Important

On November 25, 2019, Charles Schwab announced a buyout of TD Ameritrade’s online brokerage. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.

Charles Schwab and TD Ameritrade are two large brokerage firms that were early to offer web based trading and quick to switch to the commission free stock and ETF trades. While they both operate separately, this comparison has become a sibling rivalry now, as Schwab finished its acquisition of TD Ameritrade in October 2020. Both companies offer strong online brokerage platforms and have a wide range of product offerings, but we’ll look at some of the differences so you can determine which platform might be the right fit for your investing or trading needs.

  • Account Minimum: $0
  • Fees: Free stock and ETF trading, $0.65 per options contract
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  • Account Minimum: $0
  • Fees: Free stock, ETF, and per-leg options trading commissions. $0.65 per options contract.
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Usability

Both Charles Schwab and TD Ameritrade have multiple platforms to meet the needs of investors and traders. Schwab’s offerings include the Schwab.com website, a strong desktop application called StreetSmart Edge, and the Schwab mobile app. TD Ameritrade’s platforms include a website, their robust desktop application called thinkorswim, and two mobile apps where one is designed to match the functionality of the website and the other is a thinkorswim mobile app.

All of these platforms are modern and intuitive to use, with Charles Schwab’s StreetSmart Edge desktop and TD Ameritrade’s thinkorswim desktop and mobile solutions offering the greatest amount of customization and tools. The mobile apps all do a nice job of trying to replicate the user experience of the web and desktop software versions. 

While all of the platforms are easy to use, we feel TD Ameritrade’s overall platform is better because the two different mobile apps replicating the main website and desktop version of thinkorwim, respectively, made for a more consistent user experience.

Trade Experience

Desktop Trade Experience

Both TD Ameritrade and Charles Schwab have basic websites that have streaming quotes and the ability to see balances and positions, view research and fundamental information on the stock, and enter into buy and sell transactions. The websites may be sufficient for many investors who simply want to see portfolio balances, research securities, and buy and sell those securities, but the desktop applications for both companies are much more advanced. 

Schwab’s StreetSmart Edge and TD Ameritrade’s thinkorswim offers all of what the web platforms do and so much more. Both desktop applications are fully customizable and have robust charting capabilities. The desktop applications allow for customized trading strategies and analytics for more complicated trades, including options strategies. Both the Schwab and TD Ameritrade desktop apps support conditional orders. Of the two, thinkorswim has better charting capabilities and some of the best options analytical tools available, where users can change strategies and other trade variables and see how the positions would do over any time before maturity. 

Overall, Charles Schwab and TD Ameritrade websites are comparable, and StreetSmart Edge and thinkorswim offer users many sophisticated tools and capabilities. While many users may not need all of the advanced analytics available on the desktop applications, for those that do, we feel TD Ameritrade’s thinkorswim is better overall because it has stronger charting and one of the best suites of options trading analytics among online brokerages. 

Mobile Trade Experience

Here again, both Charles Schwab and TD Ameritrade have excellent mobile experiences. Schwab’s mobile app is easy-to-use for less sophisticated traders and also has a lot of features more active traders will appreciate, such as multiple contingent order possibilities like setting stop and profit taking levels when entering into a trade. 

The look and feel of the TD Ameritrade website is replicated well in the basic TD Ameritrade web platform. TD Ameritrade also made the effort to have a mobile thinkorswim that would meet the needs of more active traders that use multiple strategies and need analytics. Another example of the differences between the two TD Ameritrade mobile apps is significantly better charting functionality in the thinkorswim mobile app. The charting functionality on Schwab’s mobile app should be better, and does not compare favorably to charting available on the thinkorswim mobile app. However, the Schwab mobile app would better suit active fixed income product investors/traders because TD Ameritrade’s mobile platforms do not include fixed income. 

Charles Schwab and TD Ameritrade have both built good mobile apps, but we feel TD Ameritrade’s mobile apps do a better job replicating their respective website or workstation counterparts for a more consistent user experience across platforms.

Range of Offerings

Charles Schwab enables trading in all available asset classes on its web, downloadable, and mobile apps. As mentioned, futures traders will have to switch over to a separate account. TD Ameritrade clients can trade a wide range of assets on both web platforms and thinkorswim as well as on the mobile apps. Neither broker enables cryptocurrency trading but you can trade Bitcoin futures.

