Interactive Brokers vs. Charles Schwab: Which Is Right for You? | The Ascent by Motley Fool (2024)

Two of the best brokerages for active traders are Interactive Brokers and Charles Schwab. While Interactive Brokers is one of The Ascent's picks for day trading platforms, Charles Schwab also has advanced tools and capabilities that can make it a good fit for active investors and professional traders.

Let's look at a breakdown of Interactive Brokers vs. Charles Schwab, and see which brokerage could be the best choice for your investing style and financial goals.

Both Interactive Brokers and Charles Schwab offer low-cost trading, with commissions starting at $0. Both brokerages also offer extensive selections of no-transaction-fee ETFs. Some more complex investment products might have a higher commission or fee structure, or your fees could depend on the type of account you have.

For example, Interactive Brokers offers commission-free trades for U.S. exchange-listed stocks and ETFs, but only for its IBKR Lite accounts. If you use the higher tiers of IBKR Pro accounts, you will have to pay some commissions and fees based on the minimum (or maximum) amount per order, and your monthly trading volume.

Charles Schwab also offers $0 commissions for U.S.-listed stocks and ETFs, but charges per-contract fees for options and futures. While many Charles Schwab mutual funds are commission free (if purchased through Schwab Mutual Fund OneSource®), other mutual funds could charge up to $74.95 per purchase.

READ MORE: Best ETF Brokers

Interactive Brokers and Charles Schwab offer a wide range of investments for sophisticated traders. Whether you want to buy individual stocks or ETFs, invest in bonds, options, futures, or currencies, both of these brokerages can give you the investment choices you want.

READ MORE: Best Day Trading Platforms

But if you want to invest in individual cryptocurrencies, Interactive Brokers is the better choice. Charles Schwab has a cryptocurrency-themed ETF, but it does not allow investments in individual cryptocurrencies.

Charles Schwab and Interactive Brokers offer a wide selection of account types, beyond just the typical taxable brokerage account. If you want to use these platforms to manage your IRA money, borrow on margin, or open other specialized types of investment accounts, both Interactive Brokers and Charles Schwab can accommodate you.

The main difference in account types between Interactive Brokers vs. Charles Schwab is that Schwab offers a few unique types of banking accounts and services that Interactive Brokers does not. Schwab can set you up with a checking account, a savings account, and even credit cards. If so inclined, you could do all of your everyday banking with Schwab.

However Interactive Brokers also has a distinctive hybrid account called the IB Universal Account that offers a high yield on cash and easy mobile check deposit. However, this account does not offer check writing or bill pay, so it doesn't pass muster as a "checking account."

Let's see which types of accounts are available with Interactive Brokers vs. Charles Schwab.

LEARN MORE: Best IRA Accounts

Interactive Brokers offers a wide range of trading platforms, including IBKR Mobile, IBKR Desktop, the IBKR Client Portal, and advanced tools like the IBKR Trader Workstation. Your choice of platform affects your choice of investment products and your access to features; Interactive Brokers recommends that beginning traders start out with the IBKR Global Trader platform, while more advanced traders should use the IBKR Trader Workstation.

Want to invest and manage your Interactive Brokers account on the go? Use the IBKR Mobile App. It's highly rated for iOS (4.5 stars on the App Store) and Android (4.7 stars on Google Play).

Charles Schwab also offers a few different types of trading solutions for active investors and professional traders. Schwab's trading experience is called Schwab Trading powered by Ameritrade™, and it offers a few different thinkorswim® trading platforms for different levels of traders and investors. Schwab recommends:

• thinkorswim web for less experienced traders, and
• thinkorswim desktop for more seasoned traders who want a more full-featured platform

Investors can also manage everyday investing and trades online at Schwab.com or via the Schwab mobile app. Schwab Mobile gets high ratings for iOS (4.8 stars on the App Store) but has a lot of bad reviews for Android (2.3 stars on Google Play). If you're an Android user and a bad mobile app is a dealbreaker for you, Schwab might not be the best brokerage for your needs.

Deciding between Interactive Brokers vs. Charles Schwab comes down to how you prefer to invest, what types of accounts you want to open with your brokerage, and how many bells and whistles you need to support your active investor trading style. If you want to buy cryptocurrencies, Interactive Brokers is a better choice than Schwab. If you want a brokerage that can also give you full-service banking, Schwab fits the bill better than Interactive Brokers.

Want to try the trading platform before you commit? Interactive Brokers offers a free trial. Schwab also offers a free 30-day Guest Pass where you can try its thinkorswim® trading platforms. Doing a free test run of a new trading platform is often the best way to see how its user experience fits your investing style -- and see how much you could save on fees compared to your current brokerage.