E-Trade is one of the popular brokers among retail investors. In 2019, it joined TD Ameritrade, Charles Schwab, and Interactive Brokers and introduced commission-free trades to keep up with Robinhood and other disruptive online brokers. Is E-Trade still charging a commission fee? Some investors have wondered after reviewing their account records.
Charging a commission fee has long been a major revenue source for traditional brokerages. Therefore, while competition is forcing them to adjust their commissions, they aren’t completely eliminating them. Perhaps understanding this could help put to rest the debate about whether or not E-Trade charges a commission.
Parts of E-Trade are commission free
E-Trade offers a broad menu of investment products from stocks to futures. People can set up retirement savings accounts with the broker. Trading in the investment products that E-Trade offers might carry both broker and regulatory fees. What E-Trade did in 2019 was remove broker commission on U.S. stock, ETF, and options trades executed online.
Why E-Trade charges commission fees
Although E-Trade removed commission fees on stock, ETF, and options trades, there are some transactions that still attract fees. First, the broker only dropped commission fees on online stock, ETF, and options trades. Broker-assisted trades on these securities are still subject to commissions.
Also, E-Trade charges a fee for OTC trades on stocks, ETFs, and options. There's a cost to access penny stocks outside the NYSE and Nasdaq through an E-Trade account.
E-Trade charges a fee for writing options and futures contracts. There's also a fee associated with bonds trading. E-Trade still has fees for those using its personalized investment service.
Users also have to pay fees for transactions in retirement accounts. For example, E-Trade charges a fee for withdrawing funds early from a retirement account. The company charges a fee for changing contributions from Roth IRA to traditional IRA. However, the retirement account fees can be dropped if your E-Trade account is worth more than $100,000 or if you executed more than 30 trades in the past three months.
How much are E-Trade's commission fees?
E-Trade charges a $25 commission fee per transaction on broker-assisted stock trades. It charges a $6.95 commission per transaction on the OTC markets for investors executing less than 30 trades per quarter. The OTC commission drops to $4.95 for investors executing more than 30 trades.
E-Trade charges a $0.65 fee for option contracts for those executing less than 30 trades in a quarter. The fee drops to $0.50 for those executing more than 30 trades. The broker charges a $1 commission per transaction on bond trades. Meanwhile, E-Trade’s personalized investments fee is charged annually and ranges from 0.30 percent to 1.25 percent.
How to avoid E-Trade's commission fees
Investors can avoid E-Trade commissions or keep the cost of investing with the broker low with a few adjustments. For example, you can escape E-Trade stock trading fees by strictly conducting your trades online. You can avoid E-Trade fees by staying away from bonds and options contracts trading. Also, you can minimize your E-Trade account costs by staying away from margin trades. E-Trade’s margin rate can be as high as 9 percent.