Scottrade review: Low fees and strong customer service
In the crowded online brokerage market, Scottrade is easily one of the most recognizable names.
And that’s for good reason. The firm, which opened in 1980 with two branches, now has more than 500 brick-and-mortar locations to complement its online offering, Scottrade.com, which launched in 1996. Its $7 price for unlimited online trades is a draw for many customers, allowing self-directed investors to build their investments without worrying about exorbitant fees.
Pros: Affordable, Diverse, Helpful
The commonly held belief is that you can get either quality or affordability, but not both. Scottrade largely contradicts this with its low fees and accolades for customer service. In 2016, the firm had the highest ranking for self-directed investor satisfaction, account information and trading charges and fees, according to J.D. Power.
Scottrade has several offerings that make it attractive to individual investors:
Low trading fees
- $7 per online trade for stocks and exchange-trade funds (ETFs)
- No maintenance, inactivity or closing fees
- No minimum to open an IRA account
More opportunities for options traders
- More than 14,000 mutual fund options
- $7 per trade +$1.25 for each option contracts
- Mini-option contracts for Apple, Amazon, Google
There's also an opportunity for two exchange traded funds that allow traders to buy and sell 10 share options contracts for the same fee as above.
Free investment tools and services
- Free real-time streaming quotes
- Dashboard that features instant updates from Dow Jones
- Advanced charting, watch lists and an advanced order entry tool for provisional trade commands
- Quick Trade Bar located for greater web functionality
- Customer service via Facebook and Twitter, in addition to the traditional channels
Scottrade 2017 cash bonus and free trades promotions
Along with these benefits, investors should take advantage of Scottrade’s 2017 Cash Bonus Offer of up to $2,500 in bonus cash for quality deposits or 700 free trades for new customers.
Fund your account with at least $500 and get 700 free trades and free unlimited option contracts for 90 days.
Qualifying deposits for the 2017 Cash Bonus Offer are as follows:
- $25,000 to $49,999: Receive $100 cash bonus
- $50,000 to $99,999: Receive $200 cash bonus
- $100,000 to $249,999: Receive $300 cash bonus
- $250,000 to $499,999: Receive $600 cash bonus
- $500,000 to $999,999: Receive $1,000 cash bonus
- $1 million and above: Receive $2,500 cash bonus
The offer is an attractive option for customers who want to maintain all their investments at one brokerage firm or first-time investors who have saved up enough money to meet the minimum threshold.
Scottrade for seasoned investors
Scottrade also offers a product, ScottradeELITE, for more well-heeled investors. ScottradeELITE is available for advanced traders who fund their primary account with a minimum of $25,000 or meet another qualification described on the site. These investors get access to the following features:
- Customized trading platform that features advanced charting tools to test different trading strategies
- Daily trading ideas from Trading Central and Recognia
- A proprietary platform to measure market trends within sectors, among other advanced features
Cons: High Minimum, No Dividend Reinvestment and No Commission-Free ETFs
Higher deposit minimum than competitors
At $2,500, Scottrade’s minimum deposit requirement for opening an online brokerage account is higher than competitors like Charles Schwab’s ($1,000 minimum) or TD AmeriTrade (no minimum, but $2,000 requirement for margin and options trading).
Lacking in commission-free ETFs
Scottrade also doesn’t offer any commission-free ETFs, exchange-traded funds that trade like common stock and give investors some return at a lower cost. Commission-free ETFs are common at online brokerages that offer a low price per trade. If you’re an investor who favors diverse trading options, then this won’t be a problem. Otherwise, expect to pay more in commissions.
Other trading fees
Also keep in mind that the $7 per trade price is only for stocks that are more than $1 per share. Less than that and you’ll pay $7 plus .5% of the principal value. There’s also a $32 trading fee if you need personalized help from a broker or want to use the company’s touch-tone phone system.
No option for dividend reinvestment plan
But the biggest drawback at Scottrade is that there isn’t a dividend reinvestment plan, which allows investors to buy additional shares at a low cost. However, the company offers a Flexible Reinvestment Program that allows investors to reinvest their dividends in up to five eligible securities commission-free. Scottrade then executes these trades on monthly or quarterly basis. It’s better than nothing, but with Scottrade’s Flexible Reinvestment Program you don’t qualify for the same tax benefits you’d get with a traditional dividend reinvestment plan.
Bottom line for trading with Scottrade
Scottrade is an attractive option for first-timers or anyone who wants to consolidate their investments in one brokerage. On top of its network of more than 500 local branch offices, varied mutual fund options, low fees, extensive client education resources available through its Knowledge Center and advanced tools to help investors optimize their investment strategy, clients can also look forward to the company’s current promotional offer. If you have $2,500 to spare and are a fan of low fees (who isn’t?), Scottrade may be the right investment platform for you.