Charles Schwab Vs. Interactive Brokers: Which Broker Is Better?

Charles Schwab and Interactive Brokers are two of the most well-regarded online brokers, and they offer tons of features to help long-term investors and short-term traders thrive in the market. Schwab and Interactive Brokers score among the best performers in Bankrate’s annual brokerage reviews, and both regularly earn five-star ratings for their all-around excellence. 

We’re directly comparing these two top players in a head-to-head match-up: Charles Schwab vs. Interactive Brokers. Here’s how they compare on some of their most popular features. 

Schwab vs. Interactive Brokers: Costs

Schwab and Interactive Brokers both rank well in the cost department, so it’s neck and neck here. 

Schwab offers the industry-standard structure on stocks and ETFs — free — while Interactive Brokers offers both a free and paid tier, called Lite and Pro, respectively. The Pro tier charges a half-penny per share, with a $1 minimum commission. Interactive Brokers also offers volume pricing, but you’ll really have to move some stock before it makes sense for you.

For everyday traders, options pricing is similar, with both rivals charging 65 cents per contract — right at the industry standard. Interactive Brokers will lower the price tag if you’re doing enormous volume or trading low-cost options, where the option premium is less than 10 cents.

When it comes to other typical fees, both brokers do a good job, though not always the best job. For example, Schwab charges a $50 transfer-out fee if you’re moving your whole account — below the $75–$100 at most brokers but above a handful that charge nothing, including Interactive Brokers and Fidelity Investments. On the other side, Interactive Brokers charges you if you transfer out cash via ACH transfer more than once per month, but not Schwab.

Interactive Brokers also charges one of the lowest rates for margin loans in the industry. That’s great for more active traders who like to borrow but may be meaningless for others.

Winner: It’s a tie. If you’re looking to trade more exotic products, maybe one rival offers better pricing than another, but on the most popular securities, it’s a dead heat. 

Schwab vs. Interactive Brokers: Account minimum

Schwab and Interactive Brokers do not have a minimum account balance, so new customers can get started quickly and easily. You can open the account now and then connect your bank account later and fund it when you’re ready to start investing. And as a new customer, you’ll have immediate access to each broker’s educational tools, research, screeners and more. 

Winner: Draw. Neither broker has an account minimum.

Schwab vs. Interactive Brokers: Tradable securities

Schwab and Interactive Brokers offer a range of tradable securities that compete well with everyone. Both give clients access to all the typical choices: stocks, ETFs, bonds, mutual funds and options. Plus, each offers access to more atypical choices — futures and currency trading — both more specialized markets for advanced traders. Interactive Brokers goes a bit further, with cryptocurrency and metals trading, offering what’s likely the widest range of tradable securities. 

On top of all that, Interactive Brokers give clients access to foreign markets, so you may feel like you can trade anything that’s listed on a public exchange.

Winner: Interactive Brokers comes out on top here, given the wide range on offer, but Schwab is going to work just fine for virtually all clients unless they want to access the more esoteric stuff. Having a bigger buffet doesn’t matter if the smaller buffet already offers all that you really need. 

Schwab vs. Interactive Brokers: Trading platform

Both Schwab and Interactive Brokers offer trading platforms that work for the sometime investor as well as active traders who want to spend the day in front of their trading screens. 

Schwab brought over the thinkorswim trading platform in its acquisition of TD Ameritrade, and this platform has a number of fans. It comes in desktop, mobile and web versions, and you’ll be able to chart stocks in a highly customizable format with tons of tools, including live financial news. If you want to downshift and just get the trade done and move on with your day, you have the broker’s basic trade interface — a smooth experience that’s simple to navigate while offering a variety of functionality, such as watch lists, company financials and options trading. 

Interactive Brokers also offers a basic trading platform as part of its platform line-up, as part of the basic client portal. But the broker ups the game with several other trading platforms. The flagship platform is the Trader Workstation, which offers a customizable format that includes market data, charting, streaming news and option analytics, among other features. 

Interactive Brokers also offers notable mobile apps, including its GlobalTrader platform, which gives you access to more than 90 global markets. The broker’s IMPACT mobile app allows you to screen investments by ESG (environmental, social and governance) criteria, letting you see where an investment or your portfolio might be exposed to specific risks such as human rights or emissions. An easy-to-use graphic interface makes comparison between investments simple. 

Winner: Interactive Brokers brings the heat with a number of platforms and functionality, but don’t sleep on Schwab’s platform either. 

