Zecco Trading Alternatives

Recent pricing changes at Zecco.com makes it almost impossible for small investors to trade for free. If you are looking to switching brokers, there are a few alternatives to Zecco that charge relatively low commissions for stock and option trading.

Now we know Zecco will soon be Not ZEro Commission COst for many small investors after the broker introduced a new fee structure which requires at least $25,000 in market value to earn 10 free trades per month, it’s time to check out some alternatives to Zecco. Even though at $4.95 per trade (March 1, 2011), the commission is still quite low comparing to other discount online brokers, I can feel that there are a lot of unhappy investors ready to move on.

For me, I will keep using Scottrade and TradeKing as my primary brokers. I have earned some free trades at  Scottrade from their referral program, so I won’t have to pay commission ($7) if I trade modestly (Scottrade offers up to $100 account transfer fee reimbursement). At TradeKing, the commission ($4.95) is lightly higher than the commission at Zecco, but I like TradeKing interface much more despite the improvements at Zecco. Also TradeKing reimburses up to $150 account transfer fee charged by other brokers.

While I won’t be using my Zecco account as much as before because of the change, I will keep the account open for the time being. The reason for not closing it is that Zecco cited the current economic condition as one of the reasons to abandon the commission-free trade policy. If the economy improves (who knows when, but it will), maybe they will reverse their policy in the future? That’s not entirely impossible given how much the broker has changed its policies already.

But for now, what other cheap brokers can you use? Depending on the size of your portfolio, you have a few choices.

More than $25,000 in Assets

If you have more than $25,000, then there are a couple of other places where you can get commission free trades.

  • Merrill Edge Brokerage Service: You can get 30 commission free trades from Merrill Edge if you have more than $25,000 with the bank. The catch is assets in the brokerage account doesn’t count in the $25K assets. So you will have to have $25K in deposits accounts, checking, savings, or CD, to be eligible for the free trades.
  • Wells Fargo WellTrade: Think the $25K in deposit accounts required by BofA is too much? Than check out WellTrade from Wells Fargo. With WellTrade, you can get 100 commission free trades each year as long as you maintain $25K in brokerage, loan balances or deposits with Wells Fargo. 100 free trades a year isn’t as good as 30 per month, but the requirement is lower.

In stead of individual stocks, if you want to build a portfolio that primarily consists of ETFs, then you buy and sell many ETFs for free without having to go to a discount broker. Check out my how to buy ETFs post for a list of brokers offer free ETF trading.

Less than $25,000 in Assets

If you don’t have a high balance required by BofA or WellTrade for free trades, but still want to buy stocks with relative low costs, then there are several discounter brokers out there charge for less, in addition to Scottrade and TradeKing I just mentioned.

  • Just2Trade: With Just2Trade, you pay $2.50 per trade, for stocks and mutual funds. I know many discount brokers charge a much high commission for buying/selling mutual funds, so $2.50 for no-load mutual fund order is a very good deal. And there’s no minimum to open an account.
  • Options House: There’s no minimum requirement to open an account at Options House and you will pay $3.95 flat-rate commission for each trade. For stocks priced $2.00 or less, the commission is $2.95 per trade plus $0.01 per share.
  • Sogo Trade (reviews): With a minimum of $500, you can open an account with SogoTrade and trade for stocks or ETFs at $3 per trade market or limit order. For trades above 5000 shares, the commission cost is the regular commission plus $0.004 for each share above 5000. For stocks priced less than $1, an additional fee of 1/2 of 1% of principal value applies. There’s no inactive fee or subscription fee.
  • TradeKing: TradeKing has the same level of commission as Zecco does, at $4.95/trade. It requires $500 minimum deposit to open an account, but their services and products, as well as research tools, are superior to Zecco. Plus, TradeKing will reimburse up to $150 account transfer fee if you move your brokerage account to TradeKing

BTW, if you want to transfer your brokerage account, take a look at my previous post on how much it costs to transfer a brokerage account. While in general you need to pay, usually $50 to move out, the good news is many brokerages offer reimbursement if you move your account to them.

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8 Responses to “Zecco Trading Alternatives”

  1. KP |  Feb 03, 2009 at 11:22 am

    Have you looked into Interactive Brokers?

  2. Sun |  Feb 03, 2009 at 12:21 pm

    I have heard about Interactive Brokers, but didn’t get a chance to check it out yet. Probably I should

  3. JBT |  Feb 25, 2009 at 2:40 pm

    Try Marsco ($3.95), LowTrades ($4.95), ChoiceTrade ($5)

    I have LowTrades but I’m moving out. For some reason I never transferred that account to Zecco. I use them to trade penny stocks which is great because there are no extra charges unlike TradeKing (.01 per share) but they charged me $50 for not trading between Jan 1 to Jun 30 last year (6 month inactivity fee) and that’s because they did not execute my BQI limit order on June 24 which they eventually executed on July 1. Those bastards screwed me to get their $50 from my account which has dwindled to almost nothing because I suck at trading penny stocks…lol, not to mention the crappy market.

    Scottrade will reimburse you the ACAT from another broker if you transfer $25,000 to them for each account.

    BofA’s catch is that you have to have $25k in deposit accounts with them. The drawback is that they impose a $50 semiannual “brokerage account maintenance fee” for accounts under $50k, so the deal is not attractive to investors with low account balances. If you have multiple accounts with them, the 30 free trades/month are used for all accounts. If you only traded a few times, all the remaining free trades for that month will be gone, they don’t carry over.

    Wells Fargo, as long as you link all your accounts with the PMA checking, you can have 100 free trades for each account you hold. The PMA checking can have $0 unlike BoA where you have to have $25,000 in their checking. Wells gives you 100 free trades in combined assets. So if you have $5000 each in a Roth, a regular IRA, a Joint account, Individual account, and roll-over IRA (combined total of $25,000), you will have 100 free trades for each of those account for a total of 500 free trades.