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Compare Online Brokers - Zecco Wins the Prize

Trying to compare online brokers can be a bit like playing Pin the Tail on the Donkey.

Most people probably go with names they have seen in ads or use the same brokers their friends use.

All execute stock trades, some allow commodities trades and all try to compete with better prices than full-service brokers.

But the wrong choice can be costly in different ways and not always in terms of commission.

If you look at advertising from Zecco, the four-year-old online brokerage appears to win the commission race hands down.

Even so, it pays to be thorough when you compare online brokers or, in fact, brokers of any kind. Don't simply accept a recommendation; check for yourself.

10 free stock trades every month

It claims on its web page 10 monthly free stock trades, but the small print says you must have $25,000 in your account or make 25 trades. There's room for confusion in that statement. Otherwise, trades are $4.50 each.

Here's an unambiguous fact we can get our teeth in. Zecco's base commission compares favorably with the biggies in the industry.

  • E*Trade:$9.99
  • TD Ameritrade: $9.99
  • Schwab: $8.95
  • Scottrade: $7.00
  • Zecco: $4.50

So Zecco clearly has a price advantage but at what cost to us? There's no free lunch so what don't we get? For someone without online brokerage experience all we can do is compare what's said on the various websites and then confirm our favorites by asking around. We'll get the first part of the search done for you right here.

Offers from other online brokers

E*Trade lets us trade free for 60 days after the account is opened with a minimum balance of $2,000. That's the best one-time free trade offer in the business. After that, the commission is $9.99 for the first 149 trades and $7.99 for trades of between 150 and 500. What happens after 500 is not stated.

TD Ameritrade has the same base commission of $9.99 but they offer just 30 days of free trades with $2,000 deposited in the account. With $25,000 they give you a $100 bonus. For those with little starting capital, E*Trade and Ameritrade both offer a pretty good deal with E*Trade taking the prize.

Schwab wants a minimum deposit of $25,000 and I could find nothing on their website to indicate they give free stock trades. In fact their site was more confusing than most. They proudly announce on the first page that: "Online equity trade commissions now a flat $8.95. We've reduced commissions to make investing more affordable for everyone." For me, the reduction is not enough.

Scottrade has a less-cluttered website. It does not appear to offer free trades but its basic rate is $7 for online orders compensates for that.

So is there a catch?

Given that background comparison of online brokers, let's look at Zecco more closely. What if anything do we give up for the reduced commissions?

The firm is very clearly competing on price even if you don't qualify for freebies with a $25,000 deposit. At the top of their Pricing page they state: "Zecco Trading isn't just about free trades. We also strive to provide everybody with low prices for stock and options trading. And we have none of the annoying per-share fees, minimum purchases sizes or funding requirements that other brokers have".

There's no contest with $4.50 trades.

But what about order fulfillment and service?

Someone merely identified as Aaron says: "I've been trading almost daily for over 10 years, and now I make all my trades at Zecco. Their customer service is second to none."

Of course, we wouldn't expect Zecco to include a bad review quoting someone who says: "Service stinks and orders are filled the next day!"

On the surface, Zecco, a California company, looks like a good bet…but don't rely on others to do your due diligence. It's your money. Dig further and compare online brokers yourself.


 



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