I’ve long touted TradeKing as a great discount broker because they have low commissions ($4.95 a trade) and no account minimums. Unfortunately, there’s been a change and they will now be assessing an annual $50 inactivity fee on accounts that have a “combined household account value of less than $2,500″ or have not made a single trade in an entire year. An account is part of a household if it has the same mailing address and/or tax ID and if you are assessed an inactivity charge, you will only be charged once.

At first you might think that this is unfair, to spring an inactivity charge, but the requirements to avoid this are fairly low. If you have more than $2,500 in your accounts, you won’t be assessed the fee. If you don’t have that much, just make one trade. If you make just one trade, you won’t be assessed the fee. Paying $4.95 (or $9.90 round trip) is better than $50.

In my mind, if you have less than $2,500 and aren’t making any trades, your money is better off somewhere else (like a high yield savings account) anyway until you’ve accumulated more savings.

This promotion has expired.

Long time readers of Bargaineering will recognize TradeKing as one of the brokerage accounts I use. I really like their customer service (their online chat is great) but it was the $4.95 a trade that sucked me in. I don’t do any options trading, that’s another one of their popular offerings, and I use TradeKing for individual stocks (and Vanguard for mutual funds).

This month, they’re running an impressive promotion for new account holders. The details of the promotion are pretty straightforward – new customers who open an account between August 1st and August 31st, 2011 will receive a $100 bonus if they fund with $2500 and make three trades. There is no promotion code but you have to use the above link (in the banner) when you sign up. It’s a special promotion that may or may not be extended but it does represent one of the richest bonuses out there. The best part about this, and I’m surprised they’re doing this, is that the $150 transfer fee reimbursement offer is also available with this $100 promotion.

Get your $100 new account signing bonus from TradeKing today!

If you were waiting for a promotion to start with TradeKing, it probably won’t get much better than this (especially if you’re looking to move from another brokerage account!) for a while. I’ll take cold hard cash over “a bazillion free trades” any day.

When I first started investing, I put a lot of stock into these broker rankings because I didn’t have any of my own experiences to draw upon. I didn’t know how I would use a broker, what features were important to me, and whether or not a deficiency really matter. Price was the number one factor, as is the case for a lot of investors.

Then, as I started to invest more and more, I realized that price wasn’t everything because I didn’t make a lot of trades. While it seems silly to pay $20 a trade when there are brokers offering trades for less than $5, it may make sense if the broker offers other features that you value. Nowadays, the differences in prices is much lower anyway and so the “other” factors, like customer service, fund offerings, and banking services become more important to me.

You have to review these rankings through your own rubric. There isn’t really a #1 broker for everyone, but there will be a #1 for you.

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If you have $100,000 in cash and/or eligible securities, you can take advantage of Fidelity’s 200 free trades offer. It’s not uncommon for brokers to offer free trades to entice you to transfer your funds, TradeKing has a $100 refer a friend offer and a $150 transfer reimbursement offer, and 200 seems to be a nice round number that has the “wow factor” they’re looking for. If you want to do a dollar comparison, Fidelity trades are $7.95 a piece so this offer has a potential value of $1590, if you were to use all the trades.

Some basic ground rules:

• The funds have to come from an external account, so you can’t transfer from another Fidelity account.
• The free trades must be used within 90 days.
• The offer ends June 31, 2011.

I personally prefer cash bonuses, but that’s because I don’t think I’ll be making 200 trades in 90 days. The trade-off between a cash bonus as a free trade bonus is that the cash is immediately reported on a 1099. With free trades, it’s not clear how the promotion is going to be reported to the IRS but at worst it’ll be the cash value of the free trades you actually use. I find it difficult to believe they’d 1099 you for $1590.

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Zecco sent an email out to customers last Friday about a huge change in their account. It turns out that offering commission free stock trades is not a sustainable model and Zecco will be moving away from that as of March 30th, 2011. When I first learned about Zecco in mid-2007 and their offer of free stock trades, I was skeptical and wondered if Zecco was a scam (it’s not). When they moved to require a minimum $25,000 balance in an account to get 10 free stock trades, I suspected that it was only a matter of time before free trades are gone.

