Zecco Bait And Screw: Account Minimum Increased To $25000 For Free Trades

by golbguru on February 1, 2009

Oh come on man! … from zero dollars Zecco has increased its minimum balance requirement for free trades to $2500 earlier and now to $25000 !

Hello Jeroen Veth… that’s an “order of magnitude” change !.. and doesn’t  really gel with your self-proclaimed objectives (source):

At Zecco we believe in complete transparency in everything we do. That means that we’ll share with you how the site makes money. You’ll know how much traffic your pages get and how big the advertising checks are that come in. We believe sunshine is the best cure for iffy investment schemes and hyperventilating stock touts. Ultimately, we believe that greater access to information helps make the investment game more fair. And we rely on members of the zecco.community to contribute to the effort. By sharing research and perspectives, exposing creative accounting and conflicts of interest and uncovering hidden and undervalued opportunity in the marketplace, we all help each other. We believe that everyone has a story and deserves a listen. In the best tradition of democracy, we’re lowering the barriers to entry in the market of ideas. By sharing, debating and testing investment ideas, the zecco.community of investors may help each other make informed investment decisions.

Why weren’t you guys honest enough to just declare your “free trades” deal as an introductory offer? That way people at least know that their honeymoon would be over within the next year - that way they anticipate what’s coming and don’t feel screwed.

I think Zecco would potentially completely destroy its loyal customer base by doing something as stupid as this - of course I am assuming that a lot of those customers (like me) were attracted to Zecco ONLY because it was offering “free trades” - and it seemed like a fair bargain to avail those free trades in spite of whatever other issues Zecco had at the time. It doesn’t seem to be a smart decision - especially in these times - considering the consequenses of losing business from a number of people and earning a bad reputation.

The good part of the story is that it has woken me up from my complacency and now I am researching other brokerages where I can transfer my securities. Some of the options I am considering are listed below:

1. Sogotrade: $3 per trade, no minimums.

Our online rate is just $3.00 regardless of order type with no share limit
Stocks priced below $1.00 carry an additional fee of 1/2 of 1% of principal.

2. Just2Trade: $2.50 per trade, no minimums.

We offer unlimited trades for $2.50 and 50¢ per contract.  There is no share limit per trade. There are no other fees.  No gimmicks and no surprises.

3. MB Trading: Plan A fee structure.

$0.01 per share for the first 500 shares, then just $0.005 per additional share¹.

100 shares= $1.00
300 shares= $3.00
500 shares= $5.00

(The note marked “1″ says: $1 minimum ticket charge applies.)

In the fine print it also says “SEC Section 31 and FINRA Trading Activity fees apply to all commission plans.” However, these fees are hardly significant (per MB Trading information) - SEC Section 31 fee is $5.6 per million and the FINRA charges a Trading Activity Fee is $0.000075 per share.

4. Low Trades: $4.95 per trade, no minimums.

However, these guys charge a semi-annual $50 inactivity fee.

Inactivity Fees charged for trading periods between January-June and July-December of each calendar year. To avoid inactivity fees, one executed trade must be completed during each trading period. IRAs and Custodian accounts are exempt from these fees.

5. Options House: $2.95 per trade, no minimums.

Fine print says:

The commission for stocks priced $2.00 or less is $2.95 per trade plus $0.01 per share.

6. eOption: $3.00 per trade, no minimums.

Fine print says:

Less than $2.00 per share** $29.00

7. Trade King: $4.95 per trade, no minimums.

For Stock and ETF trades, we charge $4.95 per trade. For option trades, we charge $4.95 per trade, plus 65 cents per contract. That’s it.

I still need to read all the fine print for my options in details, but this is going to happen sooner than later. I would rather stay with a brokerage firm that charges higher fees upfront (thinking of the good old Sharebuilder - more so because now its managed by ING) than a brokerage firm who likes to get sneaky on its customers.

Stupid bait and screw tactics.

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{ 7 comments }

1 HustlerMoneyBlog 02.02.09 at 6:09 pm

I hear ya. First free, then $2500 minimum, and now $25000. What’s next? I guess it was good while it last.

2 the weakonomist 02.03.09 at 7:43 am

I’m not an active trader, but Zecco is still much better than Sharebuilder, which I’m with. There is no way Zecco could survive if they offered free trades foreverer.

3 Yan 02.03.09 at 6:21 pm

This deemed to happen sooner or later. There is no free lunch. Zeco’s margin are extremely slim and cash reserves are non-existent hence they are first to tighten the belt in tough times.

4 chelsea 03.13.09 at 6:27 pm

I tried to sign-up with Zecco and let me tell you it was a hassle (they misplaced forms, tried to make me resend them, and then once I said delete my account, magically gave me great service). Given what you have to say here, it’s a good thing I did. One service you left off your list is the one I went to after the Zecco fiasco, which, like the weakonomist, was after the Sharebuilder disaster: Thinkorswim. Trades are $5, w/ no account minimums at all. The UI is complicated — I think b/c they deal with day traders and corporate financial folk, — but it’s easy enough to figure out.

5 Mike 04.24.09 at 10:51 pm

C’mon.. it had to be expected. Like they say, if it sounds to good to be true, it probably is. They’ll be more and more “deals” going by the wayside, if they haven’t already from the date of this post.

I’ve been fooled in the past with such “bait and switch” schemes. So, I pay the little extra and stick with the honesty and safety of Vanguard.

6 Dividend Growth Investor 07.12.09 at 11:35 am

Zecco is still cheaper to use than most other brokers. Furthermore if your stock portfolio has a $25,000 market value, you still get 10 free trades/month. I realize $25K is a lot of money but what would you rather have - a failed broker or a broker raising commissions?

I would rather have the latter..

7 Chloe 08.01.09 at 4:34 am

I can only speak of what I use, and Sharebuilder is nice, clean, but for beginners - not a lot of information/research/funds and they don’t even allow writing puts! It’s best for automatic savings investing. There are no automatic withdraws. Cheap too, at a minimum of $1/trade with 20 trade/month (or $9.95 market). I also use Etrade and Fidelity. Etrade is a messy, buggy website with lots of inaccurate information which I’ve complained about numerous times, but still manages to work. They do have quite a bit of features and information; they’ve been around for a while. All advanced features are there (naked puts, futures, foreign markets). Etrade is I believe $12.99/trade. Fidelity is also full of features and research and information, and of course you get free trades for Fidelity funds. Non-Fidelity fund trades are very expensive, at $75! All three have great customer service, though Etrade’s service isn’t always the most knowledgeable, and Sharebuilder’s is more difficult to contact.

Remember, that if you pick a super-cheap brokerage, you may be giving up valuable access to research, information, visualizations, and service.

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