**E*Trade**

Updated trading tools
Good access to foreign markets
Banking services

Involvement in sub-prime mortgage crisis
Relatively high costs
Spotty customer service

Our Analysis

February 2009. E*Trade ran into trouble with mortgage-backed securities in its banking unit in November 2007. An infusion of cash from Citadel Holdings has kept the firm afloat, although Barron's still questions whether it may eventually be sold. Still, E*Trade earns praise from reviewers, primarily for its trading tools and banking services. Commissions range from $6.99 to $12.99 for a market order, based on asset amount or number of trades in a quarter. There is a $40 maintenance fee per quarter if you don't make at least one trade during that time. (IRA and custodial accounts are exempt). Those with additional E*Trade accounts or at least $10,000 in assets may avoid the fees. A minimum of $1,000 is required to open a cash account. If you want a full-service broker with banking services and branch offices, reviewers suggest that Charles Schwab may be a better choice.

SmartMoney magazine, Barron's, and Kiplinger's Personal Finance all mention E*Trade in their reviews. One E*Trade reviewer, StockTradingToGo.com, ranks online brokers based on the cost of trades only. Consumer Reports also includes E*Trade in its 2007 ratings of online brokers, but the full ratings chart is available only to subscribers.

Our Sources

1. SmartMoney.com

Editors review each broker by opening sample accounts, placing trades, calling customer service and using each site's research tools. The 2008 annual survey lists the best and the worst online broker in six different categories. E*Trade is one of only two online brokers to be named best in two categories: trading tools and banking services.

Review: SmartMoney's Annual Broker Survey, Neil Parmar, May 20, 2008

2. Barron's

Barron's 2008 review of 23 online brokers puts E*Trade in the middle of the overall ratings chart, with higher marks for its research and analysis tools and the general usability of its website, and lower ones for its costs, trading technology, and range of offerings.

Review: Making It Click: Annual Ranking of the Best Online Brokers, Theresa W. Carey, March 17, 2008

3. Kiplinger Personal Finance Details/Subscribe

Kiplinger's Personal Finance criticizes E*Trade's $40 quarterly fee for those who don't make at least one trade during that period, calling it a "nuisance fee" that drives up costs. Editors also find E*Trade's customer service to be mediocre at best.

Review: Best of the Online Brokers, Thomas M. Anderson, Nov. 2008

4. ConsumerReports.orgDetails/Subscribe

Consumer Reports rates 19 online brokers in several categories based on hands-on tests. The ratings chart is available only to subscribers, but E*Trade is included.

Review: Online Brokers: Better Prices, More Services, Editors of Consumer Reports, June 2007

5. StockTradingToGo.com

Site owner Blain Reinkensmeyer names his picks for top online brokers based on trading fees only. Although this review is called "Top Five Online Stock Brokers," there are actually six brokers listed here. E*Trade is ranked fifth because in order to get the lowest fees you have to trade more often.

Review: 5 Top Online Stock Brokers, Blain Reinkensmeyer, May 31, 2007