Charles Schwab vs TD Ameritrade Range of Offerings
Asset Charles Schwab TD Ameritrade
Short Sales  Y Y
No-Load, No-Fee Mutual Funds  20,000+ 3,600+
Bonds  Y Y
Futures/Commodities  Y Y
Futures Options  Y Y
Complex Options  Y Y
Robo Advisory Y Y
Cryptocurrency  Only CME Bitcoin futures Only CME Bitcoin futures
International Exchanges 12 non-US markets; investment service consultant can provide access to foreign share trading exchanges across 30 countries Canada; More international exchanges can be traded using broker assistance.
Forex  Y, 8 pairs AUD; CAD; EUR; GBP; HKD; JPY; NOK Y, 73 pairs
Fractional Shares  Y N
OTCBB and Penny Stocks Y, with no commission Y, but with a $6.95 flat fee

Order Types

Both Charles Schwab and TD Ameritrade are able to handle standard limit, stop loss, stop limit orders, and trailing stops. Conditional orders such as one-triggers-other, one-cancels-other, order-triggers-other, and so on are available on some platforms. Conditional orders are not available on the Schwab website or the TD Ameritrade website, but traders would be using desktop applications and/or a mobile solution that supports these orders as well as the other trading tools passive investors are unlikely to need. Given the similarities between Schwab and TD Ameritrade when it comes to order types, this category is a draw.

Trading Technology

Charles Schwab uses proprietary technology to route order, and rates highly for obtaining price improvement on 93.9% of orders, and an average of $0.01719 in savings per share. Execution speed is 0.04 seconds. Schwab does receive payment for order flow (PFOF), and this revenue stream has grown significantly for Schwab and other brokers from increases in trading volume during the pandemic; Schwab’s PFOF revenue jumped 78% from 2019 to 2020, and other brokers saw 100% increases. Schwab also provides qualifying customers with portfolio margining, which lowers margin costs based on the overall risk in the portfolio. Schwab has not, however, been proactive in helping customers maximize their cash balances, and generates significant revenue by putting the onus on the customer to be proactive if they want to obtain higher money market rates than Schwab offers. Schwab also offers account holders the ability to purchase fractional shares of as little as $5, allowing small investors to participate in ownership of high priced stocks like Tesla and Amazon, which can trade for more than $1,000 per share. 


TD Ameritrade also benefits from PFOF. TD Ameritrade allows its customers to route their own equity and options orders to select exchanges. Alternatively, its customers can benefit from price improvement through TD Ameritrade’s proprietary routing software. Orders routed through TD Ameritrade’s order routing system for transactions for between 1 to 1,999 shares, or 90% of their orders, get fills in 0.04 seconds, and average price improvement of $0.0186 on 98% of orders. TD Ameritrade also offers portfolio margining, but not fractional shares. TD Ameritrade, however, is one of just a few online brokers to allow traders to backtest their trading strategies. TD Ameritrade, like Schwab, also fails to proactively assist its customers with higher rates on cash balances.


This category is a toss-up, with Schwab winning it for the majority of investors that benefit from fractional shares. TD Ameritrade, however, wins this category when it comes to traders because of the ability to backtest strategies and route your own orders. 

Costs

Both Charles Schwab and TD Ameritrade were early adopters of commission free trading for stocks and ETFs, but TD Ameritrade still charges a flat fee of $6.95 for over the counter (OTCBB) issues. Schwab has no fee for OTCBB trades. Both TD Ameritrade and Schwab charge $0.65 per option contract, and neither company charges inactivity or minimum fees. While most futures traders would look elsewhere for even lower commission rates, Schwab’s commission on futures is $1.50 per contract per side plus exchange fees, while TD Ameritrade charges $2.25.

Margin traders will also do better at Schwab, which has lower margin rates than TD Ameritrade at every breakpoint and by more than a full percentage point for balances of $25,000 or more. Fixed income rates are difficult to compare because Schwab charges $1 per bond, with a $10 minimum and $250 maximum for online transactions, while TD Ameritrade has its fees incorporated into the price for secondary market transactions, so is less transparent. Schwab’s fee for wire transfers is $15 if done on the Schwab website, compared to a $25 fee at TD Ameritrade. TD Ameritrade does not charge foreign exchange transaction fees, while Schwab charges fees for currency exchange. TD Ameritrade charges a $49.99 commission for mutual fund trades outside of their no transaction fee program, while there is no charge at Schwab if the trades are made on its online platform.

While both brokers have no commission stock and ETF trades, and charge the same for options trades, Schwab has a clear edge over TD Ameritrade on costs because they have lower margin rates and don’t charge for trading OTCBB stocks. We also appreciate Schwab’s more transparent fees for secondary market fixed income purchases. 

