Scottrade Review

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Founded in 1980 in Scottsdale, Arizona, Scottrade has since become one of the most well-known online and branch-service stock trading services in the United States. Between 2008 and 2016, the company was awarded several high rankings from Fortune, JD Power and Associates, and others for customer and investor satisfaction.

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There are no monthly or maintenance charges on Scottrade accounts, which is a notable perk. Unlike other online brokers, however, Scottrade requires a $2,500 initial deposit to get started trading. Most online brokerages have a minimum starting deposit of under $1,000, or no minimum at all. For anyone planning on investing over $2,500 anyway, though, Scottrade is still a smart option. It has hundreds of brick-and-mortar stores across the country (the most of any online brokerage) that provide a high level of quality customer service and a deep knowledge base. Scottrade’s online trading platforms also offer all-around functionality that’s user-friendly for both advanced traders and beginners. Affordable online banking products, such as IRA accounts and mutual funds, are available through Scottrade too.

In this article

    Scottrade Details

    Pricing

    Minimum Deposit$2,500
    Mutual Funds (Broker-Assisted)No-load; no transaction fee: $25 to buy, sell, & exchange
    No-load: $42 to buy, sell, & exchange
    Load: $0 ($42 to sell & exchange)
    Mutual FundsNo-load; no transaction fee
    No-load: $17 to buy, sell, & exchange
    Load: $0 ($17 to sell & exchange)
    OptionsOnline: $7 + 0.70 contract
    Broker-assisted: $32 + 0.70 contract
    Touchtone (IVR) phone: $32 + 0.70 contract
    Option exercises and assignments: $17
    Stocks & ETFsOnline: $7 flat fee
    Broker-assisted: $32
    Touchtone (IVR) phone: $32
    Fees$0 annual fee; $0 inactivity fee; $75 outgoing/transfer fee

    Evaluation

    Best ForBeginner investors with over $2,500 capital
    Investments into IRAs
    Not ForThose with less than $2,500 startup capital
    Standout FeaturesEmail, chat, and toll-free phone customer support
    Competitive stock trading fees, including the lowest mutual fund trade among the largest competitors ($17)
    Availability of IRAs and other online banking products
    Number of Locations500+ locations in 48 states (excluding North Dakota and Wyoming)
    Products & ServicesStocks
    Bonds
    Options
    Mutual funds
    IRAs
    ETFs
    Real-time quotes and trades
    RankHighest in the industry in J. D. Power and Associates 2013 Investor Satisfaction Survey with an overall score of 810 which is 58 points above the industry average.
    Margin Rates7.75% under $24,999.99
    7.25% $25,000.00 to 49,999.99
    6.75% $50,000.00 to $99,999.99
    6.50% $100,000.00 to $249,999.99
    6.25% $250,000.00 to $499,999.99
    5.75% $500,000.00 to $999,999.99
    5.25% Above $1,000,000.00
    • Trading Platform: The Scottrade Trading Platform is intuitive, and user-friendly. Every window is laid out in a systematic way that makes sense (Home; Trades; My Account; and so on), and each window can be moved to a new location, refreshed, or closed separately. All the tools you would need to start trading, or get info on trades, are available at the top of your account page. Scottrade also offers a unique Portfolio Review Tool that’s one-of-a-kind in the industry, and provides up-to-date analysis of your portfolio at the click of a button.
    • Cost: After making the initial minimum $2,500 deposit, users can make any trade at an unlimited rate for $7 from their computer or mobile phone. Trading from a touchtone phone, or enlisting the help of an actual Scottrade rep, costs $32. The account must maintain a $2,000 balance and remain open and funded for at least six months. There is a $0 account minimum for IRA accounts. According to its website, users must have $500 in equity in an Individual, Joint, Trust, IRA, Roth IRA, or SEP IRA account with Scottrade to be eligible for a Scottrade Bank® account.
    • ScottradeELITE: ScottradeELITE is Scottrade’s advanced trading platform, meant for customers that choose to fund their account with a minimum of $25,000. The platform is fully customizable and contains additional trading tools and functions within the platform.
    • Streaming Quotes: Most online brokerages offer a one-time or subscription fee for streaming quotes, but Scottrade offers real-time quotes for free. The quote function also allows users to customize which stocks they want to track, news updates, and other real-time data that you might see on a CNBC or Bloomberg ticker.
    • Banking: Scottrade offers users banking services so long as they have at least $500 in equity in an Individual, Joint, Trust, IRA, Roth IRA, or SEP IRA account with the company. Interest is only .01% on balances above $100, but there are options for free checking accounts, debit cards, online banking, along with free standard checks and withdrawals.
    • No-Fee IRAs: Scottrade offers zero fees to open or maintain Traditional, Rollover, Roth, SEP, and Simple IRA accounts.
    • Mutual Funds: Investors who want to diversify their portfolios to decrease risk will be pleased to know they can choose from more than 14,000 non-proprietary mutual funds — more than E*TRADE (~8,000) or TD Ameritrade (~13,000). Over 2,000 of the Mutual Funds on Scottrade have no transaction fees.
    • Forex: Trading foreign currency is possible through Scottrade, but it is a risky endeavor, and the Scottrade Trading Platform is geared more toward trading US stocks.
    • Penny Stocks: Scottrade allows you to trade penny stocks at its normal $7 per trade rate, and will then charge $0.50% principal for any stocks that actually trade under $1.00, which is a standard practice throughout the industry.
    • Scottrade Knowledge Center: Scottrade has a stockpile of free, helpful documents, video tutorials, live web seminars, interactive webinars, FAQs, podcasts, and investment calculators.
    • Texting: You can set up Scottrade to notify you by text when your stock closes above or below average.
    • Mobile App: Available for both iPhone and Android, Scottrade offers an impressive mobile app that syncs with your desktop account, allowing for real-time trading through either platform.

