Zecco: Still the Best Online Broker?

Not quite a year ago, FCN readers rated Zecco as the best online broker (here’s my Zecco review). And then it happened… A few weeks back, Zecco made some pretty significant changes to their business model.

I meant to write this up back when it was happening, but it somehow slipped off my radar. In short, they’ve raised the minimum balance requirement for qualifying for free trades. Here’s the scoop:

Our base commission of $4.50 per trade is one of the lowest among any major only brokerage in the industry, and we continue to offer one of the best deals to retail investors. However, we have not been immune to last year’s market difficulties. Retail stock and options trades as well as interest income have all been hit by the economic crisis, and we have found that can simply no longer provide free stock trading to as many people as before.

As a result, I’m writing to tell you that as of March 1st, 2009, we’re increasing the minimum level of assets needed to earn 10 free trades per month to $25,000. [Note: It used to be $2,500.] At the same time, we’re adding a new way to get free trades: customers who make at least 25 total trades per month will also qualify for 10 free stock trades per month.

Here’s a screenshot of their new commission structure:

Well, that certainly changes things… The minimum balance requirement has increased 10x. In other words, an awful lot of customers, including pretty much all beginning investors, will now have to pay for their trades.

The good news is that Zecco charges just $4.50/trade. That being said, TradeKing charges just $4.95/trade, and is widely considered to provide a very high level of customer service.

Published on March 25th, 2009 - 7 Comments
Filed under: Saving & Investing
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About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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7 Responses to “Zecco: Still the Best Online Broker?”

1. 1
   Nate @ Debt-free Scholar Says:
   March 25th, 2009 at 9:44 am

   As I was reading this, I was disappointed because I do not $25,000 to put into an investment account. Then I realized, that I do not have $2,500 to put into an investment account either! So maybe I should not feel too bad.

   Great post!

   Thanks,
   Nate

2. 2
   Baker @ ManVsDebt Says:
   March 25th, 2009 at 11:20 am

   Ouch, I just read the article over at Wise Bread about ING’s new online store… and now this! I know it’s a tough market out there but going from 2,500 to 25,000 minimums for free trades sounds like a drastic change to me.

   You think they might test the water with 5k or 10k minimums. I don’t actively trade so this isn’t the end of the world for me personal. It’s always interesting to see how companies react to a down market. Keep up the honest reporting!

3. 3
   Adam Says:
   March 25th, 2009 at 11:24 am

   If you have 25,000 the difference between $5 and $10/ trade shouldn’t be a big deal. Just look for the best service. If you have a smaller amount (like I do) then it is a bigger deal. I have found Zecco to be clunky and not very customer service friendly. It didn’t bother me because I was getting free trades. About a month ago I made the switch to Tradeking and have been very pleased. It is far superior in terms of customer service and ease of use. IMO Tradeking was well worth the switch. I think Zecco really shot themselves in the foot with this one.

4. 4
   JC Says:
   March 25th, 2009 at 4:20 pm

   I wonder how the customer support is though. I’ve used Ameritrade and Etrade before. Etrade support takes forever to get through to while Ameritrade is so much after.

5. 5
   Mickey Says:
   March 27th, 2009 at 10:46 am

   I switched from Zecco to Sharebuilder last month. They offer $4 trades on Tuesdays and the dividend reinvestment program is better than anyone elses. So I switched so that with my higher dividend stocks I can start to accumulate partial extra shares.

6. 6
   NoMoreShareBuilder Says:
   March 31st, 2009 at 4:03 pm

   I have two accounts..Zecco and Sharebuilder..The difference between the two..Zecco..4.50 per trade Sharebuilder…9.95 per trade plus a monthly fee $20 because I choose not to trade only on Tuesdays for 4.00 a trade….I am choosing to use Zecco as of now until I can find a reason not to use them.

7. 7
   Ryan Says:
   April 23rd, 2009 at 9:16 am

   I’ve used Zecco for about two years now (ever since they had the initial offer of 40 free trades/month with a $2500 balance), and I’ve been happy with their trading platform. Trades are quick to execute, and I’m happy with the execution price. I do mostly options trading anyways, and their prices are pretty competitive there – $4.50/leg and $0.50/contract, and your account balance doesn’t give you any discounts here.

   As far as their customer service, I’ve found their phone service to be solid, but the website resources and email support are a little lacking. They have a good user community, which helps, but I’d appriciate quicker response to my emails (are better official answers to my questions without having to ask support for help).

   All considered, I’ve been happy. They’re still pretty new, so their trading platform gets better every month as they make improvements.