Firstrade

Scottrade vs Interactive Brokers


Compare Interactive Brokers versus Scottrade - who is the better broker in 2021? Cost, IRA accounts, online trading platforms, mutual fund offerings comparison.



Scottrade is now TD Ameritrade



Scottrade has been assimilated into TD Ameritrade which does run a new client incentive right now.


IB and Scottrade/TD Ameritrade Promotions



Scottrade/TD Ameritrade: Get $0 commissions and ACAT fee reimbursement.

Interactive Brokers: Open account and get $200 for a friend you refer.



Account Pricing, Commissions, and Fees




Interactive Brokers


Scottrade

  • Stocks and ETFs: $0.005 per share with $1 minimum, 0.5% of trade value maximum for SMART routed orders
  • Options: $0.70 per contract if premium => $0.10; $0.50 per contract if $0.05 =< premium < $0.10; $0.25 per contract if premium < $0.05 + exchange fees. Minimum $1 per order.
  • Mutual funds: $14.95 (minimum size on initial fund order is $3,000, subsequent minimum order size is $100)
  • Corporate and municipal bonds: 0.1%* face value (10 bps) if <= $10,000 face value; 0.025%* face value (2.5 bps) if > $10,000 face value
  • Treasuries (bills, notes, bonds): 0.02%* face value (2 bps) if <= $1,000,000 face value; 0.002%* face value (0.2 bps) if > $1,000,000 face value; $5 minimum
  • Metals: 0.15 basis point * trade value; minimum $2; storage cost 0.10% per annum
  • US-future and future options: $0.85 per contract
  • Forex: 0.20 basis point * trade value if <= $1,000,000,000; minimum $2
  • Investment products: stocks, options, mutual funds, ETFs, bonds, futures, currency transactions, US SSFs, EFPs, metals
  • Interactive Brokers\IB minimum deposit to open account: $0 for cash account, $2,000 for margin account

  • Stocks and ETFs: $0
  • Stocks and ETFs broker assisted: $32
  • Options: $0 + $0.70 per contract
  • Mutual funds: $17
  • CDs, OTC Secondary Corporates, OTC Secondary Municipals, U.S. Treasury Bills, Notes, Bonds and STRIPS, New Corporate Offerings: subject to a markup or markdown
  • Listed Corporate Bonds: $35 + $3 per bond (minimum investment $1,000)
  • Unit Investment Trusts (UIT): $50 liquidation fee
  • Foreign Stocks Transferring In or Out: $60
  • Investment products: stocks, options, mutual funds, CDs, munis, U.S. Treasury, Canadian and foreign stocks, ETFs
  • Scottrade minimum deposit to open account: $2,500




Compare Pros



Interactive Brokers


Scottrade

  • Low pay-per-share commissions on stock trades with up to 1,000 shares and on options trades of up to 20 contracts
  • Professional trading platform
  • Lowest margin rates in the industry
  • Access to 100 markets worldwide
  • Rich selection of products for trading

  • No inactivity, account maintenance or hidden fees
  • No-fee IRAs
  • 500+ local branches for in-person assistance
  • Good banking services: savings, CDs, money market, and free checking account that comes with free ATM withdrawals, VISA check card, and first order of checks
  • Free real-time streaming quotes
  • Flexible dividend reinvestment program (DRIP)
  • Large number of no-commission mutual funds available
  • Instant funds deposits




Compare Cons



Interactive Brokers


Scottrade

  • $10 per month minimum commission requirement to avoid $10 monthly fee (rises to $20 monthly if account balance is less than $2,000; waived for $100,000+ accounts)
  • $10 monthly for market data feed (waived if trade commissions are more than $10 per month)
  • $7.50 quarterly fee for IRA accounts ($30 per year)
  • $10,000 minimum to open most accounts
  • Complicated fee structure
  • Trader Workstation is designed for professional traders; it is not intuitive and difficult to learn
  • Expensive to make trades with over 1,600 shares
  • Lots of customer complains about snobby customer service (and yes, we experienced it ourselves)
  • Merciless margin tightening and fast margin calls - IB apparently doesn't care if their customers get completely wiped out
  • Minimum size on initial mutual fund order is $3,000 (subsequent minimum order size is $100). Only no-load funds and short term redemption fee funds are offered
  • Technical problems with trading platforms and website
  • Long login process

  • Surcharge of 0.5% of the principal value on stocks priced under $1
  • No electronic withdrawals, but clients can use a debit card, checks, or ACH transfer from their bank
  • $25,000 account balance, or 9+ stock/option trades during the previous three months is required to use advanced trading platform (ScottradeELITE)
  • $2,500 minimum to open a brokerage account




Scottrade vs Interactive Brokers: Comparison Summary



Interactive Brokers/IB (Interactive Brokers Review) offers better commissions than Scottrade (Scottrade Review) on stock and ETF orders of up to 1,400 shares. For trades with over 1,400 shares Scottrade is a cheaper company. Mutual funds transaction have similar price tag at both brokers: $15 at IB and $17 at the competitor. While Scottrade offers close to 3,000 mutual funds that are free to buy and sell (NTF funds), Interactive Brokers doesn't offer NTF funds.

IB charges inactivity and market data fees for clients making less than $10 in commissions per month, which could cost a customer as much as $360 per year. Scottrade does not have inactivity fees.

Interactive Brokers is well-suited only for very active, professional traders who really know what they are doing. The company discourages beginners to apply for an account. Investors just starting out in online investing world are definitely better off with Scottrade, especially considering how rude customer service at IB is. Interactive Brokers is merciless to their clients, and will liquidate positions automatically in case of margin call without giving investors an opportunity to add funds. The firm tightened margin requirement at the worst time during 2008 market sell-off, and wiped out a lot of its own customers in the process.

Unlike the competitor, Scottrade offers over 500 local branches where customers could talk with someone face-to-face. Because there are no IRA setup, maintenance and closing fees, Scottrade is a great choice for a brokerage IRA account (IB is charging $30 annual IRA fee). In 2021 Scottrade however was rated as one of the Best Online Brokerages for self-directed investment account.

The bottom line is that if you trade options, or make a lot of stock or ETF trades of up to 1,400 shares, or trade at international markets, then open account with Interactive Brokers. If you are not in one of these categories then Scottrade is your broker.

Update:

Scottrade was acquired by TD Ameritrade last year. TD Ameritrade plans to fully integrate Scottrade by September of this year. For this reason it makes more sense to open an account with TD Ameritrade directly and skip possible transition inconveniences. New customers could take advantage of TD Ameritrade's promotion (see below) that allows them to trade for free for two months.


IB and Scottrade/TD Ameritrade Promotions



Scottrade/TD Ameritrade: Get $0 commissions and ACAT fee reimbursement.

Interactive Brokers: Open account and get $200 for a friend you refer.