When you’re deciding on a brokerage account for investing, fees matter. The more you pay for trading commissions and other costs, the less you keep for profits. In the online era, it’s common to find discount brokers charging few to no fees. Ideally, your discount broker should keep costs low while providing a high-quality platform, an extensive investment selection, portfolio analysis tools, and solid customer service. Some do a much better job than others. The best discount broker for you also depends on your investment strategy and goals.
After conducting hundreds of hours of comprehensive research, data analysis, and live broker platform demos, Fidelity is our best overall discount broker. Unlike many of its competitors, Fidelity does not participate in payment for order flow (PFOF), yet it still charges no commissions on stock and ETF trading, all while delivering a best-in-class combination of wide-ranging assets, abundant account and research amenities, available banking features, and more. Fidelity is just one of 26 online brokers that we evaluated based on 89 criteria, execution speeds, costs, user experience, plus additional features.
Best Discount Brokers
- Best Overall: Fidelity
- Best Broker for Low Margin Rates: Interactive Brokers
- Best Broker for Fractional Shares: Interactive Brokers
- Best Low-Cost Futures Broker: Interactive Brokers
- Best Low-Cost Options Broker: Webull
- Best Broker for Earning High Interest on Uninvested Cash: moomoo
Best Overall: Fidelity
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- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trades
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Pros & Cons
Pros
Zero commissions on stock, ETF, and option trades
Doesn’t use payment for order flow
Low account fees and margin rates
Massive investment selection
Offers in-person customer service
Cons
Commissions on some mutual funds and fixed-income products
No futures trading
Limited cryptocurrency selection
Virtual assistant and portfolio analysis tools could be better organized
Why We Chose It
Fidelity combines rock-bottom fees with one of the best investor experiences around. There’s a reason it’s the largest broker in the United States.
Overview
Fidelity has been on a mission to lower fees for investors. It charges no commissions on trades for stocks, ETFs, and options. Fidelity also has rock-bottom account fees. Fidelity’s fee structure rivals the low prices of online-only discount brokers and trading apps. But unlike many online brokers, Fidelity does not make money off payment for order flow, which can help with trade execution quality.
Despite having low fees, Fidelity delivers an incredible experience. It offers powerful and user-friendly trading platforms and a large investment selection, making it the best discount broker for mutual funds. In addition, Fidelity provides high-quality research and education and first-class customer service with the option to meet with reps in person. Thanks to all this support, Fidelity is also the best discount broker for beginners.
Fidelity’s flaws as a discount broker are minimal. It does charge commissions on some trades, like bonds and non-Fidelity mutual funds, and it doesn’t offer futures trading or much of a selection of cryptocurrencies. Still, it delivers on nearly everything else, especially considering its low costs.
Fidelity's headquarters is in Boston, and it was founded in 1946.
Best Broker for Low Margin Rates, Best Broker for Fractional Shares, Best Low-Cost Futures Broker: Interactive Brokers
- Account Minimum: $0.00
- Fees:$0.00 commissions for equities/ETFs available on IBKR’s TWS Lite, or low costs scaled by volume for active traders that want access to advanced functionality such as order routing.$0.65 per contract for options on TWS Lite; that is also the base rate for TWS Pro users, with scaled rates based on volume. $0.85 per contract for futures.
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Pros & Cons
Pros
Charges the industry’s lowest margin rates
Excellent selection of fractional shares
Offers futures trading with low contract fees
Lightning-fast trade execution
Has a commission-free option
Cons
Advanced platform charges commission on all trades
Commission-free platform has relatively limited capabilities
Can be overwhelming for beginners
Why We Chose It
Best Broker for Low Margin Rates
Interactive Brokers (IBKR) charges the industry’s lowest margin rates, with even lower rates for investors borrowing large amounts of money.
Best Broker for Fractional Shares
Interactive Brokers not only provides the largest selection of low-cost fractional stock and ETF shares, but it also provides impressive research scanners to help investors find the right fit.
Best Low-Cost Futures Broker
Most discount brokers shy away from futures trading, but not Interactive Brokers. It allows investors to trade futures globally with low contract fees.
Overview
Interactive Brokers is the best discount broker for day trading and serious investors. Its powerful platform executes trades more quickly than other brokers, giving investors an edge. Interactive Brokers know that serious investors trade frequently. For this reason, the company aims to keep fees low, especially with more advanced strategies. Interactive Brokers did such an excellent job we selected it as the best discount broker in three categories.