Businesses can lower their bottom line when they operate online and online banks have proven this with their high interest savings accounts for years. Unfortunately for brokers, stock trades aren’t free and there’s still a minimum cost associated with that transaction.

While Zecco hasn’t had the best reputation in terms of customer service (according to Smart Money), it’s clear that they care because the CEO has been active in their forums. Unfortunately for them, their new pricing structure looks a lot like that of TradeKing, 7 spots higher on the Smart Money rankings. TradeKing also offers a $150 transfer fee reimbursement… that doesn’t bode well for those looking to jump off the Zecco ship.

Here was the email:
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This offer has been extended through April 14th!

TradeKing just sent out an email in which they’re offering $200 if you refer a friend to TradeKing – you get $100 and your friend get $100. This is twice what they used to do whenever they’d have refer a friend promotion like National Friendship Day and $100 is a good amount of money. The typical stock trade at TradeKing is only $4.95 so this represents twenty free trades, in the form of cash. While twenty doesn’t sound as sexy as a hundred free trades that some other brokers offer, this is 20 free trades in cash and you shouldn’t feel compelled to use them.

You need to have a current TradeKing customer (you can email me if you don’t know anyone) send a referral from within TradeKing’s referral form. Then, the new customer has to open a new account and deposit $1,000 within 30 days and make a trade within 180 days. Then, they must keep the funds in the account for at least 180 days. A stock trade cost $4.95 so this is really a $90.10 promotion ($100 minus $4.95 times 2) for the friend.

Offer expires April 14th, 2011.

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I was reading CNN Money over the weekend when I saw one of E*Trade’s latest banner advertisements, which I’ve included below. I want to salute them for using advertising that is actually useful.

It’s pretty obvious, with interest rates so low, that dividend stocks have become more and more enticing. Part of me wonders if we’re having the Time magazine effect, which is my leading indicator that something has jumped the shark, but I still think that buying a bunch of dividend yielding stocks is probably your best bet if you’re able to hold them for a while (and cash the dividend checks).
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It seems every summer TradeKing runs a promotion where you can get $50 for opening a new account (if you didn’t have one already). Well if you didn’t notice it based on the temperatures outside, it’s summer and TradeKing has brought back their $50 new account promotion this month. If you have $2,500, want a TradeKing account, then this promotion is right up your alley.

The promo is pretty straight-forward. Make a deposit of $2,500 or more within 30 days of opening the account and make one trade within 180 days of opening the account. The $2,500 you deposit has to remain in the account for at least 6 months or you surrender the credit (they say you “may” surrender the credit, so it’s unclear how closely they police this).

There is no promotion code, you just need to click this banner:
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It’s probably no surprise that in the last year I’ve been buying some blue chip companies with a solid history of dividends. Dividend investing is one of those long term investing strategies that has, for the most part, fallen out of favor after the fantastic dot-com craze, crash, and subsequent bull market that saw the Dow at 14,000 before it crashed to the mid-6000s in the depths of the economic panic. Throughout that time the Dividend Aristocrats, stocks that have paid and raised their dividend in 25 consecutive years, and the Dividend Champions, stocks that have paid a constant or rising dividend for 50 years, have maintained their dividend like clockwork.

Through dividend increases, many a billionaire’s fortune have been built (Warren Buffet’s annual dividend from his shares of Washington Post and Coca Cola exceed his investment).

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Every year, Smart Money takes an in-depth look at online brokers, from their trading platform to their customer service, and rates them based on their performance. They open up accounts and make trades, they call up customer service and pore through the reviews, and they share all of their experiences with you – the good, the bad, and the ugly.

One thing that does surprise me is how little the list changes each year. For yet another year, the top five are the same, though their order has changed a little, and the back of the list sees the same faces. You would think that these brokers would look at these problem spots and at least make some steps to address them.
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