Schwab Margin Details

[Fearchar]

Last week on Friday, I decided to sell some shares in a taxable account at Schwab.
The order was at market and was promptly executed and settled as I recall.
So, I had a new balance available to trade and I wasn't about to just let the funds sit there over the weekend.

Of course, I already knew what I wanted to do too.
So, just a few minutes later I initiated a position in a mutual fund; RCTIX.
Schwab charges $49.95 fee to do this, which I'm not thrilled about but they need to make money too.
So, did the math and put an order in for about $50 less than the new available to trade balance.
Now, I admit, I just glanced at the screens for this transaction.

Checked out the account positions on Saturday and all looked well.
There was ~$1 of cash in the account, which should have been fine.
In the past, I've entered trades that would result in balances nearer to $0.00.
However, have been dismayed to see cash balances of -$0.01 due to rounding.
So, that did not happen, and I was satisfied with the account last week Saturday morning.

5am Tuesday morning, I received and email from Schwab informing me LOAN INITIATED
in an amount about $10 more than the transaction!

So, took a much closer and careful look at the account.
Schwab has "Summary", "Balances" and "Positions" tabs.
I normally look at the Positions tab when checking the account.
However, margin details are found near the bottom in "Balances".
It not only showed a Balance subject to interest, but it was for more than the actual trade.
This made no sense, because the account position page showed that I had a small cash balance.

It also showed that I already had a "Month to Date Interest Owed" for more than my meager cash balance.
I checked again on Wednesday and same thing.
So, just to be safe, I sold some shares of SWVXX to maintain a more significant cash balance.

This morning I checked and the "Balance subject to Interest" has been reset to $0.00.
However, there is still and "Interest Owed" amount.
"Cash" is where I left it, but under "Funds available", "Cash and Cash Investments" has been adjusted for the "Month to Date Interest Owed."
So, yep, I've been charged for a Margin trade.

I have a good amount of experience with other broker platforms, but have never experienced anything like this.
I will not waste time by being put on Hold to talk with a Representative about this.
Nor will I complain to Schwab.
However, it's another lesson learned and unfortunately, not my only negative experience with this broker.

Yeah; last week I posted that I wasn't going to be posting much and I don't like rants either.
So, go figure!

Have a good weekend everyone.
Enjoy life and be grateful for what you have!!!

[fritzo489]

Fearchar, Was the interest more than a buck ? Just wondering, fritzo489

[Chahta]

Mar 9, 2024 13:14:56 GMT Fearchar said:

Last week on Friday, I decided to sell some shares in a taxable account at Schwab.
The order was at market and was promptly executed and settled as I recall.
So, I had a new balance available to trade and I wasn't about to just let the funds sit there over the weekend.

Of course, I already knew what I wanted to do too.
So, just a few minutes later I initiated a position in a mutual fund; RCTIX.
Schwab charges $49.95 fee to do this, which I'm not thrilled about but they need to make money too.
So, did the math and put an order in for about $50 less than the new available to trade balance.
Now, I admit, I just glanced at the screens for this transaction.

Checked out the account positions on Saturday and all looked well.
There was ~$1 of cash in the account, which should have been fine.
In the past, I've entered trades that would result in balances nearer to $0.00.
However, have been dismayed to see cash balances of -$0.01 due to rounding.
So, that did not happen, and I was satisfied with the account last week Saturday morning.

5am Tuesday morning, I received and email from Schwab informing me LOAN INITIATED
in an amount about $10 more than the transaction!

So, took a much closer and careful look at the account.
Schwab has "Summary", "Balances" and "Positions" tabs.
I normally look at the Positions tab when checking the account.
However, margin details are found near the bottom in "Balances".
It not only showed a Balance subject to interest, but it was for more than the actual trade.
This made no sense, because the account position page showed that I had a small cash balance.

It also showed that I already had a "Month to Date Interest Owed" for more than my meager cash balance.
I checked again on Wednesday and same thing.
So, just to be safe, I sold some shares of SWVXX to maintain a more significant cash balance.

This morning I checked and the "Balance subject to Interest" has been reset to $0.00.
However, there is still and "Interest Owed" amount.
"Cash" is where I left it, but under "Funds available", "Cash and Cash Investments" has been adjusted for the "Month to Date Interest Owed."
So, yep, I've been charged for a Margin trade.

I have a good amount of experience with other broker platforms, but have never experienced anything like this.
I will not waste time by being put on Hold to talk with a Representative about this.
Nor will I complain to Schwab.
However, it's another lesson learned and unfortunately, not my only negative experience with this broker.

Yeah; last week I posted that I wasn't going to be posting much and I don't like rants either.
So, go figure!

Have a good weekend everyone.
Enjoy life and be grateful for what you have!!!

First, I hope you keep posting. Second I am at Schwab t00. At a certain level you should get a "special person" to take care of you and your issues. If you are not happy let them know. 

