Finding information for online stock brokers isn’t easy. Every company is unique and the important things aren’t always obvious. To complicate things even more, companies that review brokers provide contradictory comparisons. For example, the top pick for SmartMoney in 2007 wasn’t even on JD Power’s list. Not to be outdone JD Power’s top pick is dead last in SmartMoney’s review. With these kinds of reviews it’s difficult to come to any definite conclusion on who’s the best. I’ve tried to be objective and pick the best brokers based on a broad range of factors. The research also made it clear that different brokers are better for different kinds of trading.

To make this concise there are some companies I deliberately left off. The three reasons most companies didn’t make the list is that they 1) didn’t have a mature offering 2) they weren’t technically online discount brokers 3) They were so close in price and offering to other players that including them would have been redundant. For example, Ameriprise is not on the list because they aren’t a true discount broker. They are more interested in using financial advisors instead of individuals trading. Another one I left off is BuyandHold.com due to their oversimplified offering. Lastly, there are many companies I left off because their pricing all hovered around $19.95/order and their offering was very close to Wells Fargo or Vanguard.

This list is a sample of the market in general with emphasis on unique discount stock brokers. Here are the results:


Best all around winner: TRADEKING.com


Pros:

  • Very low online trading cost $4.95
  • Lowest broker assisted trades at $4.95
  • No minimum balance required
  • Lowest amount of fees compared to other brokers
  • IRA friendly with no maintenance fee.
  • Trade Stock, Options, Mutual Funds, Bonds, and CDs
  • Top rated website for usability.
  • Generous interest rate on cash balances
  • Best interest rates on margin accounts for small and medium accounts
  • Full suite of investing tools
  • No gimmicks or subscriptions to get the best price and service

Cons:

  • They are lower on their cash balance interest rate than Sharebuilder’s money market sweep. But it’s only by 0.7%.
  • For accounts with $1 Million+ OptionsXpress and Fidelity’s Margin interest rate is 5.25% instead of TradeKings flat rate of 7.25%. If you have less then a million dollars in your account TradeKing smashes the competition in their margin interest rate.
  • If you trade heavily with options they are second place to Zecco’s price.
  • No checking or debit card.

Open an Account With TradeKing.com

 

Absolute Low Cost Leader: ZECCO

With Zecco there are no minimum balances to open an account. To get 10 free trades a month a $2,500 minimum is required. They have very little fees with the exception of a 30 annual fee on IRA accounts. When I signed up for Zecco the paperwork was a nightmare but I think they’ve fixed that now. They seem to be adding more and more to their offering and will be a viable broker into the future.

 

Long term stock investing:SOGOINVEST.com

Only $3 in and out for stock purchases. No maintenance fee on IRA or any other accounts. Allow fractional share purchases, automated stock purchases investing, and dividend re-investment. The only downside is a $2,500 minimum investment.

 

Most diverse trading:OptionsXpress.com

Actively trade Stocks, Futures, Mutual Funds, Advanced Orders, Contingents, Options, Bonds, Spreads, ETFs, and SSFs. They are very competitive on pricing across the board with extra low cost on option trading. No unexpected fees and no maintenance fee on IRAs or any other account.

 

Best mid-range broker: Scottrade.com

This is for the best broker that is in the middle between Premium and Standard discount brokers. Scottrade offers competitive rates with a lot of service and tools. They have the most physical branches than anyone else in the country. Scottrade is a broker that you can grow into and still feel comfortable with. They accommodate the small and large accounts nicely.

 

These are the complete numbers from the research:

Stock and Equity Trades

Base Rate
Phone Order
Broker Assisted
Bank of America
14.00
32.50
42.50
Charles Schwab
12.95
12.95
32.95
E-Trade
12.99
N/A
52.99
Fidelity
19.95
0
0
Firstrade
6.95
16.95
26.95
OptionsXpress
14.95
N/A
14.95
Scottrade
7.00
17.00
27.00
Sharebuilder
4 Buy/15.95 Sell
N/A
N/A
SogoInvest
3.00
N/A
N/A
TD Ameritrade
9.99
34.99
44.99
TradeKing
4.95
N/A
4.95
Vangaurd
25.00
40.00
45.00
Wells Fargo
19.95
19.95
44.95
Zecco
4.50
N/A
19.99
AVERAGE
11.87
24.91
32.47

 

