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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. 

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 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.

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 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 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 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.

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 risks which are detailed in the Pledged Asset Line application.

Advance Rate Lookup

Questions about a new Pledged Asset Line?

Contact your Financial Consultant or call 800-838-6573 (option 3).

Existing PAL clients may call Schwab Bank at 800-838-6573 (option 1).

Charles Schwab Bank