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Charles Schwab Pledged Asset Line review

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Access funds from your Schwab investment portfolio with this line of credit.

  • Best for borrowers with at least $100,000 in eligible assets in a Charles Schwab account.
  • Pick something else if you don't want to risk your investments for a line of credit.

$20,000,000

Max. Loan Amount

Varies

APR

Details

Product NameCharles Schwab Pledged Asset Line
Min. Loan Amount$100,000
Max. Loan Amount$20,000,000
APRVaries
Interest Rate TypeVariable
Late Fee$25

Expert review

Kellye Guinan

Review by


Kellye Guinan is a writer and editor with Finder and has years of experience in academic writing and research. Between her passion for books and her love of language, she works on creating stories and volunteering her time on worthy causes. She lives in the woods and likes to find new bug friends in between reading just a little too much nonfiction.

Expert review

A Pledged Asset Line from Charles Schwab is ideal for current customers looking to take advantage of their investments without selling them. You can borrow against up to $20 million in investments held in a Pledged Account. There are no set-up fees, and your line will have a flexible repayment schedule with no set term.

But there are inherent risks to borrowing against your assets, and with a minimum loan amount of $100,000, this isn’t a good option if you just need access to a small amount of funds. Charles Schwab also reserves the right to change your interest rate at any time without notice.

Not sure you want to use your Pledged Account as collateral? Compare your unsecured personal loan options below.

How much will this line of credit cost me?

Your APR will depend on the value of your collateral when you open a Pledged Asset line. Charles Schwab uses LIBOR — a benchmark rate international banks use to lend to other banks — plus a spread to calculate your variable rate, and like any line of credit, you are only required to pay interest on the amount you draw.

Collateral valueAPR
Under $250,0001-month LIBOR + 4.50%
$250,000 to 499,9991-month LIBOR + 3.25%
$500,000 to $999,9991-month LIBOR + 2.75%
$1 million to $2.49 million1-month LIBOR + 2.25%
$2.5 million or more1-month LIBOR + 1.75%

There are no annual or draw fees, and your monthly payments will be interest-only. To see how much your line might cost month-to-month, use our calculator below.

How it works

Charles Schwab determines your APR based on your assets, not your credit. The higher the value of your collateral when you draw, the lower your interest rate spread will be.

However, the one-month LIBOR will also determine a portion of your total APR, and it’s the same no matter which interest rate spread you get. Charles Schwab may also change the spread at any time without notice — so keep an eye out to ensure you aren’t shocked by a change to your APR.

What do I need to qualify?

Charles Schwab doesn’t list any specific requirements to open a Pledged Asset Line (PAL). At the minimum, you’ll need to have at least $100,000 in eligible assets in your Charles Schwab Pledged Account to secure your line. Lines are available for individuals, joint account holders and the trustees or trustors of a revocable living trust held at Schwab.

What assets are eligible for collateral?

Charles Schwab considers any of the following assets as collateral:

  • Marginable equity valued at $3 or more per share
  • Mutual funds
  • Exchange-traded funds
  • Certificates of deposit
  • Cash
  • Corporate, Treasury, municipal and government agency bonds

What information do I need to apply?

Because your line of credit is based on your Pledged Asset account, you likely won’t need to provide much additional information. Your Charles Schwab banker will be able to tell you the documents or other details they might need to open your Pledged Asset line.

Pros

  • Flexible repayment schedule with no set term
  • Large credit lines of $100,000 and up available
  • No annual or draw fees

Cons

  • Need to have at least $100,000 in eligible assets
  • Must make an initial draw of $70,000
  • Can be a risky investment if the market takes a hit
  • Interest rates can change without notice

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Is Charles Schwab legit?

Yes, Charles Schwab is a legit SIPC-insured lender with a secure website. Like all lenders, it has a clear privacy policy that outlines what information is collected when you use its website and how that information can be used. You can limit sharing at any time by calling 877-812-1817.

Does Charles Schwab get good customer reviews?

BBB accredited No
BBB rating A
BBB customer reviews 1 out of 5 stars, based on 19 customer reviews
Trustpilot Score 4 out of 5 stars, based on 13 customer reviews
Customer reviews verified as of 27 May 2020

Charles Schwab receives mixed reviews online, but none of its recent customers comment specifically on its Pledged Asset line of credit. However, quite a few customers had problems with customer service, which can be a red flag when dealing with large sums of money. Customers have also had issues with random account closures — another red flag for borrowers risking their investments on a line.

How do I apply?

You can apply for a Pledged Asset Line by calling 888-725-3630 or visiting your local Charles Schwab branch. Or if you’d rather have someone contact you, you can fill out a quick online form:

  1. Visit Charles Schwab’s website and hover over What we offer.
  2. Click Pledged Asset Line under Banking.
  3. Scroll down and click Request more PAL information.
  4. Enter your full name, email address and phone number.
  5. Select your client status, the amount you’re interested in and the purpose of your PAL.
  6. Click Send.

What happens after I apply?

Charles Schwab will be in contact with you to set up your account and go over the next steps. If you’re approved for a PAL, your assets will be held in a separate Pledged Account. You’ll then need to make a draw of at least $70,000 — the current minimum initial draw amount. After, the value of the assets held in the account must exceed either the minimum value of $100,000 or your outstanding loan balance.

How do repayments work with Charles Schwab?

Charles Schwab only requires its borrowers to make interest-only payments, although there are no penalties for paying off your outstanding balance early. However, the penalties for paying late are steep. On top of a $25 fee, Charles Schwab may amortize your owed interest into the principal, which can increase your total loan amount and make it more expensive overall.

Before you dive in, explore other loans available at Charles Schwab. Or compare even more personal loan providers.

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