Which Stock Trading Apps Have the Most Investor-Friendly Fees?

Which Stock Trading Apps Have the Most Investor-Friendly Fees?

Old-school discount brokers tend to charge the fewest service fees, but new stock trading apps are typically more affordable for active traders.

Which Stock Trading Apps Have the Most Investor-Friendly Fees?
Kenny Zhu

Published Apr 6, 2022Updated Apr 6, 2022

Stock Trading

Stock Trading

Active Investing

Active Investing

Non Accredited

Non Accredited

Stock trading applications, otherwise known as “discount brokers,” are what originally democratized investing, starting as far back as the late 1970s.

While everyone knows the big name shops of Fidelity, Charles Schwab, Etrade, and TD Ameritrade, in the past decade, new disruptors like WeBull and Robinhood have entered the field and made the industry even more competitive.

Discount brokers put the responsibility of asset allocation, investment selection, and investing strategy directly in your hands. This contrasts with robo advisors, which handle much of that burden on your behalf in exchange for a fee. As a result, discount brokers are typically among the cheapest options for average investors seeking to purchase stocks, bonds and mutual funds.  

Based on our research, discount brokers still vary widely when it comes to services like options trading and margin trading.

Today, stock trading apps remain a cutthroat industry, crowded with big-name contenders and up-and-coming “disruptors.” Major changes, like the demise of legacy pricing power with the rollout of commission-free trading, have turned the market on its head over the past decade.

Changes like these have led many investors to view these entities as commodities. However, there are still a number of areas when it comes to fees where discount brokers maintain some pricing power.

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Key highlights

  • Brokerage accounts largely abolished trading commissions when it comes to vanilla investments like stocks, bonds and ETFs, but a number of customer service fees still remain on the books and can vary widely across different stock trading apps.
  • Fees tied to leveraged trading, like options fees and margin rates are some of the key areas where we saw major variation in pricing.
  • Depending on the size of your margin account, margin rates range anywhere from 1.99% to as high as 8.3% among the discount brokers we surveyed.
  • Fidelity charged the fewest and lowest service fees out of the 8 brokers we surveyed; they charged none of the 4 common service fees we sampled.
  • Robinhood showed the best overall performance when it came to leveraged trading fees, charging $0 per options contract and a $5 flat fee for any margin balance under $1,000.

How brokerage account fees work

Historically, one of the biggest ways that discount brokers profited was via the collection of trading commissions, which typically ranged from $4.99 to $10 per trade prior to 2019. These commissions were charged when you purchased and sold your stocks. 

As of 2019, effectively all of the major discount brokers have switched to commission-free models, with Charles Schwab leading the charge in 2017. While this largely eliminated an income source for online brokers, the average investor benefited immensely. They could now purchase and sell smaller quantities of investments at their leisure without worrying about trading commissions sapping away at their returns.

Despite the virtual elimination of trade commissions, discount brokers continue to profit in a variety of ways, including selling their own ETFs and mutual fund products, offering financial advisory services, providing bank accounts, payment-for-order flow, and acting as market makers for investors.

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Stock trading apps with the fe...

Fidelity, Interactive Brokers, Vanguard

Of course, not all fees have been eliminated, and many legacy costs have survived. While stock trading apps are seen as commoditized by many, they can still diverge widely when it comes to these fees. We’ve ranked each stock trading app across service fees, option fees, and margin rates below.

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Stock trading apps with the mo...

TradeUp, FirstTrade, WeBull

Stock trading app service fee comparison at a glance

Brokerage account

Stock transfer fees (ACATS)

Wire transfer fee

Account maintenance fees

Paper statement fee

Fidelity

$0

$0

$0

$0

Interactive Brokers

$0

$10

$0

$0

Vanguard

$0

$10

$20*

$0

TD Ameritrade

$75

$0

$0

$0

Robinhood

$75

$0

$0

$5

WeBull

$75

$8

$0

$5

TradeUp

$50

$50

$0

$2

Firstrade

$75

$25

$0

$5

*This fee is waived for customers who opt-out of receiving paper statements.

  • Stock transfer fee (ACATS): Fee charged to transfer specific securities, or your entire portfolio from one account to another external account. Also known as the Automated Customer Account Transfer Service (ACATS).
  • Wire transfer fee: Fee charged for wire transfers into or out of your brokerage account. Can typically be avoided by opting for an ACH transfer instead.
  • Account maintenance fee: A legacy fee that’s sometimes charged for accounts that fail to meet a minimum balance requirement.
  • Paper statement fee: Another legacy fee that’s sometimes charged for individuals who prefer to receive paper statements by mail rather than electronic statements. 

Out of all the online trading apps we reviewed, Fidelity had the fewest incidental fees and did not charge for wire transfers, stock transfers, or paper statements. By contrast, FirstTrade was the firm that was most likely to list charges for the services cited above.

