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Charles Schwab vs. E*TRADE: Which Is Best?

Eric Reed
·8 min read
Older investor checks his portfolio using his Charles Schwab account
Older investor checks his portfolio using his Charles Schwab account

Charles Schwab and E*TRADE are two of the most popular investment platforms available today. Both are full-service products, meaning that they support most mainstream assets and research options. Furthermore, they are largely comparable in both price and services. There are, however, differences between the two. Here’s how the two of them stack up against one another.

Charles Schwab vs. E*TRADE: Fees

There are usually four types of fees to look out for when choosing a trading platform. You should look out for these when evaluating any investment or trading service:

  • Trading Fees – Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.

  • Trading Commissions – This is when a broker will charge you a percentage based on the volume or value of each trade.

  • Inactivity Fees – Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.

  • Non-Trading/Other Fees – Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.

In the case of Schwab and E*TRADE, their fee structures are almost identical. Both companies charge nothing to trade stocks, exchange-traded funds (ETF) or any other product listed on a mainstream stock exchange. They also charge no inactivity fees, nor fees for basic transactions such as depositing money or taking it out. Both firms charge $0.65 per contract to trade options, and both firms charge $1.50 per contract to trade futures. For high-volume traders E*TRADE reduces the cost of options to $0.50 per contract.

Schwab charges $50 to trade mutual funds, while E*TRADE charges $20. However, with both E*TRADE and Schwab you will have access to a significant no-fee fund list, which is a collection of several thousand funds listed by each firm that you can trade for free. While the listings differ, both of these trading platforms offer enough no-fee options that the average investor should be able to find options to meet his or her needs. The result is that you will likely trade mutual funds free of charge except in unusual circumstances.

Finally, both firms offer broker-assisted trading for $25 per transaction.

Charles Schwab vs. E*TRADE: Services & Features

In most significant respects, E*TRADE and Schwab offer comparable services and features.

With both Schwab and E*TRADE you can trade all mainstream securities. This includes stocks, ETFs, bonds, mutual funds, options and futures. Neither platform supports direct investment in cryptocurrency. Both platforms also offer all mainstream forms of trading data. Investors can look up price information, trading volume, volatility indicators and all other major technical indicators. When available, this information goes back for the lifetime of the asset. Both platforms allow you to create customizable charts, comparing assets or data in the same interface based on your trading needs.

Both platforms have even created a dual-brand approach to investing. With Schwab and E*TRADE alike you can choose between the firm’s main brand and a second brand developed for sophisticated traders. In Schwab’s case, this second brand is called StreetSmart, while E*TRADE has launched Power E*TRADE. Both are independent trading platforms built for a dedicated audience of sophisticated investors. In both cases, StreetSmart and Power E*TRADE offer better customization, some additional data analysis and more real-time data. These are more complex, information-dense platforms, and are well suited for highly experienced or professional traders.

The major difference between these two platforms comes in small ways. In particular, E*TRADE offers “paper” trading, an important feature that Schwab omits. This tool allows you to simulate a series of trades to see what impact they might have on your investment portfolio over the long term. This stock market game can let you test trading strategies or make plans without committing money.

Schwab, on the other hand, offers a trading tool called the All-In-One Trading Ticket. This is a secondary screen in which Schwab’s platform gathers all of your current trades before it executes them. This can be a feature you may either love or hate. Some users, such as this reviewer, find it distracting, an unnecessary step in the trading process. Others, however, may highly value the summary view that it offers. If you like the idea of seeing your trades gathered in one place before you commit to a new position in the market, the Trading Ticket may be a high-value feature for you.

Charles Schwab vs. E*TRADE: Online & Mobile Experience

Two women use E*TRADE to check their portfolios
Two women use E*TRADE to check their portfolios

Again, the trading experience with both Schwab and E*TRADE proves largely consistent. Users have several options when they trade with these two platforms. You can trade through either a web-based portal or on an app through either E*TRADE or Schwab, and can choose to do so through either their main brands or their sophisticated platforms. (However, it is important to understand that both StreetSmart and Power E*TRADE are highly complicated tools. It is very unlikely that a retail investor will get much extra value out of them, and you will likely have to wade through a significantly steeper learning curve in the process.)

E*TRADE and Schwab have both developed clean, efficient user interfaces. Both platforms show their age somewhat, with their designs slightly favoring the websites over the apps. However, this can be just as easily chalked up to the density of information that these platforms offer. It is simply not easy to elegantly fit a full-featured trading platform into the limited screen space that a smartphone allows.

Novice investors may find E*TRADE’s platform somewhat more user friendly. E*TRADE’s brand has always been introducing investment to newcomers, and it expresses that in its modern incarnation. Both on its website and its app, E*TRADE makes it slightly easier to navigate around your trading space and the design emphasizes basic information such as price history. This may add an extra click or two for experienced investors who would like to research their trades a bit more in depth, but creates a less daunting experience for newcomers.

This is not to say that E*TRADE’s platform is necessarily easy. Investors will still quickly bump into deep lists of asset classes, options ranging from bonds to ETFs and the classic candy cane-colored candlestick charts that make up investing. All of this may prove somewhat confusing to newcomers. However, they will likely find this space somewhat more intuitively laid out than Schwab’s.

Schwab’s platform, on the other hand, may slightly favor experienced investors. In addition to the All-In-One Trading Ticket (which, again, may confuse newcomers to the market), Schwab tends to offer better original analysis and data gathering. Inexperienced investors will likely take little value from market research, while sophisticated investors may find it highly useful.

Charles Schwab vs. E*TRADE: Who Should Use It?

Businessman checks his portfolio using a mobile app
Businessman checks his portfolio using a mobile app

The truth is, as we have noted above, there’s not much daylight between E*TRADE and Schwab. Both offer almost the exact same product at almost the exact same price. This is particularly true for a retail investor. Unless you trade at a very high level you will almost certainly not see a significant functional difference between these two platforms. This leaves two ways to choose among them.

The first is to review the small differences that do exist. If you, for example, use the retail services of Schwab, you will likely take additional value from also investing with them directly. You may prefer the paper trading options offered by E*TRADE, or the slight ease of use this platform offers over its counterpart. This is a perfectly viable option.

However, we recommend that a better choice might simply be to navigate into each trading platform yourself and test the waters. While both are well-designed products, each has its own layout and idiosyncrasies. The best way forward is likely to see which platform fits you best by using it for a little while without actually investing any money.

The Bottom Line

Schwab and E*TRADE are two of the biggest, most well-established trading platforms in the market. They offer largely identical prices and services, and either one would serve you very well as an investor.

Tips for Investing

  • Before you make a choice, be sure you learn a little bit more about everything that E*TRADE and Schwab have to offer. In our reviews we dive into the details of E*TRADE’s platform, and we do the same with Schwab. Details matter, which is why we’ve covered them for you.

  • What is your portfolio for? Do you want to retire comfortably, buy a house, send a child to college? Once you’ve settled on a financial goal, consider talking with a financial advisor so you can develop the best possible investment plan to reach that goal. Finding a financial advisor doesn’t have to be hard. With SmartAsset’s matching tool you can find one near you, in minutes, to develop a long-term financial strategy. If you’re ready, get started now. After all, the only thing better than having a great online trading app is having a great plan.

Photo credit: ©iStock.com/Extreme Media, ©iStock.com/SrdjanPav, ©iStock.com/ipopba

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