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TradeKing vs. Zecco: Discount Broker Comparison

Posted By Jim On 08/24/2009 @ 12:02 pm In Investing | 10 Comments

When Zecco [3] first appeared on the discount broker scene, everyone celebrated their $0 stock trade commissions. I know it caught my attention, there are very few things that beat free. Even when reports of customer service woes rolled in, I still thought their offer was the best of the bunch. If you are paying $0 per stock trade, you can’t expect them to have an army of customer service reps there to answer your every call. You get what you pay for and you pay nothing.

Then I learned about TradeKing [4], which charges $4.95 a trade. $4.95 isn’t free but it’s certainly cheaper than E*Trade, where I was paying $9.99 a trade. Not only were the trades cheap, but TradeKing had been winning best customer service awards and best discount broker awards for years. So when Zecco stopped offering no-strings attached free trades, I knew we needed to compare the two straight up to get a better idea of which one was tops.

TradeKing vs. Zecco

VS.

Stock Trade Commissions

  • TradeKing [4]: TradeKing charges a flat $4.95 a trade, which is half the price of other discount brokers like E*Trade.
  • Zecco [3]: Zecco will give you 10 free trades if you maintain a balance of at least $25,000 or you execute 25 trades each month. If you can’t satisfy those conditions, trades are $4.50, forty five cents cheaper than TradeKing.

You might argue that Zecco should win on account of cheaper commissions right? Even if you don’t have $25,000, the $4.50 is cheaper than TradeKing’s $4.95, you save about a dollar on each round trip (buy and sell). I would agree with you if it weren’t for the fact that Zecco is consistently rated in the bottom three in broker surveys.

For options trades, TradeKing is again slightly more expensive than Zecco. Zecco charges $4.50 a trade plus 50 cents per contract. TradeKing charges $4.95 per trade and sixty-five cents per contract.

Other Account Features

  • Account minimums: Both brokers are identical for this category – both have a minimum account balance of $0 for cash accounts and $2,000 for margin accounts. Neither charges an inactivity fee.
  • Transfer fund refunds: Zecco doesn’t offer to cover your transfer fee if you leave another broker but TradeKing will up to $150 (learn more about that here [5]).
  • Online community: This is an area where TradeKing really outshines Zecco, in part because TradeKing started the whole idea of creating a community for their broker clients. Zecco also has their version, ZeccoShare, but the tools and interaction is not as sophisticated as TradeKing’s.

Awards

In the awards category, there really is no comparison. TradeKing has been in the top five in both Kiplinger’s best discount brokers [6] survey and Smart Money’s best online brokers [7] survey, Zecco has been in the bottom three of both. Zecco has been plagued by continued reports of poor customer service, whereas TradeKing has been lauded for their superior customer support.

In fact, if you try to find an award that Zecco has won, you’ll come up empty handed. While I don’t see awards as a reliable way to decide who you will do business with, the fact that they haven’t won anything is pretty telling. You don’t have to win every race, but you have to place or show at least once!

Summary

I don’t want to count Zecco out but the recent shift from a free commission model to a pay commission model, thus invalidating their name “ZEro Cost COmmissions,” isn’t a good sign for them. If you have $25,000 and can muster the ten free trades, I think it’s worth using them to save a few bucks. Just recognize you may be in for some customer service headaches, but I’ve never called my stock broker in all my years of investing (retirement accounts excluded).

However, if customer service is more important than forty-five cents in commission, then TradeKing is probably a better choice for you. I use TradeKing myself and while I’ve never called their customer service, I’ve never had any reason to complain about TradeKing yet.

To Open An Account…

Click here to open a TradeKing account [4], and,
Click here to open a Zecco account [3].

What are your thoughts? TradeKing or Zecco?


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[3] Zecco: http://www.bargaineering.com/articles/r/zecco.php?tag=TKvZ

[4] TradeKing: http://www.bargaineering.com/articles/r/tradeking.php?tag=TKvZ

[5] learn more about that here: http://www.bargaineering.com/articles/r/tradeking-transfer-promo.php?tag=TKvZ

[6] Kiplinger’s best discount brokers: http://www.bargaineering.com/articles/kiplingers-best-discount-brokers.html

[7] Smart Money’s best online brokers: http://www.bargaineering.com/articles/smartmoneys-2008-best-discount-brokers.html

Thank you for reading!