Schwab checking accounts do not pay interest on your balance
Charles Schwab's standard checking account—the Schwab Bank Investor Checking—earns zero interest on the money you keep in it. Your balance sits flat, regardless of how much you deposit or how long you hold it there. Schwab stopped paying interest on checking accounts years ago and has not resumed the practice.
If you are looking for a checking account that pays interest, Schwab is not the place to find it. However, Schwab does offer other ways to earn money on your cash, and understanding those options matters if you are deciding whether to bank there.
Key Takeaways
- Schwab checking accounts pay 0% interest, so your balance generates no earnings no matter how long the money sits there.
- Schwab does offer a money market account and savings account that pay interest rates that change based on Federal Reserve decisions, currently ranging from 4% to 5% depending on the account type and your balance tier.
- The Schwab Bank Investor Checking account waives ATM fees worldwide and has no monthly maintenance fee, which can offset the lack of interest earnings for some customers.
- If you want interest-bearing checking, you will need to look at banks other than Schwab or move money into Schwab's savings or money market products.
How Schwab makes money on your checking deposits instead
When you deposit money into a Schwab checking account, Schwab lends that money out to other customers or invests it. The bank keeps the interest earned from those loans and investments. You receive none of it. This is how most large banks operate—they pay you nothing on checking and profit from the difference between what they earn and what they pay out.
Schwab's trade-off is that they do not charge you a monthly fee to hold the account, and they reimburse ATM fees you incur anywhere in the world. For some customers, the convenience and fee structure make up for the zero interest. For others, the lack of earnings makes Schwab checking less attractive than competitors who do pay interest on checking balances.
Where to earn interest within Schwab Bank
Schwab offers two products that do pay interest: a money market account and a savings account. Both earn rates that move up and down with Federal Reserve decisions. The exact rate you receive depends on which account you choose and how much money you keep in it.
Money market accounts typically pay a higher rate than savings accounts at Schwab, but they may have restrictions on how often you can withdraw money. Savings accounts are simpler—you deposit, earn interest, and withdraw whenever you want. Both accounts are separate from your checking account, so you would need to transfer money between them if you want to move cash.
The interest rates Schwab pays on these accounts change frequently. You can check the current rates on Schwab's website or call their customer service line to see what they are offering at the moment you are deciding.
Why banks stopped paying interest on checking accounts
In the early 2000s, some banks paid modest interest on checking accounts. When the Federal Reserve lowered interest rates to near zero during the 2008 financial crisis and kept them there for years, paying interest on checking became unprofitable for banks. Most large banks, including Schwab, stopped offering it. Even as rates have risen again in recent years, most major banks have not brought back checking interest.
Smaller banks and online-only banks have filled this gap. Some now offer checking accounts that pay 4% to 5% interest, though usually with conditions like a minimum balance or a cap on how much earns the higher rate. If interest-bearing checking is important to you, these alternatives exist—you just will not find them at Schwab.
What to compare if you are choosing between Schwab and other banks
If you are deciding whether to bank with Schwab, do not base the decision on interest alone. Compare the full picture: monthly fees, ATM access, customer service, mobile app quality, and whether you want to keep investments and banking in one place.
Schwab checking has no monthly fee and reimburses all ATM charges worldwide, which saves money if you travel or use out-of-network ATMs often. Many competitors charge monthly fees or limit ATM reimbursement. On the other hand, if you keep a large cash balance and want it to earn interest, Schwab checking will cost you money in lost earnings compared to an interest-bearing checking account elsewhere.
The math is straightforward: if you keep $10,000 in Schwab checking earning 0% and could earn 4% elsewhere, you lose $400 per year. Whether that matters depends on how much cash you typically hold in checking versus savings or investments.
Moving money between Schwab checking and interest-bearing accounts
If you open a Schwab checking account and also use Schwab's savings or money market account, transferring money between them is free and usually instant. You can move money online through Schwab's website or mobile app in seconds.
The downside is that you have to actively manage the transfer. Money does not automatically move from checking to savings to earn interest—you have to do it yourself. Some customers set up a routine (moving money weekly or monthly) to maximize interest earnings. Others keep most of their cash in checking for convenience and accept that it earns nothing.
Frequently Asked Questions
Does Schwab checking earn any interest at all?
No. Schwab Bank Investor Checking pays 0% interest on your balance. The account has no monthly fee and reimburses ATM fees, but it generates no earnings on the money you deposit.
What interest rate does Schwab savings pay?
Schwab's savings and money market account rates change based on Federal Reserve decisions and vary by account type. You can see the current rates on Schwab's website or by calling their customer service. Rates are typically in the 4% to 5% range, but this changes frequently.
Can I earn interest if I keep a large balance in Schwab checking?
No. Schwab does not pay interest on checking regardless of your balance size. If you want to earn interest on a large cash deposit, you would need to move it to Schwab's savings or money market account, or bank elsewhere.
Is there a penalty for moving money out of Schwab checking?
No. You can transfer money out of Schwab checking to another bank at any time with no fee or penalty. Transfers typically take one to three business days depending on the receiving bank.
Should I use Schwab checking if I want to earn interest?
Only if the other benefits (no fees, worldwide ATM reimbursement, integrated investing) outweigh the cost of zero interest earnings. If earning interest on your checking balance is a priority, you will find better options at online banks or credit unions that pay interest on checking accounts.