[yogibearbull]

See related on MFO about T+2 & T+1 settlement trap.
My experience is that Schwab doesn't reverse these "user mistakes". I once started arguing and the Rep said why worry, it's such a small amount. But when I said, OK, but why not reverse it? The line almost went dead for a while. But the answer was, NO.
www.mutualfundobserver.com/discuss/discussion/comment/173465/#Comment_173465

[steadyeddy]

I always leave a few dollars in the account in order to avoid hassles like this. In fact, I had an issue with an IRA a couple of years ago where I had to move a $1 to cover negative balance.

[FD1000]

In my experience, every time I had an issue like that, I called my team and they fixed it. Either it was nothing = the wrong warning or it was real and the Schwab rep credit my account.
Not only they waved my $49.95 for buying I share funds, they also credit my account with ST $49.95 fee for regular funds.
All I do is ask for the moon and I get pretty close to it.
If the first rep doesn't, the 2-3 one will do.

[habsui]

I became a Schwab customer through the TDA acquisition (small account for us).

I am not impressed with their trade cash/MM handling.  I'm gradually moving $$ out..

[anitya]

Mar 9, 2024 20:42:17 GMT habsui said:

I became a Schwab customer through the TDA acquisition (small account for us).

I am not impressed with their trade cash/MM handling.  I'm gradually moving $$ out..

I thought Schwab charges for partial account transfer.  No?

[habsui]

Mar 9, 2024 22:03:22 GMT anitya said:

Mar 9, 2024 20:42:17 GMT habsui said:

I became a Schwab customer through the TDA acquisition (small account for us).

I am not impressed with their trade cash/MM handling.  I'm gradually moving $$ out..

I thought Schwab charges for partial account transfer.  No?

Whenever I sell something, the cash gets moved out..

[Fearchar]

Mar 9, 2024 16:15:47 GMT steadyeddy said:

I always leave a few dollars in the account in order to avoid hassles like this. In fact, I had an issue with an IRA a couple of years ago where I had to move a $1 to cover negative balance.

Eddy; 

It wasn't a matter of leaving a few more dollars of cash available in the account.
Instead, it's more along the line of what Yogibearbull stated.
That is, it's a settlement trap.

Apparently, at Schwab equity trades don't really settle until a few days later.
And they charge customers over 12% annually for that.
Margin was charged on an amount that was actually greater than the purchase amount.

So, the amount of funds available for trading are not what one might normally consider.
They do not inform the customer that the margin expenses will show up until a few days after the trade.

[anitya]

Mar 9, 2024 22:21:46 GMT habsui said:

Mar 9, 2024 22:03:22 GMT anitya said:

I thought Schwab charges for partial account transfer.  No?

Whenever I sell something, the cash gets moved out..

Got it.  Good idea to use the Schwab bank to siphon out but not so easy to do in an IRA.

I think to get better service from Schwab, one needs to establish a good relationship with your local branch and have a local branch team associated with your account.  Whenever you have a problem, you just go to that team, rather than to a telephone Rep.  I get that not everyone might be lucky to have a good branch.  I need to do this myself before my TD accounts move over and before calling quits on Schwab.  I understand some of the obstinate Schwab service experiences shared in this forum.  E.G.,

I recently called Schwab because I held an NTF fund for 87 days and asked them to waive the $49.95 before I place the sell order as at Fido and Vanguard, STR fees applies only if held for less than 60 days.  The telephone Rep put me on hold and received permission for the waiver but he told me he has to submit a case and the approving manager will simply OK it officially and so I would initially be charged and then refunded.  A week went by and no refund.  I called back the telephone rep, which is not very easy to connect to because you do not get their extension or number.  He apologized and said he would follow up.  Another week went by and no refund.  I am not going to spend many hours to get $49.95 back.

On another occasion, I transferred 1 share of a TF  mutual fund to Fido and simultaneously transferred many $0000 of cash from Fido to Schwab, both rollover IRA ACAT transfers.  Later on I noticed Schwab charged partial account transfer fees for the 1 share transfer.  I called a tel rep and pointed out the irony.  She said those are the rules and when I pointed out that I could just take the cash back to Fido, she said I would be charged another partial account transfer fees if I moved the cash out.

There has to be an easier way or time to move on for me - I will give them 6 months after my TD account transition.  

Many posters have complained about Schwab before but there is always one poster here who consistently tells those posters or implies that their experiences are invalid.  That stops other posters from sharing their experiences.  Drowning out other voices is not so uncommon occurrence here.  

Life is too short.  Good luck to you all.

[steadyeddy]

Mar 9, 2024 22:45:04 GMT Fearchar said:

Mar 9, 2024 16:15:47 GMT steadyeddy said:

I always leave a few dollars in the account in order to avoid hassles like this. In fact, I had an issue with an IRA a couple of years ago where I had to move a $1 to cover negative balance.

Eddy; 

It wasn't a matter of leaving a few more dollars of cash available in the account.
Instead, it's more along the line of what Yogibearbull stated.
That is, it's a settlement trap.

Apparently, at Schwab equity trades don't really settle until a few days later.
And they charge customers over 12% annually for that.
Margin was charged on an amount that was actually greater than the purchase amount.