Account Research Amenities

Schwab and TD Ameritrade both have excellent screeners for stocks, ETF, mutual funds. The respective fixed income screeners are both able to look for specific issues and provide ladder building tools. Both brokers also offer trading idea generators. TD Ameritrade’s options analysis and screening tools are best in class, and superior to Schwab’s offerings. On the other side, Schwab’s screeners for ETFs and mutual funds let users screen for securities that meet socially responsible investing (SRI) and environment, social, governance (ESG) criteria, while TD Ameritrade does not offer SRI/ESG filtering on their screeners.

Both companies provide free research, news, and fundamental information for individual stocks. They also both provide daily market reports and provide access to third party research. TD Ameritrade’s thinkorswim platform allows paper trading and backtesting of strategies, which is not available at Schwab. While charting is also available on both platforms, we found TD Ameritrade’s charting clearly better, in addition to their market and implied and actual volatility data going back further than the data available at Schwab. 

Overall, we give the edge to TD Ameritrade when it comes to account and research amenities.

Portfolio Analysis

Both TD Ameritrade and Schwab allow aggregation of outside accounts to provide a full financial picture for clients. Similarly, they both provide excellent tools and calculators for portfolio analysis, including tools for margin, portfolio mix, retirement and income guidance, tax efficiency, life events, and options pricing and probabilities. Rebalancing, benchmarking, internal rate of return, and tax impact analysis and other tax accounting tools are also available. We gave a slight edge to Schwab’s offering of tools, calculators, and portfolio analysis even though both companies have strong offerings in this area.

Education

Schwab and TD Ameritrade both have excellent offerings to help educate investors and traders, but TD Ameritrade is our choice as having the best educational offerings of all online brokers. TD Ameritrade provides hands-on learning through paper trading, and investment education that uses technology to deliver innovative educational content in a personalized way.

Customer Service

Both TD Ameritrade and Schwab provide solid customer service, and unlike most online brokers, they also have a wide branch network with offices throughout the United States. Both brokers have 24/7 phone and live chat help options, as well as making financial advisors available to assist customers with strategy and trading ideas. Our research found that Schwab’s average wait time on customer service calls is 102 seconds, compared with TD Ameritrade’s 43 seconds. While both wait times are reasonable for such large companies with so many accounts, we give the slight edge in customer service to TD Ameritrade because its wait times are less than half of Schwab’s.

Security

Security on Schwab and TD Ameritrade is largely comparable, but there is an exception. Both brokers offer dual-factor identification, biometric fingerprint and facial recognition, and additional protection beyond Securities Investor Protection Corporation (SIPC) through insurance policies in London. While neither broker has reported any recent data breaches, TD Ameritrade, along with several brokerage firms, experienced intermittent downtime on January 27, 2021, that prevented users from logging on, checking portfolios, or making trades. TD Ameritrade also encountered login issues in 2020 as a result of unprecedented activity volume. A clean record on login issues for Schwab tilts the scale to them on security.

Our Verdict

Both Schwab and TD Ameritrade have wonderful technology for their website, desktop, and mobile apps, so there are no real losers in this competition. That said, TD Ameritrade has a small edge over Schwab because its trading technology is more consistent between web, desktop, and their corresponding mobile apps. Further, TD Ameritrade’s charting, options analysis, and investor education offerings are all better than at Schwab. More sophisticated traders would likely choose TD Ameritrade because of how good thinkorswim is, and for the ability to control how their orders are routed. TD Ameritrade also gives users the ability to paper trade and backtest trading strategies. 

There are, however, some offerings and cost differences that can tilt the scale in Schwab’s favor. Regarding offerings, Schwab has fractional share trading and TD Ameritrade does not. You can also screen for SRI/ERG criteria for Schwab for mutual funds and ETFs. On cost, examples include margin rates more than a full point lower at Schwab; OTCBB trades that are free at Schwab and not at TD Ameritrade; fixed income fees are difficult to understand at TD Ameritrade because commission is included in the price of the bond; and mutual funds outside of the no-fee offerings cost $49.99 at TD Ameritrade, but nothing at Schwab if the order is placed online. While futures commissions are also lower at Schwab, we did not weigh this heavily because active futures traders would not be likely to use either of these platforms for futures. 

Again, both Schwab and TD Ameritrade are excellent brokers and investors won’t be poorly served choosing either one. That said, if you are in it for trading technology, charting, and education, TD Ameritrade is the better fit. If you are after lower costs, ESG tools, and fractional shares, however, Schwab is the obvious choice.

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Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.



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