Best online brokerage checking account
Any of the figures mentioned in this study are subject to change at any time at the sole discretion of the brokerage firm.
Also, two brokerage firms in this study, Scottrade and TD Ameritrade, will be joining forces in the coming year, so you may want to reevaluate them after the transition is complete. Below are the top-ranked online brokers in each category.
Listed first are the overall winners based on average rankings in those six categories. The online brokerage branch of Merrill Lynch was the overall winner because it did better than most of the brokers studied in every category except margin rates, and that consistency earned it the best ranking on average.
Of all the things online brokers advertise about their offerings, commission rates are probably the attribute they most often use to appeal to investors. In that light, it is interesting that Merrill Edge ranked first because its commission rate is far from the lowest. Like Merrill Edge, Charles Schwab outperformed most of the brokers studied in every category but one to earn the second overall ranking.
Ally acquired TradeKing in to add brokerage to its well-known online-banking capabilities. Based on Ally Invest's high overall ranking in this study, the acquisition appears to have been a good choice. While not the cheapest option, customers might find that the quality of TD Ameritrade's research resources and online tools helps them make more effective investment decisions. By and large, online brokers these days offer flat-rate, per-trade commissions rather than charging based on the size of the trade.
That works especially well for people who make larger trades. But smaller investors need to watch trade commissions carefully because they can eat up a significant amount of funds, especially since you will pay that commission both when you buy and sell a stock. This means they would be cheaper than a fixed rate for small trades but not for large trades.
Getting started can be one of the most difficult parts of investing. Online brokers try to make it easy by offering user-friendly interfaces, but there are also dollars-and-cents barriers to consider. Assuming most new investors start with relatively small amounts of money to invest, MoneyRates. As mentioned previously, Firstrade had the second-lowest commission rate in the study. When you combine that with no monthly maintenance or inactivity fees and no account minimum, the economics work well for new investors.
In particular, customers of Ally's banking services might find the transition to their brokerage service to be especially seamless. However, with no maintenance or inactivity fees and no account minimum, it is a fairly cost-effective place to get started, especially for lower-volume traders. It is currently offering cash bonuses for new accounts. This broker was an exact match for Capital One with respect to commissions, monthly fees, and minimum funding policy.
They, too, offer an incentive for new investors -- in this case, it is 60 days of free trading plus cash bonuses for certain account sizes. A monthly maintenance fee is a set dollar amount charged in addition to usage-based charges like commissions and, since it is typically a dollar-based rather than percentage-based fee, it is proportionally more burdensome on small investors.
Inactivity fees are charged by some brokers to investors who don't meet a certain volume of trading activity. Like monthly maintenance fees, these are set dollar amounts that disproportionately affect small investors. Also, newer investors who want to wade into the market gradually are more likely to fall below the required trading volume.
Finally, while many online brokers allow you to start an account with any amount of money, some impose a minimum account size which could be a barrier to getting started. So, in considering the best online brokers for new investors, MoneyRates looked for those with reasonable commissions, no monthly maintenance or inactivity fees, and no minimum funding requirement.
MoneyRates also found that a few online brokers are offering special incentives for new investors. Since these incentives are temporary, they were not considered dominant factors, but they are noted above where applicable. For investors who use margin, the margin interest rate is a key hurdle to overcome in order to earn a positive rate of return. Here are the brokers that had the cheapest margin rates:. With a margin rate of just 2. Online brokerage mobile apps are heavy on price and volume charts but typically a little thin on facilitating access to fundamental research.
Overall, two apps rose to the top:. No earth-shattering features, but overall one of the more robust line-ups including portfolio status, watch-list information and alerts, and current market data. Motif is geared toward helping customers build portfolios around broad thematic themes, and their mobile app does an efficient job of allowing users to construct model portfolios on the fly and then implement them instantly.
Since the desktop interfaces of online brokers offer largely the same capabilities, MoneyRates put an emphasis on transparency, looking at which desktop interface made it easiest for users to locate key information for decision making. To keep it simple, look for brokers that offer flat-fee trades, ie charging a flat rate regardless of the type, price of the stock, or size of the order. Customer Service When picking up the phone or emailing a broker, is a well trained customer service representative ready to assist?
How any investor is treated as a client is more important to some than others. Trading Tools Trading successfully is a lot easier when investors have great tools at their disposal. A top stock broker should offer access to a wide variety of trade tools to help make the most of each and every trade. From real-time streaming quotes to last sale tickers, quality stock scanners, mobile trading apps, and level II quotes to name a few.
Strong tools are essential for active investors. Account Minimums Some brokers allow you to open an account with no minimum deposit while others may require several thousand dollars. Also know that some brokers require higher minimums to gain access to premium platforms, functionality, and personalized support.
Market Research A good online broker will provide a variety of market research tools. The rule of thumb here is simple: Investment Options A online stock broker should offer access to not only trading stocks, but also a strong selection of no load mutual funds, commission free ETFs, and complex options.
Other unique investment offerings to look for could include direct market routing, conditional orders, futures trading, and forex trading. Other Fees Fees beyond trade commissions include inactivity fees common with active trading brokers such as Interactive Brokers, Lightspeed, and TradeStation and IRA fees for having a retirement account.
Just like a bank account, stock brokers also make a portion of their profits off miscellaneous fees. There is no reason why you should pay an annual fee to have an retirement account. If managing your own portfolio is not of interest, all full-service brokers offer optional advisory services as well.
Furthermore, robo-advisors such as Betterment are growing in popularity. Once again, the experience at larger established brokers is going to be superior to smaller brokers. Banking Larger online brokers offer banking and other financial services. This goes beyond money market accounts and CDs. Checking accounts, mortgages, debit cards, and credit cards can also be offered. The leader in this space is, hands down, Bank of America Merrill Edge.
Account Security Because of the web today, all online brokers invest heavily into account security.