So, the amount of funds available for trading are not what one might normally consider.
They do not inform the customer that the margin expenses will show up until a few days after the trade.

Fearchar, thanks for the clarification!

[FD1000]

Mar 9, 2024 22:03:22 GMT anitya said:

Mar 9, 2024 20:42:17 GMT habsui said:

I became a Schwab customer through the TDA acquisition (small account for us).

I am not impressed with their trade cash/MM handling.  I'm gradually moving $$ out..

I thought Schwab charges for partial account transfer.  No?

Schwab and Fidelity never charged me for partial transfer. I always did by the new broker from the old one.

[anitya]

Mar 10, 2024 5:34:46 GMT FD1000 said:

Mar 9, 2024 22:03:22 GMT anitya said:

I thought Schwab charges for partial account transfer.  No?

Schwab and Fidelity never charged me for partial transfer. I always did by the new broker from the old one.

No need to talk about Fido as no one is talking in this thread about Fido charging for partial transfer.  Just because you were never charged a fees by Schwab does not mean those fees did not exist or posters were not charged those fees.   

Here is my chat from a few minutes ago with a Schwab Rep and then his supervisor:

"A: Could you please direct me to the webpage that lists the fees for partial and full account transfer out of Schwab brokerage account?

Rep: That is not listed on Schwab.com, but I am happy to provide the information here. The fee for a full transfer is $50 and partial transfer is $25

A:  All fees must be disclosed pursuant SEC rules. So, it would be stated on your website. Please ask your colleagues or supervisor for the weblink.

Rep: There is no link with that fee listed. I apologize. But all other fees are found here: client.schwab.com/secured/pricing

A: please connect me to your supervisor  [while I am on the chat, I am furiously digging their website to make sure I have latest information]

A to supervisor: www.schwab.com/legal/schwab-pricing-guide-for-individual-investors
This document clearly says, effective February 2024, no fees for partial transfer out of assets, but your representatives keep saying there is a $25 fees - please read today's chat with your representative.  The same fees was quoted to me by earlier representative as well. What is the $25 fees they are talking about that is not in the pricing guide?

Supervisor: That has recently changed, we will certainly make sure that the awareness on that gets better. Partial transfer fees have been $25 for many years."

What is your objective of you telling or implying to posters that their experiences and information are not valid? More often than not you cite outlier examples to contradict other posters or simply drive conversations out of context. I have asked you many times before to take a nurturing approach in responding to posters but to no avail. Are you trying to make yourself feel important at other posters' expense or are you simply trying to kill valid conversations and ultimately this forum? Your dismissive comments, such as the one above, to posters are causing irreparable damage to this forum. This is getting very tiring and many posters do not want post / share here because of your approach.

[Fearchar]

Thank-you anitya ,

Lately, I've been working thru a number of issues with Schwab besides the latest margin revelation.

The Schwab account was originally set up by my Dad.
After he passed away, it became my Moms.
It was a large enough account that a VP was assigned to it.
He tried establishing a relationship and that was fine by me.
So, I have been discussing the accounts with him for a number of years.
He was helpful with the merger of my Moms TDA accounts and I was hopeful
and encouraged since the Schwab office was also relatively local.

However, over the last 2+ months, it's become apparent that he has not been able to make up for Schwab's nuances.
He seems like a nice sharp guy too with plenty of experience.

Now I guess most people on this board already know that these local VPs aren't really Executives.
It's just a title they are given to impress clients.
However, he has been working for Schwab for a good while.

My Mom also had an account at Fidelity.
Not as large, so there was no VP assigned to it.
Also, the Fidelity office is much further away.
After my Mom passed I contacted Schwab first and waited a few days before calling Fidelity.
Fidelity assigned and Estate Specialist.
Everything went smoothly with those accounts.
Beneficiary accounts were established and funds dispersed within 2 weeks of when I contacted Fidelity.
And I have my Mom's Fidelity 1099 for 2023.

It's March now and I'd like to get Mom's Taxes done.
However, still no 1099 from Schwab and I'm not exactly sure why.
I've been promised by the VP that it will arrive this coming week.

[yogibearbull]

Fearchar, 1099s depend on complexity of holdings. So, my Vanguard 1099 came early, then Fido 1099, and recently Schwab 1099.

Beware that those may be revised in a few weeks, or any later time when any fund makes adjustments to its distributions, small or large.

I wait until mid/late-March to start my taxes. For very late 1099 revisions, if the changes are minor, I don't bother with amended 1040X - so far so good.

One reason I got out of investments that generated K-1s, besides the complexity of filings, was that some K-1 were posted only by late March or early-April and that made me nervous, even though I could file for extensions.

[anitya]

Fearchar,

I agree with Yogi. However, you still might continue to have a dissatisfactory relationship with Schwab. A VP title in a financial services organization is not very high. Given your experience so far, i think it is time to see the branch manager (ask the VP politely to get you the appointment) and if that meeting does not reset your relationship with Schwab, you know what to do. Good luck.

A