Account Details

Minimum Balance
Fractional Shares
Branches
Inactivity Fee
Sign-up Bonus
Bank of America
0
-
Bank
100
-
Charles Schwab
1,000
-
303
0
-
E-Trade
1,000
-
28
160
-
Fidelity
2,500
-
118
0
-
Firstrade
0
-
-
0
Yes
OptionsXpress
0
-
-
0
-
Scottrade
500
-
326
0
-
Sharebuilder
0
Yes
-
0
-
SogoInvest
2,500
Yes
-
0
-
TD Ameritrade
1,000
-
103
0
Yes
TradeKing
0
Yes*
-
0
-
Vangaurd
4,000
-
-
30
-
Wells Fargo
1,000
-
Bank
60
-
Zecco
0
-
-
0
-

*Only with dividend reinvestment

Option Cost & Margin Rate

Option Trading Costs
Margin Interest Rates
Base
Per Contract
Exercises
/Assign.
Under 10K
50-100K
1 million +
Bank of America
19.95
1.50
42.50
?
?
?
Charles Schwab
9.95
0.75
10.75%
8.50%
7.50%
E-Trade
12.99
0.75
19.99
9.49%
8.49%
6.49%
Fidelity
19.95
0.75
?
10.33%
8.83%
5.25%
Firstrade
6.95
0.75
?
9.00%
8.75%
5.75%
OptionsXpress
0.00
1.25
?
9.50%
7.75%
5.25%
Scottrade
7.00
1.25
17.00
9.75%
8.75%
7.25%
Sharebuilder
15.95
1.00
30.00
10.50%
8.00%
7.50%
SogoInvest
N/A
N/A
N/A
9.50%
9.25%
7.00%
TD Ameritrade
9.99
0.75
19.99
11.00%
9.25%
8.25%
TradeKing
4.95
0.65
9.95
7.25%
7.25%
7.25%
Vangaurd
30.00
1.50
$30 + $2.50
?
?
?
Wells Fargo
9.95
1.00
34.95
9.50%
8.25%
7.25%
Zecco
4.50
0.50
4.50
7.95%
7.45%
7.45%

 

Cash Issues

  Cash Balance Interest Rates Accessing Cash
Under 5K
50-100K
1 million +
Check Writing
ATM
Bank Account
Bank of America
?
?
?
-
-
Yes
Charles Schwab
0.50%
0.50%
2.05%
-
-
Yes
E-Trade
0.05%
2.65%
3.50%
Yes
Yes
Yes
Fidelity
?
?
?
Yes
Yes
Yes
Firstrade
1.50%
1.75%
2.00%
-
-
Yes
OptionsXpress
3.76%
3.76%
3.76%
-
-
Yes
Scottrade
0.50%
3.25%
4.75%
Yes
-
Yes
Sharebuilder *
4.18%
4.18%
4.18%
-
-
Yes
SogoInvest
1.25%
2.25%
3.25%
-
-
Yes
TD Ameritrade
0.05%
0.30%
1.85%
-
-
Yes
TradeKing
3.41%
3.41%
3.41%
Yes
-
Yes
Vangaurd
?
?
?
-
-
Yes
Wells Fargo
?
?
?
-
-
Yes
Zecco **
4.08
4.08
4.08
-
-
Yes

*Sharebuilder uses DBMXX money market account.
**Zecco uses DWS Scudder money market accounts.

Mutual Funds Details

Mutual Fund Trading Costs

# of No
Fee
Funds

No-Load No
Fee Program
No Load Fee
Load Funds
Bank of America
1,300
Yes
45
45
Charles Schwab
2,000
Yes
49.95
49.95
E-Trade
1,175
Yes
19.99
19.99
Fidelity
1,400
Yes
19.95
19.95
Firstrade
Yes
9.95
0
OptionsXpress
N/A
No
14.95
14.95
Scottrade
1,150
Yes
17
17
Sharebuilder
N/A
No
N/A
N/A
SogoInvest
N/A
No
N/A
N/A
TD Ameritrade
1,300
Yes
49.99
0
TradeKing
-
No
14.95
14.95
Vangaurd
N/A
No
N/A
N/A
Wells Fargo
800
Yes
35
25
Zecco
-
No
10
N/A

 

IRA Details

IRA Costs
Annual Fee
Termination
Bank of America
0
75
Charles Schwab
0
0
E-Trade
160
60
Fidelity
Firstrade
0
0
OptionsXpress
0
0
Scottrade
0
0
Sharebuilder
25
50
SogoInvest
No IRA Available
TD Ameritrade
TradeKing
0
50
Vangaurd
30
Wells Fargo
30
50
Zecco
30
30

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