Last week Zecco changed the requirements for free stock trades for their account holders. Previously, account holders received 10 free trades per month if they maintained a minimum balance of $2,500 in their accounts. Free trades are now limited to Zecco account holders who maintain a minimum of $25,000 in their accounts or who make 25 trades per month.
Why Zecco is so attractive
Zecco’s pricing structure was among the best on the industry – you can’t beat free trades. Even after the 10 free trades, additional trades were only $4.50, which is still among the best places to get cheap online stock trades. On top of Zecco’s pricing structure you have a fairly robust trading platform with investing tools, and education platform, and a large community of Zecco users who share information and tutorials in forums and blogs within Zecco’s pages. There is a lot of value packed into an inexpensive stock trading platform. I wrote a review of Zecco.com that further explains some of the pros and cons of Zecco.com.
But is Zecco now the best option for discount brokerages?
Even with all of the good things going for Zecco.com, the new pricing platform has leveled the playing field. TradeKing and ShareBuilder are now much more competitive in pricing when compared to Zecco. If you reference back to the Zecco review you will see that Zecco was able to offer free trades in part through premium features. Almost all of the features are available for free through TradeKing.
Comparing Zecco to TradeKing
I am going to use an example of a casual trader – someone who is using an online discount brokerage to make a few trades per month or systematically purchase ETFs or other equities. Unless you have $25,000 in your account or make 25 trades per month, then you will be paying full price for trades with Zecco.com. If you meet the free trade requirement, Zecco may still be the most cost effective option.
Zecco vs. TradeKing. Equity trades at Zecco cost $4.50 each and trades cost $4.95 at . The difference is only $0.45 per trade, which isn’t much when you only make a few trades per month. The difference comes with the extras – Zecco charges $50 a year for their GainsKeeper tool, which tracks your realized and unrealized gains – it’s a great tool for maximizing your tax strategy as you go. features the Maxit Tax Manager which does the same thing, but is free. Zecco also boasts a host of other premium features, many of which require a subscription. Most of these aren’t very expensive for what you get, but similar tools can be found for free at places like TradeKing.
TradeKing will pay you to switch brokerages. On top of this, TradeKing will pay you up to $150 to move your brokerage account assets to your new TradeKing account. Here are more details about TradeKing’s asset transfer offer:
Why switch to TradeKing from Zecco? TradeKing offers all the features that Zecco offers, but doesn’t charge you extra for them. TradeKing has a robust trading platform, great community, and one of the best investment training resources on the web – all for free. Here is a full TradeKing review for more information.
Comparing Zecco to ShareBuilder
Making the same assumptions of a casual investor, here is how Zecco compares to ShareBuilder:
Zecco vs. ShareBuilder. ShareBuilder is another popular discount brokerage firm. ShareBuilder’s business model is to get their investors to systematically invest their money through automatic purchases. ShareBuilder wants you to build wealth through Dollar Cost Averaging and growing your shares through reinvesting dividends. ShareBuilder offers the option of purchasing partial shares and setting up automatic DRIPs (dividend reinvestments). You can do DRIPs with Zecco, however, you cannot purchase partial shares, which means you may have some loose change after every quarterly dividend payment. ShareBuilder uses every cent toward growing your wealth.
Cost of investing with ShareBuilder. ShareBuilder’s pricing structure is geared toward systematic investors. Scheduled purchases can be had for a little as $2-$4 each (based on number of scheduled purchases per month). Real time trades are $9.95. Like Zecco, ShareBuilder offers a few premium features which require a subscription. If you use Zecco for buying ETFs or other equities on a regular basis, you may find that ShareBuilder just became a more attractive option in terms of price.
Why switch to ShareBuilder from Zecco? ShareBuilder offers inexpensive trades to the systematic investor looking to grow their wealth through dollar cost averaging and dividend reinvesting. The ability to purchase and reinvest in partial shares is extremely attractive to dividend investors looking to maximize the growth of their dividend stocks. The pricing structure is also a very attractive alternative. Here is a full ShareBuilder review.
Zecco is still a great discount brokerage
I’m not saying you should leave Zecco – far from it. I believe they have a solid trading platform and an attractive pricing structure. But the playing field has been leveled and it is by their own doing. It never hurts to shop around – you may find a brokerage that is better suited for your needs.
Other brokerage reviews: How to choose and online brokerage, Zecco review, Sharebuilder review, TradeKing review, Free Stock Trading and Investing Tools.
{ 12 comments… read them below or add one }
Great breakdown! When I have money to invest, I need to refer back to this to help me decide which online service to use. In the past I invested through Edward Jones, but I’m definitely going to bypass the middleman going forward.
Quit messing w/ these Bullsh*t “discount brokerage” firms and move to a real brokerage like Interactive Brokers or ThinkOrSwim who charge far less per transaction and you can truly manage your portfolio.
I trade with TOS and get $1 equity trades, $1.25 options, $2.50 futures. They have an oustanding software platform you can download or you can manage it online like rest of the companies out there. In addition, you get an internet rebate with 40 trades, 3 free mutual fund trades if that’s your thing, they cover $100 ACAT fees if transferring, etc., etc.
E-mail me if you need more info or a referral.
