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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