The announcement comes after competitor Fidelity announced it lowered trade commissions by $3 to $4.95 on Tuesday.
"We never want commission costs to be a barrier for investors deciding which firm can best serve their needs," said Walt Bettinger, Schwab ( ) president and CEO in a statement Tuesday.
The reduction will go into effect on March 3.
The fee cuts make the two firms' commissions lower than competitors TD Ameritrade ( ) and E*Trade.
On Tuesday evening, TD Ameritrade announced it will cut its commissions for online equity and ETF trades to $6.95, down from $9.99, starting March 6.
E*Trade charges $9.99 for online U.S. stocks and ETF trades.