I signed up with interactive brokers and they said they’re not running any promotions where they cover a ACAT fee
frugalcpa: If you know what you are doing, you can save a lot of money by eliminating the middle man. A professional advisor can benefit you though, because they will know certain things you won’t – such as allocation, tax laws, different places to invest, etc.
Just be careful you don’t let them sell you something you don’t need!
Brad: Thanks for the info. I have not had much exposure to TOS, which is why I did not mention them.
Am I missing something regarding the fees? You mentioned you pay $1 equity trades, but the TOS price sheet states that shares are $0.015 per share, with a $5 minimum, a $10 flat rate.
There are other good benefits at TOS – the three free mutual fund trades per month is nice, as are a few other features.
I guess I’m just curious to hear more info.
Thanks for the comparisons. I just opened a Sharebuilder account for a $90 bonus through costco. As I don’t really have any extra money to invest right now, I will most likely wait until TradeKing does some sort of bonus. The comparisons were very helpful though.
Thanks, Steve. From what I understand, TradeKing usually does a giveaway offer about once a year. They did it in October and November of last year, so it may be awhile before they do it again. but I agree with waiting. No need to open an account that you won’t use!
Why nobody talks about sogotrade? This is still the best website for only 3 dollars a trade/option. Sogotrade is not as good as tradeking, but it’s better than zecco. OK! zecco’s used to have a good interface, but its no good now due to a new change that makes it a little bit confusing. Sogotrade web interface is not really good, but you can get used to it because if you trade a lot like me. Sogotrade is not a nobody like zecco, it comes from a big broker and not a broken bank underinvestigation by the us gov. Tradeking requires little document to open an account there, but it has a fun interface. At the end, all cheap one line trade brokers are fast. Choose the one that you like. I chose Sogotrade!
Chad: I have never used SoGoTrade, which is why I cannot compare them to TradeKing, Zecco, or ShareBuilder – three online brokerage accounts I have used before.
Zecco received so much attention and press because they offered free trades to virtually everyone – though that is not the case anymore. Of the three I mentioned, TradeKing is my favorite because of the interface, free tools and education, and the low prices.
I am in the process of closing my TradeKing and Zecco accounts. I don’t believe the $5 you save trading with them is work the lack of services.
There were a couple things that really bothered me with TradeKing. A wire transfer is cash money. However, if you wire money into TradeKing, and then need to get part of it back, they will not let you take out your money until after 10 days have passed from the time they received your wire. They are simply holding onto your clear cash to float your money and that is pretty crappy of them to do that. The second thing that I didn’t know when I opened my account with them is that they do not let you margin the leveraged ETF shares. That was a big surprise and a deal breaker for me. That is what lead to the surprise of them holding onto my cash that I wired to them for 1o days until I could get it back! That is crazy and for that policy alone I would not trade with them ever again.
If you really must save $5 per trade over better options, and you are going to decide between TradeKing and Zecco, I’d say TradeKing is the better choice of the two evils. Zecco is really bare bones; no pre or after hours trading allowed, no way to trade on mobile platforms, no service after hours, and a poor trading platform without any advanced order entry options. For example, you can’t enter an order triggers order with Zecco. (Say you want to automatically put in a stop order once your buy order is filled, you can’t do that with Zecco.) I had a bad experience trading a very leveraged ETF on 4x margin where the system would not let me enter my stop order. It could have been very serious if the market moved against me while I repeatedly tried to get the system to accept my order.
I’ve moved both my Zecco and TradeKing accounts over to TD Waterhouse. They charge $10 instead of about $5 that TradeKing and Zecco charges. If $5 per trade is going to make or break you, I don’t think you should be trading. I suggest you download the ThinkorSwim software (free) and check it out. It will blow you away. You can paper trade with a $100,000 account to try out the trading platform. For me the advanced real time streaming charts and advanced order capabilities at TD Waterhouse is way worth the extra $5 a trade. I’m really surprised the ThinkorSwim software is free. It blows away the streaming charts at TradeKing. At TradeKing you have to have a minimum of 25 trades per month to use their real time streaming charts. Try ThinkorSwim, you’ll love it. I run it with dual monitors and it gives me a very nice package of charts, news, and very advanced trade entry options. ThinkorSwim was the #1 rated internet broker and they have now merged with TD Waterhouse which was the #1 rated discount broker. Can’t go wrong with that combo.
I was drawn to the lower commissions at Zecco and then moved to TradeKing because of the extremely limited trading platform at Zecco. But it quickly became apparent that you get what you pay for and the extra $5 a trade at TD Ameritrade is well worth it for all the free tools, advanced orders, and real time streaming charts you get. With them you can even put in orders like “If the DOW falls by 3% buy TZA at market.”
PS – Just saw the post from Brad. TOS stands for ThinkorSwim. I agree 100% with him. Zecco and TradeKing is really amateur hour stuff.
Just read your post alan,
Why not just have a tdameritrade/TOS account with a small amount of money in it so that you can use all the free tools. Tdameritrade has no yearly fees. Then use tradeking for your actual trades.
That’s a great idea, Dan. I can see why some people would prefer not to do that – for example, if they don’t trade often or prefer to have as few open accounts as possible. But otherwise this idea could save money in the long run.