Zecco Eliminates Free Trades and Raises Stock Trade Commissions

When something seems too good to be true, it probably either is or won’t last long in case it is true.

And what happened to Zecco Trading in the past few years just serves as a perfect example. Zecco, an online discount broker whose name stands for ZEro Commission COst, started in 2006 by offering its customer commission free stock trades. At that time, I had wondered how long the no-commission fee structure can last. It turned out it didn’t. Two years later on March 1, 2009, Zecco had its first major change of its fee schedule by adding account balance and trade limits when rewarding free trades, which was reduced to 10 commission free trades per month. For customers who don’t meet the requirement, the commission for online stock order is $4.50/trade. The change caught many by surprise, including me, but it wasn’t unexpected despite that Zecco claimed at that time

Apparently, Zecco wasn’t done.

Starting tomorrow, March 1st, two years after the first change, Zecco will once again restructure its commission. This time, eliminate the free trades all together and raise commission for stock trades.

The following is a letter I received from Zecco last Friday.

Thank you for being a Zecco Trading customer. I hope you’ve been enjoying the exciting improvements we’ve rolled out in the last few months.

When Zecco Trading first launched in 2006, our focus was to deliver a good, solid service at a bare bones price. In the four and a half years since that launch however, our customers’ needs have evolved quite a bit. While investors today certainly value low commissions, they also demand a great trading service with a rich set of advanced features.

So, we have been working hard to continuously improve the Zecco Trading experience. In just the last year or so we’ve introduced major improvements in our quotes and research offering as well as launched important new tools like Zecco Streamer, Zap Trade and the new Zecco Mobile iPhone app. We’ve also made substantial improvements in customer service and upgraded our core infrastructure to dramatically improve performance and reliability.

To better support this balance between offering remarkable value and continuing to deliver the innovative new technologies, tools and services that Zecco Trading customers require, we are modifying our commission structure. Starting on March 30, 2011, our new commission rates will be:
With this change we are no longer offering 10 free trades per month. As before, there are no minimum balance requirements or inactivity fees to open or maintain a Zecco Trading account.

  • Equity trades: $4.95 per trade
  • Options trades: $4.95 per trade, plus $0.65 per contract

With this change we are no longer offering 10 free trades per month. As before, there are no minimum balance requirements or inactivity fees to open or maintain a Zecco Trading account.

At $4.95/trade, Zecco puts itself at the same level with TradeKing, another popular discount broker, in terms of commissions, but I doubt many will see them as equal because they are just not. And at $4.95, I don’t think Zecco has any advantage over other brokers.

Two years ago, I wrote about Zecco Trading alternatives. Now with so many commission free ETF trades, you don’t really need Zecco in you want to buy ETFs without paying a commission.

Are you using Zecco? If you are, with this latest change, may not be the last though, are you plan to keep your account with them? If you are considering moving, TradeKing may be a better choice since the commission is the same at $4.95, but the customer service and website, as well as research tools, are well superior. Plus, TradeKing will reimburse up to $150 account transfer fee if you move your brokerage account to TradeKing. Check out my TradeKing review for details about the broker.

I am glad that I only have a small play account with Zecco.

 

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This post was written by Sun You can find out more about Sun and his activities on Facebook , or follow him on Twitter .

4 Responses to “Zecco Eliminates Free Trades and Raises Stock Trade Commissions”

  1. TJ |  Feb 28, 2011 at 9:38 am

    That’s too bad. Seems like a classic bite & switch to me.

    • Sun |  Feb 28, 2011 at 9:43 am

      Yes, now I wonder how Zecco is going to compete with others without commission free trades.

  2. Brent |  Mar 06, 2011 at 3:42 pm

    I transfered my ZECOO account last week to Scottrade. I found a referral code : KGKP0724 and I use it get 3 free trades. I really like Scottrades platform better than ZECCO. I really like the free trades… Anyway… I’m at Scottrade now.

  3. Courtney Hansen |  Jun 10, 2011 at 4:35 pm

    I’ve been trying zecco for awhile, it’s not great but then again it’s cheap.

    Courtney H.