Best Discount Brokers

Updated June 30, 2013
Best Reviewed

Best discount broker


TradeKing is the best online discount broker

Discount broker TradeKing charges a very low commission for stocks and other trades (Est. $5 per trade, plus 65 cents per option contract). Its commission for mutual funds (Est. $10) is also hard to beat. There are no hidden fees, and there is no minimum to open an account, which makes this online broker ideal for those who are just starting to build a portfolio. TradeKing, which merged with the popular online discount broker Zecco, often reimburses new clients for bank transfer fees as well.

Just as importantly, TradeKing wins high marks for its customer service; in fact, SmartMoney magazine rates it tops in customer service for four years. The company's signature feature is its online community; it was the first online broker to incorporate social networking. Reviewers also like the tools available for options traders. TradeKing operates online only (you won't find a branch anywhere) and offers no banking services, but does have a revamped website and has free PIN-protected trading apps for iPhone and Android users.

For even deeper-discounted trades, reviewers say it's hard to beat OptionsHouse (Est. $4 per trade or Est. $10 per trade for mutual funds), with no account minimum. This discount broker is geared toward options trading, as the name implies, but it has a wealth of other offerings. Barron's calls OptionsHouse's mobile apps "terrific" but notes that this broker offers "very limited access to international markets."

If costs are your main concern, the small online broker Just2Trade charges only $2.50 a transaction. Interactive Brokers (Est. $0.005 per trade) is for active traders and regularly scores among the top brokerage firms for low commissions and fees, but has been fined by the U.S. commodities regulator for irregularities, including mismanaging accounts.

Keep in mind that many online stock-pricing structures still contain fees that may sneak up on you, like trade minimums and transfers (the latter of which remain very common). This is especially true of the bigger, more established brokerages, which have excellent resources but have been generally slower at embracing innovative models for online users. The mutual-fund giant Vanguard, for example, charges $20 annually but waives the fee if you forgo mail by signing up for an electronic-only account. The same goes for minimums: Charles Schwab requires $1,000 to open an account, unless you make regular deposits. Phone or broker-assisted orders will almost always cost extra.

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