The outage, which began at 9:25 a.m. EST, lasted until technicians replaced a recently installed piece of software, a Schwab representative said.
The systems failure forced customers to make trades either by calling a Schwab representative or physically going to the company's nearest brick-and-mortar branch, Schwab spokesman Greg Gable said.
The rush of phone calls to speak to Schwab employees quickly swamped telephone operators, he added.
"When people can't access the Web, there typically is a wait and getting through might be more difficult," Gable said.
Schwab will waive $500 in commissions for customers forced to make a trade at one of the company's physical locations, he said.
This is the second time the site has collapsed in less than a month. On Feb. 18, the site barred customers from trading for about 30 minutes. That outage was also blamed on a software problem. That problem was not related to the latest system error, the company said.
While site outages have become commonplace for many of the top e-commerce sites, which must handle sporadic spikes in traffic, few industries are as pained by site malfunctions as online trading.
Last year, many of the top trading firms, including E*Trade and Ameritrade, suffered high profile outages. Some customers claimed they lost money because they couldn't make important trades.
One E*Trade customer filed a lawsuit last year after the Internet brokerage crashed four times.
"Whenever somebody has difficulty getting to their account, that can cause frustration," Gable said.