    Scottrade’s Claim

    Scottrade prides itself on its unlimited $7 stock trades, as well as being one of the oldest and most trusted companies in the online stock trading industry. It boasts an impressive knowledge-base and educational platform that would be attractive to both intermediate investors and those just learning how to trade online. The trading platforms it provides are simple and easy to use, and with a variety of support options, new investors can expect the online trading learning curve to be relatively painless.

    Is it True?

    Yes. Scottrade makes good on its claims, offering industry-leading customer service, consistent and competitive trading rates, and an effective online trading platform. The stock trades are $7 + 0.70 per contract across the board. It also offers a variety of peripheral products, including IRAs, ETFs, mutual funds, and more. Scottrade consistently receives high consumer satisfaction ratings, too; offering one-on-one help at any one of its more than 500 store locations nationwide, as well as phone, email, and live-chat customer support. You can even ask questions through the company’s social media channels, and someone will actually respond to you.

    Signing up is fast and easy: you open up an account on Scottrade’s site, fill out a standard account form, deposit money into an account with a check transfer (ACH, account, or wire transfer options are available as well), and then you begin to build your portfolio. After that, new users will have to print, sign, and mail in the account agreement — a standard process among all online brokerage companies. This is the same process you’d go through if you were opening up an account at a physical location, and it’s simply unavoidable.

    Scottrade’s investor education program, the Knowledge Center, has a wide variety of informational literature and media that’s helpful to investors of every skill level, including investment education, trading calculators, help forums, how-tos, and updated lists of client education events. All of the articles are regularly updated and maintained, so you won’t be reading outdated information.

