Is Scottrade a Scam? Is Scottrade Safe and Legitimate Brokerage Company? Are Your Money, Assets and Investments Insured?

Acquisition By TD Ameritrade

Scottrade has been assimilated into TD Ameritrade one of the safest firms in the industry.

TD Ameritrade Promotion

Open TD Ameritrade Account

Is Scottrade Safe?

Some of our readers who are new to investing world sometimes ask us the following questions: Is Scottrade a scam? Is Scottrade safe to use, to keep money and investments? Is my Scottrade account SIPC/FDIC insured? We want to clear all these fears and concerns: Scottrade is a legitimate, safe brokerage firm that has been in business for over 30 years. In fact, Scottrade is one of the five largest and best-known brokerage houses in the United States - so called "Big 5 Brokerages". The firm is reviewed every year by major financial magazines, such as Barron's and Kiplinger, and always gets high scores. There is a number of business analysts that are watching the firm's financial situation and they will not be shy to speak up if anything suspicious was going on.

Is Scottrade SIPC Insured And FINRA Regulated?

Scottrade is a member of FINRA and SIPC. It means that Scottrade brokerage accounts are insured in case of firm failure. The insurance is limited to $500,000 per customer, including up to $250,000 for cash.

Is Scottrade FDIC Insured?

For those who use Scottrade banking services - the firm is also a member of FDIC. The basic FDIC insurance amount is $250,000 per account holder per insured bank for deposit accounts and $250,000 for certain retirement accounts deposited at an insured bank. These insurance limits include principal and accrued interest.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, municipal securities, and money market funds, even if these investments were bought from an insured bank. However, customers of Scottrade checking account enjoy full FDIC insurance coverage.

Scottrade BBB Rating

Scottrade BBB (Better Business Bureau) rating is A+. Considering that the firm has a few million customers this result is actually amazing.

On the Scottrade Better Business Bureau page there is a total of 51 closed complaints.

Founded in 1980, Scottrade is a discount retail brokerage firm with over 500 service center locations across the United States. People who are partial to low trading fees and easy to use platforms will find Scottrade provides all that account holders need.

Getting Started

For the majority of accounts, a client merely needs to fill out a simple application which can be downloaded online through Scottrade’s website. For the first time, many people opt to visit a local branch to fill out the paperwork and fund the account. It is also a way to get to meet the manager and staff in case the need to contact these individuals in the future arises. Otherwise, the online application can be downloaded, printed, filled out, and mailed along with a check ($2500 minimum) to open up an account. Once Scottrade receives the completed paperwork, a client would be contacted with an acknowledgement of the processing and opening of the account.


There are no fees to open an account with Scottrade. Trading stocks, no matter the size, is just $7 through Scottrade’s website; however, for customers who prefer to trade through brokers at the branches or on the phone, the fees are $32 per trade.


Scottrade offers sophisticated tools to help clients who trade options. Among these are tools for showing profit and loss analysis, as well as implied volatility. Clients can also access option chains in order to identify and calculate the right one for their goals and time-frame.

Option strategies that can be utilized through the website include income strategies for selling cash secured puts and covered calls; growth strategies for buying puts and calls; and speculative strategies for selling uncovered puts. Traders can also buy and sell mini option contracts for these securities: APPL, AMZN, GOOG, GLD, and SPY.

Trading options with Scottrade has the same price structure as trading stocks along with an additional $0.70 per contract. The option assignment or exercise fee is $17 per separate security.

Mutual Funds

Scottrade features over 14,000 mutual funds for its clients. The funds are available in all categories: US Large Cap, US Mid Cap, US Small Cap, International Equity, and Fixed Income. Over half of these mutual funds are no-load, which have a $17 fee for buying or selling. Approximately 2,600 are no-load, no transaction fee (NTF), and the rest are load mutual funds, which have no fee to buy and a $17 fee to sell. Trading these funds with broker assistance carries higher fees that include $25 for buying or selling no-load, no transaction fee (NFT); $42 for buying or selling no-load; and $42 for selling load funds.

Scottrade offers clients on-line tools to assist them in selecting which mutual funds fit their objectives. Independent research from Morningstar ratings and analyst reports can be easily accessed. Customers can also find mutual fund news, recent market events, market statistics, and expert commentary from Standard & Poor’s. Furthermore, pre-defined screeners can show short-term, fixed-income funds and income-oriented funds.

Other Accounts

Aside from regular brokerage account, Scottrade also provides a wide array of other accounts, which include IRAs, Trusts, Custodial/Guardian, and Business accounts.

Final Thoughts

Factors that draw clients to Scottrade include the low fees for trading and no fees for account maintenance or inactivity. In addition, customers like easy-to-use website and trading platform.