First, Interactive Brokers charges the lowest margin rates for investors who want to borrow money for trades. The rates are even lower for those looking to borrow six or seven figures. Interactive Brokers also has an excellent fractional shares program, where you buy a portion of a stock or ETF. While other discount brokers also offer low-cost fractional shares, Interactive Brokers has the best scanners to find opportunities for your portfolio. Finally, Interactive Brokers offers futures trading in over 30 markets around the world. Most discount brokers don’t offer futures trading. Interactive Brokers does and charges low contract fees.
Interactive Brokers is ideal for serious investors looking for a great deal on margin trading, futures trading, and fractional shares. While the Interactive Brokers Pro platform does charge commissions on every trade, users gain the ability to use IBKR's SmartRouting feature which helps support best execution by searching for the best available prices for stocks, options, and combinations across exchanges and dark pools. Interactive Brokers does offer its commission-free IBKR Lite option, however, this plan's capabilities and trade execution fall short of the Pro platform.
Interactive Brokers was founded in 1977 and has its headquarters in Greenwich, Connecticut.
Best Low-Cost Options Broker: Webull
- Account Minimum: $0
- Fees: $0 commissions for stock, ETF, and options
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Pros & Cons
Pros
Doesn’t charge commissions or contract fees for options
Excellent options trading user experience, charting capabilities, and research
Zero-commission trades for stocks and ETFs
Fast account setup and options trading approval
Offers extended market and after-market trading
Cons
Uses payment for order flow
Doesn’t offer mutual funds or fixed-income investments
Limited portfolio management tools
No access to financial advisors
Why We Chose It
Webull is the best discount broker for options trading. It doesn’t charge commissions or contract fees, yet it still provides an excellent user experience for planning and executing options trades.
Overview
Founded in 2017, Webull is an online discount broker offering zero-commission trades. It doesn’t charge commissions when you trade stocks, ETFs, or options. Webull’s stock and ETF capabilities are decent, but it really stands out for its option trading platform. While other discount brokers offer zero-commission option trades, many still charge contract fees. Not Webull. The entire transaction is free. At the same time, Webull doesn’t sacrifice the trading UX. It’s user-friendly, provides ongoing market data and charting capabilities, and lets you set up 11 different options strategies including more advanced ones like a Condor or Iron Butterfly.
Webull can give all this away without charging commissions because it earns money on payment for order flow. Your trades may have worse price execution quality. This could concern serious options day traders. Webull doesn’t offer mutual funds or fixed-income investments. Its portfolio analysis tools and support are also a little lacking.
Best Broker for Earning High Interest on Uninvested Cash: moomoo
- Account Minimum: $0
- Fees: $0 commissions for stock, ETF, and options
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Pros & Cons
Pros
Pays a sky-high interest rate on uninvested cash
Welcome bonus for new investors
No commissions on U.S. stocks, ETFs, and options
Excellent trading user experience and charting capabilities
Decent margin interest rates
Cons
Limited account types
Smaller investment selection
High fees on account withdrawal options
Why We Chose It
Moomoo pays one of the highest interest rates on uninvested cash and gives generous welcome bonuses. Investors can easily make passive income doing nothing with this discount broker.
Overview
Moomoo is a relatively new discount broker with zero-commission trades and low margin rates. It has some appealing offers to attract investors to its platform. To begin with, moomoo pays the highest interest rate on your uninvested cash, 5.1% APY as of May 23, 2024, allowing users to receive a competitive return just for holding money in their account.
Moomoo also offers several bonuses, adding to its appeal as one of the best discount stock brokers. First, you can receive an even higher interest rate for the first few months after you join. In addition, you can receive extra cash or free stocks after making your initial deposits. Besides these bonuses, moomoo offers a strong trading experience with available research, high-level options analysis features, some creative portfolio analysis tools, and low-margin interest rates.
Moomoo only offers a basic investment selection of stocks, ETFs, options, and fractional shares, and U.S. customers can only open individual margin accounts. This means there are no joint accounts, trust accounts, or any type of retirement account. Finally, moomoo charges higher fees than other brokers for some withdrawal options, including wire transfers and stock transfers directly out of the account. There’s no fee for ACH withdrawals, though.
Moomoo's headquarters is in Palo Alto, California, and it was founded in 2018.
Research Insights
When selecting a discount brokerage platform, investors should prioritize transparency, affordability, and value for money. Transparency is key for investors seeking brokerage platforms that clearly disclose all fees and charges associated with trading and account maintenance. Additionally, affordability is paramount for investors seeking competitive commission rates, low or no account maintenance fees, and minimal additional charges.
