Zecco – Are Free Trades Everything?

Zecco is one of those companies that is making the online brokerage business better by raising the bar on value for your dollar.

Serving over 100,000 customers, Zecco’s claim to fame is free trades. If you trade more than 25 times in a month, or have an account balance over $25,000, you get 10 free trades. Other customers still get a pretty sweet deal – $4.50 per trade, which is cheaper than the vast majority of firms out there. Commissions on options trades are equally attractive at $4.50 + 50 cents per contract – an even better deal than TradeKing’s $4.95 + 65 cents per contract pricing.

You may wonder how Zecco can afford to offer free trades to some customers. On its site, the company says that “like other online investing brokerages, we make money on interest income and options trades.” It’s not quite that simple. The free trade offer likely draws in active investors, and it also makes for great ad copy – who wouldn’t click on an ad offering free stock or options trades?

However, even if you don’t qualify for free trades, Zecco is still offering an oustanding value, particularly for active equity and option traders.

Zecco isn’t as attractive for mutual funds. Mutual fund trades are $10 each, $10.99 if executed by a broker. Some firms like TD Ameritrade (AMTD) and Scottrade offer free executions on certain mutual fund classes.

However, I do like that Zecco does not have an account minimum or inactivity fees which tend to unfairly penalize small and/or buy-and-hold investors. So Zecco is definitely a firm the small investor can grow with. And what better reward for growing your account than the free trade offer once you break the $25,000 account balance mark.

It’s also likely that the $25,000 requirement for free trades will go lower over time. Despite regular consolidation in the industry, new competitors are regularly popping up and keeping downward pressure on commission rates. It is becoming cheaper and cheaper to execute stock and option trades, and there’s always a new kid on the block willing to pass the savings along to investors.

And like TradeKing, Zecco also has a social-networking application called ZeccoShare. Zecco also offers forex trading, research from Standard & Poors,

At the end of the day, Zecco offers an excellent deal for two types of investors – the active trader seeking to lower commission costs, and the beginner with a small account balance.

Interested?

Then click here: Learn more about Zecco