Many of the fees cited are charged for legacy services that have either fallen out of vogue or can be avoided. For example, even though Vanguard lists an account maintenance fee of $20, this fee can be entirely avoided by opting out of paper statements. Removing this fee would have tied Vanguard with Interactive Brokers for the online broker with the 2nd fewest service-related fees.

Automated customer account transfers service (ACATS) fees are charged by many firms for processing the paperwork to transfer securities out of your account. But in many cases, they act as deterrents for users thinking about swapping services. With the exception of TD Ameritrade, we found that smaller stock trading apps like Robinhood and WeBull were more likely to charge ACATS fees than established competitors like Vanguard or Fidelity.

The other split between legacy discount brokers and newer shops was reflected in paper statement fees, as none of the large discount brokers surveyed charged fees to receive paper statements while all of the newer brokers we reviewed did charge these fees. This likely reflects their core investor base and how they prefer to hold onto their records.

Many of the other service charges are easily avoided by opting for electronic statements or simply choosing to deposit funds into your account via check or ACH transfer.

Leveraged trading fees at a glance

Based on our research, discount brokers still vary widely when it comes to services like options trading and margin trading. These are of particular interest to more active traders who trade on margins to amplify potential returns on high conviction bets. We define both below.

  • Option fee: Fee charged for buying and selling options contracts on the open market. Typically charged on a per-contract rate; third-party exchanges may also tack on additional costs which are beyond the scope of this study.
  • Margin rates: Interest rate charged by brokers to offer you additional buying power beyond the cash balance you have available in your account.

Both options trading and trading on margin are forms of leveraged trading. Leveraged trading exposes you to the risk of losses that, in some instances, may exceed the amount of your original investment principal. Consequently, these should be left to experienced investors who can fully understand and tolerate the increased risks associated with these investments.

Unlike cash accounts, which limit your investment capacity to the cash you have in your account, margin accounts allow you to push the envelope in terms of the amount you can trade in your account. They essentially represent short-term loans from your broker that allow you to buy and sell securities “on margin.” This opens the door to the possibility for outsized returns but also a greater risk of loss should you overextend your position. 

Both options trading and trading on margin require users to either open margin accounts or otherwise obtain special approvals for their accounts. This is because leveraged trading inherently entails more risk and complex trading strategies. We summarize the option fees charged by top stock trading apps below.

Option fees compared

  • Stock trading apps with no option fees: FirstTrade, Robinhood, TradeUp, WeBull
  • Stock trading apps with highest option fees: Vanguard

Brokerage account

Option fees

Fidelity

$0.65

Firstrade

$0

Interactive Brokers

$0.65

Robinhood

$0

TD Ameritrade

$0.65

TradeUp

$0

Vanguard

$1

WeBull

$0

The newer contingent—WeBull, Robinhood, FirstTrade, and TradeUp—all tied for stock trading apps with the lowest options trading fees. None of them charged additional commissions for options contracts. By contrast, the incumbents surveyed all typically charged the standard $0.65 per options contract, while Vanguard charged an above-average options fee of $1 per contract.

As a group, we found that smaller brokers like Robinhood or WeBull were less likely to charge incremental per-contract fees for options trades. This may make them more attractive to younger investors seeking to leverage their accounts in pursuit of higher returns.

Conversely, more established shops charge typical fees per option contract for the typical rate of $0.65 per contract. This was shared across Fidelity, TD Ameritrade and Interactive Brokers. We found that Vanguard, a shop known for low-cost index funds and traditional investing, seemed to actively discourage options trading on its platform with the highest option fee of $1 per contract. 

Margin rates compared

  • Stock trading apps with the lowest margin rates: TradeUp, Robinhood, Interactive Brokers
  • Stock trading apps with the highest margin rates: TD Ameritrade, FirstTrade

Brokerage Account

Average Margin Rate

TradeUp

1.99%

Robinhood

2.50%

Interactive Brokers

2.58%

WeBull

5.89%

Fidelity

6.53%

Vanguard

6.88%

Firstrade

7.04%

TD Ameritrade

8.30%

To better illustrate margin rates across different stock trading accounts, we graphed them side by side based on the most common margin ranges and rates charged per broker. TradeUp charged the lowest margin rates across the board while TD Ameritrade charged the highest.

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*Robinhood charges $5 as its margin rate for balances under $1,000 which is not exhibited on this graph.

We found two basic fee structures in our sample group—either a fixed margin rate structure that remained the same no matter what the margin balance quoted was or an incremental curved cost structure with margin rates gradually decreasing as the margin balance increased.

Also worth mentioning was Robinhood’s unique $5 margin fee for balances under $1,000, the only fixed margin fee we saw of its kind. This is likely tailored toward its large contingent of low-balance accounts.

