Pledged Asset Line

A Pledged Asset Line® from Charles 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. 

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").

Proceeds may not be used to purchase securities or to pay down margin lines, and may not be deposited into Schwab brokerage accounts.

Line amounts range from $100,000 to $15,000,000. Clients may be able to borrow up to 70% of the value of their eligible assets pledged as collateral. (Please note that your actual advance rate may be lower.)

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

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

Terms of up to five years are available.

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.)

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.

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 are based on the maximum Pledged Asset Line amount and must be satisfied in order to borrow on the Pledged Asset Line and to maintain the Pledged Asset Line in good standing.

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 checkwriting, 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.

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

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 following risks, which are detailed further in the Pledged Asset Line application:

  • You can lose more assets than you are required to deposit in your collateral account. A decline in the value of the securities in your collateral account may result in a reduction in your Pledged Asset Line, a demand that you deposit additional funds or securities into your collateral account (such demand is a "collateral maintenance call"), or the forced sale of securities in your collateral account. The Pledged Asset Line is a full recourse obligation, and you will still be responsible for satisfying any obligation that remains outstanding after such sale.
  • The lender can force the sale of securities in your collateral account to satisfy your Pledged Asset Line obligations.
  • Your collateral account also secures any obligations owed to Schwab.
  • The lender can sell your securities without contacting you.
  • You are not entitled to choose which securities in your account are liquidated or sold if you fail to meet a collateral maintenance call.
  • You are not entitled to an extension of time to meet a collateral maintenance call.
  • You may incur adverse tax consequences if your securities are sold, or otherwise in connection with your pledge of securities as loan collateral.
  • There may be alternative ways of borrowing funds that are less expensive and involve less risk.

Questions about a new Pledged Asset Line?

Contact your Financial Consultant or call 
800-838-6573 (option 1).

Servicing your Existing Pledged Asset Line Accounts

There are three ways to make a payment to your Pledged Asset Line:

  • Make a transfer from your Schwab Bank account
  • Make a Schwab MoneyLink® transfer from a non-pledged Schwab One® brokerage account
  • Mail a check to:

Charles Schwab Bank
P.O. Box 982600
El Paso, TX 79998-2600

Interest accrues daily and is payable on the 15th of each month, but may be added to the principal amount of the loan if there is sufficient availability on the Pledged Asset Line. If the Pledged Asset Line does not have sufficient available credit, monthly interest payments will be required and will be reflected on your monthly statement. Principal, unpaid interest, and other fees, if any, are payable at maturity.

Forms for Existing Pledged Asset Lines

Wire Request
Request to Increase or Decrease Line Amount 
Request to Release Excess Assets
Pledged Asset Letter of Authorization
Account Transfer Form  
Request to Close Your Account
PAL Automatic Payment Authorization Form

Existing PAL clients may call Client Banking Services at 
800-838-6573 (option 2).