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Pledged Asset Line®

 

Pledged Asset Line®

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Pledged Asset Line® When opportunity knocks, say hello to flexible financing.

Looking to leverage your assets to enhance borrowing power for real estate, business, and consolidation opportunities? Our Pledged Asset Line (PAL) offers convenient and flexible securities-based financing that’s easy to manage online or using the Schwab Mobile app.

PAL gives you quick lending decisions at competitive rates on fluctuating line sizes ranging from $100,000 to $20,000,000 and above, based on the value of your pledged securities. Retirement assets are not eligible.

PAL benefits

  • Flexible lending for real estate, business loans, and more
  • Convenient access to online accounts and funds
  • Competitive rates, plus no application or set-up fees*
  • Timely access to your line of credit for a period of five years

What collateral can be used?

  • Marginable equity securities valued at or above $3/share at the time of funding and closing
  • Most mutual funds and exchange-traded funds
  • Certificates of deposit and cash
  • Many corporate, Treasury, municipal, and government agency bonds

Ready to consider a PAL?

Call 888-725-3630

(Monday through Friday, 8:30 a.m. to 8:00 p.m. ET)

— or —

Request more PAL information

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I’d like to know more about the Charles Schwab Bank Pledged Asset Line. Please contact me so I can see if PAL could be the right lending solution for my needs.

Why would you like to open a PAL?* (Check all that apply.)

Are you a Schwab client?*

PAL FAQs

A Pledged Asset Line (PAL) from Charles Schwab Bank (Schwab Bank) can help you leverage the value of your investments. This revolving line of credit allows you to borrow against the value of eligible assets without liquidating your investments.

What is the Pledged Asset Line?

It's a non-purpose revolving line of credit from Schwab Bank secured by eligible assets held in a separate Pledged Asset Account (PAASB) maintained at Charles Schwab & Co., Inc. ("Schwab").

Are there limitations on using proceeds?

Proceeds must be used for a lawful purpose and may not be used to purchase securities, pay down margin loans, or be deposited into Schwab brokerage accounts.

What are the minimum liquidity requirements?

Up to 75% of your total liquid non-retirement assets may be pledged. Assets at another institution must be verified to be included.

What types of borrowers are eligible?

Individuals, joint borrowers, and revocable living trusts with identical trustee, trustor, and beneficiary are all eligible.

How long is the term?

Terms of five years are available.

What is the interest rate?

Rates are based on the market-driven one-month LIBOR (London interbank offered rate) plus an interest rate spread. The interest rate spread is determined based on the maximum Pledged Asset Line amount. (Note: Applications received prior to November 1, 2013, may still be based on the three-month LIBOR index.)

What are fees and charges?

There are no application or account set-up fees. In addition, many account maintenance fees—such as wire fees, returned payment fees, draw fees, and check fees—have been eliminated. 

The only fees applicable to the account are late fees. As long as there is available credit to cover the amount of interest due, interest capitalization will be done so that no monthly payment is required and no late fees will be assessed. 

There is no fee to establish or maintain the Pledged Asset Account; however, standard trading commissions will apply to all trading in the Pledged Asset Account.

Are there collateral requirements?

Schwab Bank requires that the assets pledged as collateral for the Pledged Asset Line be held in a separate Pledged Asset Account (PAASB) maintained at Schwab. Schwab Bank establishes collateral requirements regarding the type of assets, value of assets, and concentration of assets that are eligible to secure the Pledged Asset Line, and reserves the right to change the requirements from time to time. Collateral requirements must be satisfied in order to borrow on the Pledged Asset Line and to maintain the Pledged Asset Line in good standing.

What is a Pledged Asset Account at Schwab?

A PAASB is a Schwab brokerage account that holds assets pledged as collateral for the Pledged Asset Line.

Because the PAASB holds collateral for the Pledged Asset Line, it is treated as a cash or non-margin account. The following limitations have been established on the PAASB:

– No margin capability
– No option trading
– No payment features are available on the PAASB, including check writing, debit card, or bill pay privileges
– No withdrawals without the consent of Schwab Bank
– Only assets constituting Eligible Collateral may be acquired
– PAASB settlement terms require cash in advance

Brokerage products are:

  • Not insured by the FDIC;
  • Not a deposit or other obligation of, or guaranteed by, Charles Schwab Bank; and
  • Subject to investment risks, including possible loss of principal.


There is no fee to establish or maintain a PAASB, but standard trading commissions will apply to all trading in the Pledged Asset Account.

Who's responsible for investment decisions?

Neither Schwab Bank nor Schwab provides investment or financial advice with respect to the PAASB, any assets to be pledged in the PAASB, or any transactions therein.

What are the risks?

Entering into the Pledged Asset Line and pledging securities as loan collateral involve a high degree of risk. Before you decide to apply for a Pledged Asset Line, make sure you understand the risks which are detailed in the Pledged Asset Line application.