Again, the trend toward low-cost options trading continued to hold true for margin rates, as smaller brokers again seemed to offer lower margin rates on average than their older, more established counterparts. This could reflect a higher tolerance for risk-taking among the core investor base for newer stock trading accounts.

Stock trading fee comparison breakdown

Fidelity performed well in the basic service fees category, generally charging none of the common service fees cited among top competitors. 

Both Interactive Brokers and Vanguard also performed fairly well in the service fees category, particularly if users opted for electronic statements rather than paper statements, which would result in Vanguard waiving its account maintenance fee. TD Ameritrade also performed fairly well but fell towards the middle of the pack due to its $75 ACATS fee that wasn’t charged by its big brand competitors.

Based on our observations, the aforementioned incumbent stock trading apps, (Fidelity, Interactive Brokers, Vanguard, and TD Ameritrade), performed better than their smaller competitors, (Webull, TradeUp, and FirstTrade), which seemed to pass many incidental service fees onto their customers. Particularly onerous were the high mandatory ACATS fees that would make transferring accounts to other brokers an expensive option.

However, the results were flipped when it came to the leveraged trading fee categories, which encompassed both option trading fees as well as margin rates. Robinhood ended up being our best overall performer, tying for first when it came to option fees due to its $0 per contract fee, and placing second when it came to margin rates. It was narrowly outperformed by TradeUp, which charges a flat 1.99% margin rate for all balance amounts sampled, which was about 0.5% lower than Robinhood’s average margin rate quote.

What made Robinhood particularly attractive was its $5 fixed fee for margin balances under $1,000. This is likely a boon for the majority of its customer base, where the median account balance is around $240. No other stock trading app in our sample charged fixed fee margin rates for any balance observed. 

Finally, we found brokerage accounts within our sample that featured consistent margin rate structures across all balances had lower rates overall than comparable brokerage accounts that charged different rates based on the size of your margin account. For the brokerage accounts that quoted varying margin rates, we also found that margin rates generally became cheaper the higher your balance grew.

Methodology and caveats

Our rankings sampled the fee structures of eight popular stock trading apps. We attempted to collect a sample that contained a variety of both large incumbent brokerage accounts like TD Ameritrade and Fidelity as well as smaller “disruptor” companies like Robinhood and WeBull. 

We canvassed each stock trading app for a variety of commonly quoted expenses, including common service fees, options trading fees and margin rates. We then tabulated the fees for each category and ranked each discount broker across these three fee categories.

For service fees, brokers were ranked on the basis of both the number and size of each of the four common service fees sampled: stock transfer fees, wire transfer fees, account maintenance fees and paper statement fees.

When it came to options trading fees, we ranked each discount broker based on the per-contract cost quoted for buying and selling options.

Finally, when it came to margin rates, we collected the margin rate structures quoted by each discount broker. We collected all margin account balances and their corresponding rates and ranked them from lowest average margin rates to highest. 

Due to a variety of disparate fee ranges being quoted, some liberties were taken to compartmentalize and simplify the margin rate balances cited for comparison purposes, so margin balances do not necessarily reflect word-for-word quotes found on broker sites. 

We caution that our study focuses exclusively on commonly charged fees shared by a select number of popular stock trading apps. These are not reflective of all of the fees charged by each discount broker, but instead only reflect a distinct cross-section of the most common fees quoted by these eight stock trading apps. 

For the purposes of our analysis, we did not take into account any specialized offerings or account features that might otherwise distinguish the benefits of any specific discount broker. Investment-specific fees like expense ratios and fund management fees commonly charged by mutual funds and ETFs were also excluded from our analysis, as these costs typically fall beyond the control of most discount brokers.

Sources

  1. Annual account service fees | Vanguard. (n.d.). Vanguard. Retrieved February 15, 2022, from Vanguard
  2. Brokerage Fees | TD Ameritrade. (n.d.). TD Ameritrade. Retrieved February 15, 2022, from TD Ameritrade
  3. Commissions | Interactive Brokers LLC. (n.d.). Interactive Brokers. Retrieved February 15, 2022, from Interactive Brokers
  4. No Investment Broker Fees! | Online Discount Brokers. (n.d.). Firstrade. Retrieved February 15, 2022, from Firstrade
  5. Pricing and Commission - TradeUP. (n.d.). TradeUP. Retrieved February 15, 2022, from TradeUP
  6. Robinhood fee schedule. (2022). Robinhood. Retrieved February 15, 2022, from Robinhood
  7. Trading Commissions and Margin Rates - Fidelity. (n.d.). Fidelity. Retrieved February 15, 2022, from Fidelity
  8. Webull Financial Fee Schedule - Webull Pricing. (n.d.). WeBull. Retrieved February 15, 2022, from WeBull