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.
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