Charles Schwab Bank's High Yield Investor Savings Account

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Update 3/23/10: The rate has fallen to 0.50% APY. Refer to the bottom of the post for the rate history.

Charles Schwab has started a new savings account called the Schwab Bank High Yield Investor Savings. The yield as of 2/27/09 is 2.00% APY which is a little low for online savings accounts, but it has some features which may be appealing to certain people. Like the High Yield Investor Checking Account, this savings account has the following features:

  • no minimum balance requirements and no monthly fees
  • ATM fees reimbursed worldwide
  • FDIC insured
  • Provides an Electronic Funds Transfer (EFT) service for initiating ACH transfers to and from other institutions. An EFT form is required to set up a link. Once the link is set up, you have to call by phone to initiate the transfer.

There are some important differences between the checking and savings. Unlike the checking account, the savings account has:

  • no check writing or online bill pay
  • a limit of 6 non-ATM withdrawals (as required by regulation)
  • no requirement that you must also have the brokerage account

Even though you can open this without a brokerage account, you'll probably want one. The brokerage account gives you the capability of using Schwab's MoneyLink service to initiate ACH transfers to and from other institutions. Readers have mentioned that MoneyLink transfers are fast. The MoneyLink online service appears much more convenient than the EFT service.

The current 2% APY is a little low compared to other online savings account rates. Schwab may have set it a little low with the intention of keeping it at 2% for a while even as rates continue to fall. However, Schwab High Yield Investor Checking Account doesn't have the best history of competitive rates. For much of last year, the checking account rate was only 2%, and it has been at 1% since mid January. So if you don't already have a Schwab account, this new savings account alone isn't that great. For those who already have the checking account, this savings account can make a good addition by providing a boost in your interest rate for the money that you don't immediately need to pay bills.

With the mixing of bank accounts and brokerages, it's becoming confusing to understand what's covered under FDIC. Money held in this High Yield Investor Savings is under Charles Schwab Bank, N.A. which is FDIC insured (FDIC Certificate # 57450). However, money held in the brokerage account is under Charles Schwab & Co. which is a separate company from the bank. Brokerage products are not FDIC insured.

My past reviews of Charles Schwab products:


Thanks to the reader who commented on this new account in the Daily News & Deals post.

Rate History:
03/23/10: 0.50% APY
02/04/10: 0.75% APY
08/18/09: 1.05% APY
06/13/09: 1.35% APY
04/28/09: 1.75% APY
02/27/09: 2.00% APY

Comments
Anonymous
Anonymous   |     |   Comment #1
I am a schwab customer with this checking account for about 6 months. It has been very good and the customer service has been great. However I am only getting 1% on my account and have been for about the past month. don't know why they are advertising 2%.
Anonymous
Anonymous   |     |   Comment #2
sorry i need to read better.
did not read rate was for savings account.
Mike
Mike (anonymous)   |     |   Comment #3
Thanks for posting this! I don't know how I keep on finding out about Schwab products first on your site despite being a Schwab customer. It's kind of ridiculous!
Anonymous
Anonymous   |     |   Comment #4
I have had a schwab brokerage account for 30 years or more and opened the high vield checking account when it was started and I think the rate was 3.5 or 4 %. Problem now is it's not high yield Linking other accounts is a real pain plus every time you want to transfer it requires a phone call. At 2% the savings account is not worth the bother for me as there are other accounts that pay more. I keep the checking account open as it does work well with the brokerage account but in my opinion, if you don't have a brokerage account the checking and savings account are not the place to be.
More Returns
More Returns (anonymous)   |     |   Comment #5
Not aware of this new savings account. Thanks for the post! The rate is still high yield considering the current interest rates given by most banks. 2.0% is better than nothing.
giver and saver of money
giver and saver of money (anonymous)   |     |   Comment #6
don't forget about the 2% visa card they have. i guess if you spend a lot this is one way to get the money into an account to pay bills the easiest way, if anything else.
DataIsGold
DataIsGold (anonymous)   |     |   Comment #7
***Accidently posted this in the Comment on New Deals thread ***
Schwab Investor Savings. I opened the account, I see it in my list. I can't transfer funds to it from either my checking nor my brokerage. I can't even click on the account to see more information. It has a notice that says Savings Account Servicing. It's been like that all last week, so I called them today and the CSR said you cannot interact with the savings account online till May. You can only see the balance, and you have to mail in deposits.
They should have probably waited to launch their savings account.
Anonymous
Anonymous   |     |   Comment #8
down to 1%.....
Anonymous
Anonymous   |     |   Comment #9
DataIsGold, is it still impossible to interact with account online?
empyriol
empyriol (anonymous)   |     |   Comment #10
They are still advertising a 2% interest rate; I think the above comment "down to 1%....." was probably in reference to Schwab Checking.

