Vanguard vs Schwab: Investing and Banking

June 27, 2025 • 👁️ Loading...

I have used Vanguard for many years. It's the low cost leader and mainly I'm investing in boring things like VOO, VEU, and BOXX. More on BOXX in another post.

Here are my nitpicks about Schwab and Vanguard.

Schwab Banking is great

Schwab gives you a free checking account which also comes with an ATM card. This is a great benefit if you travel a lot and need to take out funds, especially in foreign currencies. Schwab will reimburse all your ATM fees and they will give you great conversion rates.

Schwab also makes it easy to send wire transfers. For years I suffered through sending wires with Vanguard. The thing that kills me about Vanguard is how frustrating it is to send a wire. Both Schwab and Vanguard have free incoming wires and also free outgoing wires if you have enough funds under management with them.

But to send a wire with Vanguard you have to call a person and this often involves lengthy call wait times. Plus you have to read a bunch of stuff over the phone, like routing and account numbers, which are better entered using a computer.

This is where Schwab wins. You can easily wire funds using the Schwab web interface. I don't think they let you do it in their app, which is fine.

Schwab doesn't sweep cash

My nitpick with Schwab is that they don't automatically sweep cash into a money market fund. I had assumed this was a basic function of any brokerage account, but not at Schwab. If you sell some stock and want to sit in cash for a bit, you have to manually buy a money market fund once the trade clears. Even worse, if you want to buy a stock, you have to manually sell the money market fund before you can buy the stock or ETF. If you want to buy the stock right away, you can margin it, but then you're paying interest while you wait for the money market sale to go through. This just seems wasteful and idiotic to me.

I guess Vanguard is just more investor friendly here than Schwab.

A little of both

So in the end I have most of my funds at Vanguard since for me, investing is easier there given the whole sweep thing. But I keep my Roth IRA and a small brokerage account and checking account at Schwab so I get the benefits of easy wires and amazing ATM card benefits.

Maybe someday Schwab will support default sweep funds or Vanguard will give me an ATM card and make it easy to send wires. Until then, I'll need two accounts.