all the tax reporting tools an investor needs. The brokers are both excellent in this category, but Schwab’s overall suite of offerings has the small edge over E*TRADE.

Education

Again, both platforms have a broad range of educational offerings, including many articles, videos, and classes. E*TRADE has a lot of good information for new investors covering long-term investing, tax planning, and options and futures. E*TRADE also recently introduced Virtual Learning Environments, which are full-day structured online events with targeted learning objectives, such as beginner options. Schwab also has a very robust array of educational offerings.

Both E*Trade and Schwab increased the volume of webcasts and online events as a result of the COVID-19 pandemic, but Schwab offers more of this programming than E*Trade. Schwab also has a branch network to assist customers further, while E*Trade only has 29 branches. We give the edge to Schwab in the education category because of the volume of information, including five hours of dialing live programming, and a branch network with professionals that can also educate investors.

Customer Service

Both E*TRADE and Schwab offer customer service to account holders and potential customers with 24/7 support by phone. Additionally, Schwab offers support via chat with a live person. The support received is generally good, and customers can speak with live brokers and financial advisors.

E*TRADE is working to ramp up capacity, but Schwab’s customer service is better, and it also has a branch network that can provide service. Schwab has the advantage in customer service.

Security

Schwab and E*TRADE are tied when it comes to security. Both Schwab and E*TRADE have strong security that includes two-factor authentication for all platforms. E*TRADE hasn't reported any significant outages or data breaches in the past year. Schwab hasn't experienced outages but had a data breach regarding email and chat messages going to an external email address. Schwab contacted all customers affected by the incident and enhanced monitoring of all accounts potentially affected.

Schwab carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers with an aggregate limit of $600 million, limited to a combined return to any customer of $150 million, including cash of up to $1.15 million. E*TRADE clients will be covered under the Morgan Stanley excess of Securities Investor Protection Corporation (SIPC) supplemental insurance policy, which has an aggregate limit of $1 billion. This amount is above and beyond the required insurance by SIPC.

Charles Schwab and E*TRADE are both up to industry standards when it comes to security.

Available Account Types

Charles Schwab and E*TRADE both offer the full range of commonly used account types. This includes:

• Individual taxable
• Traditional individual retirement accounts (IRAs)
• Roth IRAs
• Rollover IRAs
• Simplified employee pension (SEP) IRAs
• Custodial accounts
• 529 college savings plan and education savings accounts (ESAs)
• Trusts

There are some differences with E*TRADE offering an IRA specifically for minors and Schwab offering a global account with access to 12 international markets in local currency. That said, most investors will find the account types they need with either broker.

Final Verdict

While E*TRADE and Schwab are very competitive with each other, we give the nod to Schwab for the average investor by the smallest of margins. This is because Schwab has better customer service, a larger breadth of educational offerings, superior screeners, and lower commissions for fixed income. That said, the competition was very close, and other investors may find E*TRADE the better choice should they prioritize better charting and overall trading experience.

In terms of active traders, we definitely prefer E*TRADE to Charles Schwab. In addition to the aforementioned charting advantage, E*TRADE is cheaper in terms of options with enough volume and has a much better app in terms of trading on the go. All in all, however, both brokers are excellent choices for the majority of investors and traders. The main exceptions are highly sophisticated traders that want control over routing their own orders, even lower options commissions, and direct access to cryptocurrencies.