Value for money is another critical consideration, with investors assessing the overall package of services and features offered by the brokerage platform in relation to its cost. While low-cost trading is essential, investors should also consider factors such as research tools, educational resources, customer support, and trading platform functionality when evaluating the value proposition of a brokerage platform. By prioritizing transparency, affordability, and value for money, investors can select a brokerage platform that meets their trading needs while minimizing costs and maximizing the potential for long-term investment success. - Amrut Deshmukh, Investopedia Research Analyst
The Bottom Line
The best discount brokers show that just because a company has low trading fees doesn’t mean it has to give up on quality. Fidelity is the best discount broker overall. Not only does it have low fees across the board, but it also offers a massive investment selection, excellent trading platforms, top-tier market research, and first-class customer support. In other words, the complete package.
Interactive Brokers makes sense for serious investors and offers the best deal for three advanced trading strategies: it has the lowest margin rates, the most extensive selection of low-cost fractional shares, and futures trading across global markets with low contract fees. Webull is best for options traders, combining a powerful user experience with no contract fees or commissions. Finally, moomoo stands out for paying the highest interest rate on uninvested cash and offering generous sign-up bonuses along with zero-commission trades.
Compare the Best Discount Brokers
| Company | Account Minimum | Fee & Commissions | Available Assets |
|---|---|---|---|
| Fidelity | $0 | $0 for stock/ETF trades, $0 plus $0.65/contract for options trades | Stocks, mutual funds, ETFs, bonds, CD's, options, currencies, crypto, OTC |
| Interactive Brokers | $0 | $0 commissions for stock/ETF trades,$0.65 per contract for options trades | Stocks, mutual funds, ETFs, bonds, CD's, options, futures, currencies, crypto, OTC |
| Webull | $0 | $0 commissions for stock, ETF, and options | Stocks, ETFs, Options, Futures |
| moomoo | $0 | $0 commissions for stock, ETF, and options | Stocks, ETFs, options |
Everything You Need to Know About Brokerage Accounts
Discount Brokerage vs. Full-Service Brokerage
The level of service and human support are the main differences between a discount and a full-service brokerage. At a full-service brokerage, a human advisor helps you research, plan, and execute your trades. The stockbroker may manage your portfolio and have the right to make trades on your behalf. With a discount brokerage account, you manage the investments and set up the trades. In exchange, discount brokerages are much less expensive than full-service brokerages and have lower account minimums.
What Is a Discount Brokerage?
A discount brokerage is a stockbroker that executes buy and sell investment orders at a low cost. Discount brokerages usually charge low to no commissions on trade orders. In exchange, they don’t provide advice or analysis as part of executing the trades. Discount brokerages became much more popular in the digital age as people could manage low-cost trades on their own online versus working through a human stockbroker.
How Does a Discount Broker Work?
A discount broker works like a self-service option for making investments. As an investor, you are responsible for researching your trade ideas and setting up the buy and sell orders yourself. You also manage the portfolio over time yourself. Thanks to this setup, discount brokers can charge investors much lower fees and require lower account minimums. They are accessible to people with smaller portfolios.
Are All Brokers Discount Brokers Now?
Nearly every major broker offers a discount brokerage option. Long-time industry giants like Fidelity, J.P. Morgan, and Merrill built their businesses on human full-brokerage services. Yet today, all offer their own online discount brokerage platforms. However, investors can still choose to go with a full-service brokerage experience with human support if they’re willing to pay for it. Robo-advisors have also emerged. They use technology to provide the same portfolio management and advice as a human advisor at a much lower cost.
How We Picked the Best Discount Brokers
Providing readers with unbiased, comprehensive reviews of online brokers and trading platforms is a top priority for Investopedia. We combined our industry research, subject matter expertise, and investor survey data to guide the research and weightings for our 2024 online broker awards. To collect the data, we sent a digital survey with 110 questions to each of the 26 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Feb. 19 to March 19, 2024.
We then developed a proprietary model that scored each company to rate its performance across 11 major categories and 89 criteria to find the best online brokers and trading platforms. The score for each company’s overall star rating is a weighted average of the criteria in the following categories:
Additionally, during our 2024 research, many of the companies we reviewed gave us live demonstrations of their platforms and services via video conferencing methods and also granted our team of expert writers and editors access to live accounts so they could perform hands-on testing.
Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top online brokers and trading platforms.
Learn more abouthow we review online brokers.
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