I take it all back about Charles Schwab, onward with Fidelity

tl;dr version: Schwab is NOT a good choice for international travelers, use Fidelity instead.

I blogged about switching to Schwab for my banking needs while temporarily living outside the U.S., well, I spoke too soon.

While we were in Hualien for the Taroko half marathon, I got errors trying to withdraw from ATMs with my Schwab card. I called Schwab and was told I had to call the verification department to remove restrictions placed on my accounts. I called the following Monday (their verification department has normal business hours, not 24/7 like their customer service), and this was what happened:

  • When I applied for the Schwab account, I came from a Taiwan IP address
  • I was told the Schwab One Brokerage and Investor Checking accounts are only for U.S. residents living in the United States
  • I have to go into a Schwab location in the States, in person, with 2 forms of identification to verify the account
  • If I couldn’t do that, I could either close the account, or convert it to an International Schwab account, which takes a long time to open and is not really the same thing
  • It doesn’t matter that I am a U.S. Citizen, they said to comply with whatever banking regulations they couldn’t allow account holders living outside the United States, even temporarily
  • Even if I was able to walk in to verify the account this time, if I use foreign ATMs too many times they could potentially re-lock the account without notice and I would have to do the verification in person all over again

This is total bull, if their policy is such that you can’t open accounts with foreign IPs without in-person verification, they should’ve blocked the application until it was verified. However they let me open it, transferred in money, even ACATS in stocks from another brokerage account. They also sent me a box of checks and even sent me the debit/ATM card via FedEx to Taiwan! I could access the account online and with the iPhone app, used the ATM card as normal for almost a month, AND THEN locked me out of everything all the sudden without warnings.

Fortunately I played it safe and hadn’t switched to Schwab as my primary bank yet, so not having access to that cash and not able to trade wasn’t a huge deal. All my holdings are long-term, so I didn’t get screwed too badly. HOWEVER, after the election there was actually a decent selloff, and the portfolio value dipped over 20%, I could not do anything about it, but since they’re very long shares, I probably wouldn’t have done anything about it either.

My main reason for choosing and recommending Schwab was foreign ATM transactions fees refunds while traveling internationally, but fact that they would lock the accounts randomly due to out-of-States usage makes Schwab a HORRIBLE choice. So, if you plan to travel outside U.S. for an extended period of time, do not count on being able to access your Schwab account.

I ended up opening a Fidelity account with similar offerings, and transferred everything from Schwab to it. I used a VPN with a U.S. IP address close to my U.S. mailing address to do the application this time just in case. I had to call Fidelity once with a few questions, and was told they wouldn’t care even if I lived permanently outside the U.S., I can have the accounts as long as I am a citizen.

Also, with Schwab, every time I setup an account for ETF transfer, I had to call them to finalize the link even after I typed in the verification deposit amounts. It was pretty annoying but I only had to do that once per account I wanted to setup ETF for. When I applied for the Schwab account I enabled Bill Pay in the application, but it was never automatically setup. I had to call and it took 3 weeks to get working. Fidelity’s setup process has been a lot more seamless.

And just to avoid any accidental account lock-ups, while traveling outside your home area, it’s best to use a VPN with an IP address close to home to access financial sites and iOS apps. I’m trying Astrill with an IP from Los Angeles, where my Virtual Post Mail virtual address is.

4 thoughts on “I take it all back about Charles Schwab, onward with Fidelity

  1. Pingback: ayn blog » Blog Archive » Finally closing all bank/brokerage accounts with virtual keyboards

  2. David

    Shwab closed all my accounts due to a “business decision” I also spend time outside of US a lot. But I still don’t know the main reason behind it.

  3. TJS

    Schwab is totally losing it. After being a customer for 30 years, I got banned, too. I have no idea why. I’ve had tens of millions of dollars on deposit at Schwab. No longer. Here’s my Google review, posted for the main office in San Francisco:

    Rash of mysterious terminations of High Net Worth customers, without appeal or recourse. Alarming. Read on.

    If you’re a HNW individual, think very, very carefully about Schwab. My experience has been shockingly bad. Recently Schwab has, for reasons I can only speculate, been banning HNW customers without explanation or recourse. My best guess is that they’ve been pressured by their banking partner (BNY Mellon) to persecute and evict customers who are associated with fintech operations or cryptocurrency. It happened to me, after being a customer for 30 years. (note: I’m a US national with zero criminal history)

    At any rate, it’s lovely when you get a letter saying, essentially, Schwab reserves the right to terminate you at any time for any reason, and you don’t have any recourse, and that they don’t owe — and won’t ever give — an explanation. More than a little traumatizing, especially after thirty years.

    The good news is that, at least for my style of family office and LLC operations, there are much better options out there. Interactive Brokers, for instance, has great execution, fantastic margin rates, top-tier forex and non-US exchange offerings, and they won’t drag you out behind the barn in the dead of night and shoot you in the head. Metaphorically speaking, of course.

    It’s a shame what Schwab has become. If you’re just a sleepy little IRA customer, you’ll probably be fine. But if you have any kind of sophistication and are involved in any kind of enterprise they can’t understand, brace for the worst. Because it’s no fun, what happened to me.

    Schwab reached out with a perfunctory note urging me to “resolve the issue” by calling the main 800 number? Um, really? Can I smirk just a little bit here? Because I spent four months on the phone, several times a week, with the “Client Advocacy Group” (Hey, Bob Tyre. How ya doing?) with zero success. Letters to the Chairman. Character references. Any number of special pleadings. A call to the main Schwab number is going to help me? Are you just trolling and gas-lighting me? This is just the kind of inept, disconnected, incompetent response you’ve conditioned me to expect — the only consistent, reliable, predictable feature of this entire misadventure. (8/30/18 I did reach out; after being on hold for ten minutes, and 20 minutes of conversation, the rep told me that in fact there’s nothing that Schwab can or will do. The rep said he’d amend the response to this review with a statement stating same. When pigs fly, I assert.)

    PPS I’m hoping this is Schwab Corporate. With any luck, this report might find its way to somebody with a brain.

    PPPS An interesting thing crossed my desk this morning: my attorney has another HNW client, also a Schwab customer, who seems to have had a SAR (suspicious activity report) filed against them, which also seems to have resulted in a ban. Said client’s own due diligence points to international wire transfers as the cause of Schwab’s ban. This overlaps in the cases I have seen first-hand. So, if you’re doing any kind of business that involves wiring money outside the US, you may find yourself banned. At any rate, seems like Schwab has some kind of regulatory issue or liability that it is addressing by unjustly terminating customers. Great business model you got there, Chuck. You may think you can stonewall and gaslight your customers, but, newsflash: we all talk to each other. We can connect the dots. We know there’s something going on. Fix it before your reputation is irreparably damaged.

    PPPPS Chuck, if you’re listening, consider that you’re shafting a member of your immediate community. Remember that golf retreat you purchased on Padre Lane? You bought it from my my best friend’s parents — I grew up in that house. You probably knew that “Bertie” lived close by — who was, and remains, a dear family friend. You listening, Chuck? Because (metaphorically) knifing people in your immediate community is not good business.


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