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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  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 , 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.
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.
In the awards category, there really is no comparison. TradeKing has been in the top five in both Kiplinger’s best discount brokers  survey and Smart Money’s best online brokers  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!
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.
What are your thoughts? TradeKing or Zecco?
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