Online brokerages frequently offer cash bonuses, promotions, and other incentives to entice new, and occasionally keep existing, account owners. To find which brokerage offered the best deals, we looked at five major online brokers that offered cash credit and free trades promotions, and compared them to see how they stacked up. We included e*Trade, Sharebuilder from Capital One, Merrill Edge, TD Ameritrade, and Fidelity in our analysis due to the similarity of their offerings and their status as five of the largest players in the market. We'll organize this into those with the best cash bonuses and those with the best free trades.
Best Cash Bonuses on Deposits
Cash bonuses tend to kick in when investors have transferred at least $5,000 into their accounts within each online brokers' specified qualification period. They range anywhere from $50 to $2,500 based on which tier or bucket your funds fall into.
Sharebuilder from Capital One has the best cash bonuses for beginning investors or consumers with lower deposits. It rewards investors $50 when they've deposited at least $5k into their investment holdings; in fact, it's the only major online brokerage company that gives bonuses out for any deposit amounts below $20,000. Up to $249,999 in balances, Sharebuilder either matches or outpaces other brokers when it comes to cash bonuses on deposits. Consumers depositing funds totaling anywhere between $250,000 - $499,999 will find that the five major brokerages give out essentially the same bonuses. For funds deposited above the $500,000 mark, e*Trade, Fidelity, and TD Ameritrade offer the biggest bang for your buck.
Below are how the five major online brokerages stack up in terms of their introductory bonuses. These promotions were accurate at the time of posting, but they change quite frequently, so there's no guarantee they'll remain the same.
|Funds Transferred within Period||e*Trade||Sharebuilder||Merrill Edge||TD Ameritrade||Fidelity|
|$2,000 - $4,999||$0||$0||$0||$0||$0|
|$5,000 - $9,999||0||50||0||0||0|
|$10,000 - $19,999||0||100||0||0||0|
|$20,000 - $24,999||0||100||100||0||0|
|$25,000 - $49,999||200||200||100||100||0|
|$50,000 - $99,999||200||300||150||100||200|
|$100,000 - $124,999||300||600||250||300||300|
|$125,000 - $199,999||300||600||250||300||300|
|$200,000 - $249,999||300||600||600||300||300|
|$250,000 - $499,999||600||600||600||600||600|
|$500,000 - $999,999||1,200||600||600||1,200||1,200|
For those investors focused on returns, one metric that we look at is the Bonus Rate, which measures how much of a cash bonus we get for the dollars we invest with the online brokerage. We'll calculate the bonus rate based on the cash incentive each brokerage doles out compared to the lower threshold of deposit brackets, which is how online brokers typically group amounts invested. For example, if a $50 credit is received for deposits between $5,000 and $9,999, the rate is calculated using $50/$5,000. On a purely bonus return on cash perspective, here’s what we found:
As we mentioned earlier, there are various timelines to keep track of in order to be eligible for these bonuses. Investors who transfer their funds within a period of 45 - 90 days from account opening will be eligible for the cash bonuses. After the funding period, the online brokerages will take anywhere from 1 - 6 weeks to actually add the bonus into your account. You'll still have to keep the funds in the account for a longer period of time to be eligible to keep the introductory bonus. Free trades tend to be available within the first two to three months as an introductory offer.
|e*Trade||Sharebuilder||Merrill Edge||TD Ameritrade||Fidelity|
|# Days to Fund Account (Qualification Period)||45||90||45||60||60|
|Time until Reward is Credited (after Qualification Period)||1 week||4-6 weeks||2 weeks||3-5 business days||2-4 weeks|
|# Days Funds Must Remain in Account (after Qualification Period)||180||270||90||360||270|
Best Free Trade Bonuses on Deposits
If we take into account the free trades included with the promotions, the question about which online broker has the better promotions becomes more difficult to answer. This is especially more significant when you have a particular strategy to actively execute, or are a personal day trader with greater volume.
Only e*Trade, Merrill Edge, and TD Ameritrade offer incentives for free trades to their new account owners. TD Ameritrade's offer of 500 free transactions kicks in at account opening, while e*Trade's only kicks in when you've deposited $10,000 in investment funds or more. Merrill Edge offers 300 free trades, which is the lowest quantity, but still better than the zero free trades that Sharebuilder and Fidelity have. Keep in mind that these stock purchases or sales must be transacted within the first 60 - 90 days of account opening.
How many trades will you execute? The 500 free trades from e*Trade and TD Ameritrade are great deals, but they also accompany the more expensive per trade fees of $9.99 that you'll have to pay after the introductory period runs out. Merrill has one of the cheaper fees for simple stock transactions in the long run.
|Funds Deposited||e*Trade||Sharebuilder||Merril Edge||TD Ameritrade||Fidelity|
|$2,000 - $4,999||0||0||0||500||0|
|$5,000 - $9,999||0||0||0||500||0|
|$10,000 - $19,999||500||0||0||500||0|
|$20,000 - $24,999||500||0||300||500||0|
|$25,000 - $49,999||500||0||300||500||0|
|$50,000 - $99,999||500||0||300||500||0|
|$100,000 - $124,999||500||0||300||500||0|
|$125,000 - $199,999||500||0||300||500||0|
|$200,000 - $249,999||500||0||300||500||0|
|$250,000 - $499,999||500||0||300||500||0|
|$500,000 - $999,999||500||0||300||500||0|
|Fee per Trade||$9.99||$6.95||$6.95||$9.99||$7.95|