Charles Schwab Eliminates Trading Commission Fees, Others Follow
collage of investing related photos

Charles Schwab Eliminates Trading Commission Fees, Others Follow

Change is in the wind — can you feel it? Just as the leaves are starting to display their autumn coloring and falling to the ground, commission fees at three major brokerage firms are dropping to new lows as well. Now customers of Charles Schwab, Ameritrade, and E*Trade can buy and sell stocks and ETFs for a commission of $0.

Last week Schwab announced that it was cutting its $4.95 online stock trading commission to $0. The new policy is effective as of today, October 7th, 2019. Commenting on the move, Schwab President and CEO Walt Bettinger said in the statement, “This is our price. Not a promotion. No catches. Period. Price should never be a barrier to investing for anyone, whether an experienced investor or someone just starting on the investing path. We’re proud to provide clients with a full-service, modern investing experience that delivers on our no trade-offs combination of service, simplicity and superior value – backed by a satisfaction guarantee.”

In response to the Schwab news, both Ameritrade and E*Trade announced they were also ditching their $6.95 trade fees in favor of a commission-fee structure. While the news may be welcome for some investors, those who own stock in the trio of brokerages weren’t too pleased. As TechCrunch reports, share prices for Schwab dropped 12% after the announcement while E*Trade’s price was off 19% and Ameritrade lost 28%.

Those assessing what led to this abrupt change pointed to one main culprit: Robinhood. For years the FinTech startup has challenged brokerage norms by offering users commission-free trades on stocks and ETFs. In a statement the company acknowledged their role in the evolution, stating, “The changes taking place across the brokerage industry reflect a focus on the customer that‘s been inherent to Robinhood since the beginning.” Of course this also isn’t the first time Robinhood has seemingly had an impact on commission prices. For example last year Chase announced its You Invest platform, offering up to 100 commission-free trades for users. Meanwhile other FinTechs such as SoFi have gotten in on the free stock trading bandwagon, with Square reportedly looking to do the same. However Robinhood insinuated that they didn’t fear competition from these FinTech or other brokerages, saying, “We remain focused on offering intuitively designed products that reduce barriers to our financial system, including account minimums and commission fees.”

For many, it was only a matter of time before Robinhood and other startups forced other brokerages to lower their pricing to $0. Now that day has finally come, potentially putting the pressure on Robinhood for a change. Regardless of what happens on that front, the developments of this past week amount to a big win for investors — especially those who may have been hesitant to get started before.

Leave a Reply

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get the Latest News Delivered to Your Inbox
Travelers with two Best Western Credit Cards

Best Western Debuts Two New Rewards Credit Cards

After pausing applications for their previous rewards card, the hotel chain Best Western has unveiled a new pair of rewards credit cards with a new issuer. About the Best Western cards: Best Western is partnering with First Bank & Trust and Mercury Financial to introduce two new co-branded credit cards. First up is the no-annual-fee Best Western Rewards Visa Signature Card. With this card, customers can 4x points on Best...
Marriott Bonvoy card and a woman on vacation

Marriott Bonvoy Bold Card Launches Travel Contest

Chase and Marriott Bonoy have unveiled a special contest while continuing to offer its best-ever welcome bonus. About the welcome bonus and Bold Chat Court Contest: Marriott Bonvoy and Chase have launched a special opportunity called the Bold Chat Court contest. As part of this contest, 10 lucky travelers will be awarded 500,000 Marriott Bonvoy points (for a total of 5 million) as well as $5,000. For this contest, the...
Bilt and All Reward logos

Bilt Adds 2 New Transfer Partners Including First 3:2 Transfer Rate

Bilt is once again expanding its travel transfer rewards program — and is even breaking the mold with one new partner. About the new additions to Bilt: This week, Bilt launched partnerships with two more travel brands: TAP Air Portugal and Accor. As a result, Bilt members will now be able to transfer their points to Miles&Go and ALL Reward, respectively. In total, Bilt now has 18 transfer partners including 13...
Fioney Top 10 Must-Read Personal Finance Articles Septemeber 2024

Top 10 Personal Finance Articles of the Month — September 2024

Welcome to Fioney's look at the top 10 personal finance articles of the month. On the first Friday of each new month, we look back at some of our favorite posts published in the weeks prior and highlight them right here. This includes a mix of sites that have become staples of our lists as well as many first-timers. To start things off this month, we'll look at some articles...
Amazon and Target logos

Discover Reveals 5% Bonus Categories for Final Quarter of 2024

As we head into the holiday season, Discover has unveiled its fourth-quarter bonus category picks. About the Q4 2024 Discover It 5% categories: Starting on October 1st, Discover It customers will be able to earn up to 5% back on purchases from two major retailers. First up is Amazon — which has been a fixture of Discover's fourth-quarter bonus categories since at least 2015. While this category will of course cover...