Schwab vs. Interactive Brokers: Account types

Schwab and Interactive Brokers offer a range of account types, though the exact ones depend a lot on the broker. Schwab’s range of accounts is more appealing for a general investor, while Interactive Brokers focuses more on active traders and professionals. 

For example, Schwab offers individual, joint and custodial accounts as well as traditional and Roth IRAs, 529 education savings plans and small-business retirement accounts, including the SIMPLE IRA, SEP IRA and solo 401(k). In short, Schwab offers a solid range that competes well with any broker out there, meaning clients will likely find what they want now and in the future. 

Interactive Brokers offers the standards — individual, joint and custodial accounts as well as the typical IRA accounts — but is lighter on the small-business retirement accounts. The real differentiator here is the professional accounts, including accounts for family offices, hedge funds, advisors, corporations and similar business accounts. 

Besides these brokerage accounts, both brokers have associated robo-advisor accounts — Schwab Intelligent Portfolios and Interactive Advisors. These robo-advisors can build investment portfolios at reasonable cost, meaning clients can let someone else do the investing for them. Schwab also offers a higher-touch version of its service with access to advisors at a higher price.

Winner: Too close to call. Schwab offers more for individuals looking to oversee their own finances over a lifetime, while Interactive Brokers offers some of that plus more for the pros. Which is better depends a lot on your specific needs. 

Schwab vs. Interactive Brokers: Fractional shares

Both Schwab and Interactive Brokers let you buy partial shares of stock, putting them among the best brokers for fractional shares. With fractional shares, you can buy any stock — yes, the high-priced ones — regardless of cost. But it’s important to see the differences in their offerings. 

Interactive Brokers lets you buy fractional shares in 11,000 stocks and ETFs — across the U.S., Canadian or European exchanges. You can also reinvest dividends in fractional shares, but with a caveat: You need to turn reinvestment on and off at the portfolio level, so either all holdings reinvest their payouts or none do. If you’re using the broker’s Lite tier — with $0 commissions — your reinvestment is free, but with the Pro tier you’ll pay a $1 minimum per reinvestment. 

Schwab’s Stock Slices is narrower, letting you buy partial shares of any stock in the S&P 500 stock index with as little as $5. This offering lets you buy 500 or so stocks, and they’re the largest and most popular names that have most of the market’s volume. But the plan does leave out thousands of other smaller stocks on the exchanges. Schwab does allow you to reinvest your dividends in fractional shares, so you can get that whole payout to compound immediately.

Winner: Interactive Brokers’ selection of supported stocks is enormous, even if both brokers do let you buy partial shares. Fidelity Investments and Robinhood also offer a wide selection of stocks in their fractional programs.

Schwab vs. Interactive Brokers: Customer support

Schwab and Interactive Brokers both offer some form of 24-hour support, and the latter’s offering has improved significantly over the years. 

Interactive Brokers offers 24-hour access to phone support during each business day, which is a strong schedule to help active traders. Tack on round-the-clock live chat support from Sunday 8 p.m. to Friday 8 p.m. ET. For less pressing questions, you’ll also get email support via ticket, but the broker has no branches, so you won’t be able to schedule an in-person chat or walk in. In our recent interactions, staff have been knowledgeable and squared away issues quickly.

Schwab’s customer support hours are just a bit better, with 24/7 access, as well as the ability to reach out via live chat or email. You can also stop at one of Schwab’s approximately 400 branch locations. The support staff are knowledgeable and can help you solve your problems with ease.

Winner: Schwab offers more hours and means to contact support for your problems, though Interactive Brokers’ hours are still better than many rivals’. 

Who is Charles Schwab best for?

• Schwab works well for all ranges of investors who want research, education and the broker’s well-regarded customer service. 
• Schwab’s strong trading platform may be especially valuable for traders or those who really like the thinkorswim platform.
• Investors who may need a range of accounts or who want to grow with a proven broker have plenty of choices here, including a robo-advisor account.

Who is Interactive Brokers best for?

• Interactive Brokers works well for all types of investors but is especially geared for active traders and investors who appreciate the broker’s strong execution. 
• Strong trading platforms, including multiple mobile apps, make the broker an attractive choice for clients looking to trade actively. 
• Investors who are looking to purchase securities around the world have excellent access to the world’s stock exchanges through Interactive Brokers. 

Bottom line

As regularly top-ranked brokers in our reviews, Charles Schwab and Interactive Brokers are both excellent options. The key thing is to consider which broker fits your needs best. Those who are looking to trade more frequently may find Interactive Brokers to be a better pick, while those who take a long-term buy-and-hold approach may find Schwab a better fit. 

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.