    The Competition

    • TD Ameritrade: $0 flat free trade plan; $0 minimum deposit. TD Ameritrade is known for being a well-rounded broker, but it is also one of the more expensive brokers out there.
    • E*TRADE: $0 flat fee trade plan; $0 minimum deposit. E*TRADE is largely recognized by its humorous television commercials and it maintains a valuable customer-oriented business model, similar to Scottrade.
    • Merrill Edge: $0 flat fee trade plan; $0 minimum deposit. Owned by Bank of America since 2010, Merrill Edge is affordable and is a good fit for those who already have various BoA accounts.

    Scottrade requires an initial $2,500 deposit for new accounts, whereas most online brokerages require less than $1,000 to get started. For example, E*TRADE and TD Ameritrade have no minimum deposit. But before you go running off to one of the brokerages that doesn’t require a minimum deposit, take pause. Remember that you’re going to have to deposit something into your account to be able to buy and sell stocks, no matter which online broker you go with. To make any substantial trades — even if just to learn how trading works — first time investors should make a $500-$2,500 deposit into any new trading account. It’s certainly possible to start making trades with a smaller initial deposit through one of Scottrade’s competitors, but if you know you are going to deposit an amount over $2,500 anyway, Scottrade will likely still be your best option.

    Cheaper (or Free!) Alternatives

    Unfortunately, there isn’t a way to trade stocks with Scottrade without the initial $2,500 deposit. It’s an expensive fact that can drive potential investors to brokers with lower startup costs. If you’re looking for the lowest per trade fee from an online stockbroker with a $0 minimum deposit, take a look at E*TRADE.

    What Others Are Saying

    Scottrade’s platform and ability to deliver a positive trading experience to its customers has largely stayed out of the media over the years. That’s because there’s nothing overtly newsworthy about a company doing what it should be doing. Consequently, the media Scottrade has garnered focuses mainly on its problems:

    • ThinkAdvisor reported that Scottrade and Morgan Stanley paid a sum of $950,000 to FINRA (Financial Industry Regulatory Authority) for failing to implement reasonable supervisory systems to monitor wire transfers to third-party accounts. Scottrade got hit again in November 2016 by FINRA for $2.6 million for failing to retain customer records and emails.
    • Business Insider reported that Scottrade was notified by the U.S. authorities that they had been a victim of a cyber-attack in October 2015. According to the report, the company didn’t even know its system had been breached. Fortunately, Scottrade uses enhanced encryption techniques when handling its users’ personal information, so no username or passwords were compromised.
    • Scottrade has also been charged or fined several times over the years by the SEC, for everything from misrepresenting details to customers, to failures in basic recordkeeping.

    Methodology

    SimpleScore

    The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.

    For every review, our editorial team:

    • Identifies five measurable aspects to compare across each brand
    • Determines the rating criteria for each aspect score
    • Averages the five aspect scores to produce a single SimpleScore

    Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best stock trading platforms and brokerages of 2020.

     

    Why do some brands have different SimpleScores on different pages?

    To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.

    However, it’s also possible for brands to have multiple SimpleScores, as we measure each category individually with a separate set of criteria. For example, when we apply our methodology to Chase’s stock trading product, it scores a 3.6 out of 5. On the other hand, when we compare Chase checking accounts, it scores a 4.4 out of 5.

    Questions about our methodology?

    Email Hayley Armstrong at hayley@thesimpledollar.com.

    Mobile app rating

    We took an average of each stock brokerage’s iOS App Store and Google Play ratings and scored brands based on the result.

    Additional products

    Investing is not just about stocks. We rated brands based on their product variety including ETFs, bonds, mutual funds, IRAs and options. The more products means higher the score.

    Resources

    We rated brands based on how many educational and investing resources are available. This includes Morningstar reports, market trends, how-to guides and more.

    Customer support

    When you run into trouble with your stock investment account, how can you get in touch for support? We award brands with more channels of support with higher scores in this aspect.

    Customer satisfaction

    We leveraged J.D. Power’s 2020 U.S. Self-Directed Investor Satisfaction Study to rate each brand’s customer satisfaction. As always, a higher customer satisfaction rating means a higher SimpleScore.