Individual investors have continued to surge into the market in 2021, with the pandemic playing a key role in giving people the time to take control of their portfolios. Comparing costs has become less straightforward, however, as most online brokers have eliminated the trading fees that were the easiest method of direct comparison. To evaluate brokers in this environment, we focused on the costs and fees left in the pricing schedules and compared these with the value the broker was delivering. Looking at low-cost in combination with value still yielded very tight competition, but we found three brokers that cost-conscious investors will find to be excellent deals.

Best Online Brokers for Low Costs:

Fidelity: Best Low-Cost Online Broker

Why We Chose It

Over the last year, we have re-evaluated what it means to be our best low-cost online broker. There are online brokers that cost next to nothing to trade on. That was all it took to walk away with this category in the past despite a broker having a limited range of assets, or a lack of useful tools, or a weak trading platform—and potentially all three as long as the price was low enough. This year, however, we went for low-cost in comparison to the value delivered. This approach to the data ended up with Fidelity (our best overall broker) on top, but the winning factors over close competitors were the cash management options on idle cash and the excellent portfolio analysis tools that consolidate outside accounts. If you aren’t going to be trading a large amount of options and you don’t require futures or cryptocurrency, then Fidelity offers you the most bang for your buck.

Interactive Brokers: Best Broker for Low Margin Rates

Why We Chose It

Interactive Brokers has margin rates well below the industry average. The margin rates at Interactive Brokers were the lowest among all brokers surveyed on balance ranging from $10,000 all the way up to the millions. Margin interest at a $100,000 balance is 1.58% for an IBKR Pro user and 2.58% for an IBKR Lite user. This was the lowest of all the brokers surveyed by quite a bit. You can also apply for portfolio margin, increasing your leverage by lowering the margin required based on overall portfolio risk. If you are trading frequently using margin, Interactive Broker makes a strong case for being your platform on the margin rates alone. Rest assured, however, that it is also one of the most robust trading platforms out there.

Interactive Brokers: Best Broker for Fractional Shares

Why We Chose It

Interactive Brokers was one of the first brokers to really get behind fractional shares, but it repeats as our pick as the best broker for fractional shares because it simply offers more. The broker requires you to trade through the Traders WorkStation (TWS) to trade fractional shares, but once you are there, you have access to fractional shares for “U.S. stocks listed on NYSE, AMEX, NASDAQ, ARCA, or BATS, as well as OTC Pink U.S. penny stocks with average daily volume above $10 million and market cap above $400 million.” Non-U.S. stocks are not available as fractional shares, but that is a limitation shared by competitors. The point is that IBKR’s fractional share offerings go beyond the National Market System (NMS) exchanges where most online brokers draw the line. If you are looking to access fractional share trading for the largest pool of stocks, then Interactive Brokers is the obvious choice.

Webull: Best Low-Cost Options Broker

Why We Chose It

Webull is essentially a no cost broker, not a low cost broker. Webull’s main advantage in pricing is the fact that it offers US listed options in addition to stocks and ETFs. The most surprising thing about Webull is the fact that its options tools and charting abilities are robust for a broker that costs next to nothing to trade on. The options tools help you set up common options strategies and customize it further using different order types and adjustments to the width between strike prices in multi-leg strategies. If you are looking to trade options at the lowest possible price, Webull is the broker for you.

What Do Brokers Charge to Trade?

Brokers can charge a variety of fees depending on the services they offer. Here are some fees you can typically expect at a brokerage:

• Stock Trade Fee (per trade): Typically between $0.00 and $6.95
• Stock Trade Fee (per share): Typically between $0.006 and $0.01
• Broker-Assisted Trade Fee: Typically between $0.00 and $50.00
• Mutual Fund Trade Fee: Typically between $0.00 and $50.00

Discount Brokers vs. Full-Service Brokers

There are different types of brokers that beginning investors can consider based on the level of service and cost they are willing to pay. A full-service, or traditional, broker can provide a broader set of products and services than what a typical discount brokerage would. Full-service brokers can offer their clients financial and retirement planning as well as tax and investment advice. These additional services and features usually come at a steeper price.

If you are looking for a cheaper, more hands-on approach, a discount broker is a better choice. Discount brokers offer low-commission rates on trades and usually have web-based platforms or apps for you to manage your investments. Discount brokers are less expensive, but require you to pay close attention and educate yourself. Luckily, most discount brokers provide educational resources to help you learn to trade and invest.

Pros & Cons of Discount Brokers

Discount brokers can be ideal for those looking to save money. If you are a novice investor and need more hands-on guidance, however, they may not be the right fit for you.