This savings account is very tempting for me: I've been very pleased with my Schwab checking account since I opened it last year (except for the interest rate drop), and I've had my eye out for a convenient savings account with decent interest. This account seems to fit the bill.
David
David (anonymous)   |     |   Comment #11
I don't see how you can say 2% is not a good rate. I looked around and it is higher than most and the few that were higher were not higher by much.
DataIsGold
DataIsGold (anonymous)   |     |   Comment #12
@Anonymous, at 6:15 AM, March 21, 2009

Yes the Online Savings account is still in an interactiveLESS state. If you really want to transfer money in or out of it, you have to call the bank.

Here's what the service page says:

Transfer between High Yield Savings and your Schwab Bank High Yield Checking account:
Call 888-403-9000 to transfer funds between these accounts. Funds will be immediately available if the transfer is made during Schwab Bank’s business hours.

Also from their FAQ

Can I access my account online at Schwab.com?

If you have a Schwab brokerage account (such as a Schwab One account or Schwab IRA) you can view your High Yield Savings account balance on the Account Summary screen of the NEW Schwab.com. Balances are not available on the original site due to its 2009 scheduled retirement date. If you have trouble viewing your account balance, call 888-403-9000.
Anonymous
Anonymous   |     |   Comment #13
down to 1.75% APY & the Schwab HY checking is 0.75% APY now...
Anonymous
Anonymous   |     |   Comment #14
Seems that the Savings Account is not accessible online yet. "limited functionality" is how they explained it to me on the phone. If you want to see any transactions you have to call them for now. Hopefully, they will get this straightened around soon so you can do more online.
Anonymous
Anonymous   |     |   Comment #15
Is a transfer from the Savings Account to your brokerage account instant, even if it's by phone? So if you wanted to buy stocks right away you can transfer the money in immediately? Etrade has this instant set up and it works great, but Etrade's bank rate is now less than Schwab's (surprisingly). Etrade = 0.95%; Schwab = 1.75%
DataIsGold
DataIsGold (anonymous)   |     |   Comment #16
Today is the first day you can interact with the Savings account.

I can click it and see the transaction history.

However, it's treated as an outside bank in the ACH/Transfer system. (Why?)
So transferring funds to it goes on the next business day from the brokerage.

If you call all transfers are instant.

So in short, it's getting better.
Anonymous
Anonymous   |     |   Comment #17
Looks like their interest rate is about to match ETrade's. Have they fixed their access between savings and brokerage yet, so you don't have to do it by phone?
Anonymous
Anonymous   |     |   Comment #18
Rate is now down to 1.05% APY. You still need to call in order to have instant transfers between brokerage and saving, which are definitely instant. It isn't too hard to call, but I'd still rather do it online and have the flexibility of transfers during non-business hours. I asked when online transfer functionality was going to be added, and he said they're "working on it." I opened it as an alternative to the checking so that I can more easily and quickly transfer funds between brokerage and a higher-yielding account (as opposed to an external institution which takes two to three days); so it serves a purpose, but the interest rate is somewhat pathetic now.
Anonymous
Anonymous   |     |   Comment #19
You can now transfer between the Schwab brokerage and savings accounts online.
Anonymous
Anonymous   |     |   Comment #20
Currently, the only way to transfer money between the Schwab checking and savings is to use the phone. A CSR I talked to said they plan to have internet transfer capability by January, 2010.
Anonymous
Anonymous   |     |   Comment #21
You can transfer online between savings and checking if you do it in 2 steps: transfer from checking to brokerage, then from brokerage to savings.
Ricochet
Ricochet   |     |   Comment #24
BEWARE may be scammer

I reported to DA

Edit: spam post removed
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