The decision is effective Oct. 1 and will affect approximately 650,000 accounts that have a household income lower than $25,000.
Schwab predicts that its earnings for the current quarter will be somewhere between $195 million and $205 million, as per analysts surveyed by Thomson Financial, the AP said.
The firm is planning to spend approximately $30 million on an advertising campaign to make it known that the firm is dropping account fees.
"We sort of lost our way by imposing fees to pay for and over the head structure, that quite frankly, was too high," said Christopher Dodds, the San Francisco firm's CFO. "Now that we have eliminated the high overhead, we are giving back some of that savings to our clients."
On top of dropping service fees, the firm also plans on eliminating the $3 handling fee charged for stock trades.
In total, he moves will save clients about $375 million annually, Schwab estimates.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
