I have been a very active sharetrader with Commonwealth Securities for well over fifteen years. During this time CommSec charged me huge sums of brokerage while its parent company, Commonwealth Bank, paid a mere pittance of interest on the large cash balances that sat idly in a cash management account in between trades.
I thought I change all this by asking Commonwealth Bank to open an account which pays a slightly higher rate of interest. Got it all set up and linked to my sharetrading account, then went ahead with my next trade. Did I get a nasty surprise when I received Commsec's contract note! The brokerage plus GST had gone up from what used to be on this particular trade $103.69 to a whopping big $267.60, or a 158% increase!
It seems that what the Commonwealth Bank gives you with the one hand in slightly higher interest, it takes away with the other by a huge increase in fees! Nobody at the bank had told me - and I had been advised by the bank manager himself - that a change of account results in an increase in fees which outstrips the gain in interest by a factor of five!
I was so incensed by this sleight of hand that I immediately started to research other banks and online brokers. What I came up with made me wish that CommSec had put the boot into me many years earlier so that I would have gone and found another online broker who could have saved me an absolute fortune in brokerage and at the same time paid me a much better rate of interest.
Here are some comparisons of online brokerage rates (before GST):
Commonwealth Securities (at their most recent rate) 0.2838%
Commonwealth Securities (at their previous rate) 0.11%
ANZ Bank's E*Trade 0.1%
NAB Online Trading 0.1%
Bell Direct 0.1%
Morrison Securities 0.05 or 0.06%
Amscot 0.025%
These are innocent-looking percentages but on high trading volume they make a difference of thousands and tens of thousands of dollars between the lowest and the highest rate. Take a smallish $200,000 trade on which Commonwealth Securities used to charge 0.11% or $220 but which it has now increased to 0.2838% or $567. Amscot would have done the same trade for as little as $50.
ANZ's E*Trade would have done it for $200 PLUS given me QANTAS Frequent Flyer Points! My past trading volume would have given me several trips around the world already! And if I joined E*Trade before 30 June 2010, they would even give me $550 in FREE BROKERAGE!
And, without getting too technical, ANZ's E*Trade offers something CommSec never did: trailing stops! They are a great way to protect one's portfolio.
Well, every setback is a starting point for this Comeback Kid.
Don't disturb me! I am busy talking to several brokers who are all very keen to get my business!
P.S. Okay, I heard you: yes, I will have to learn how to use a new online trading platform but, hey, leaning new things keeps the old Alzheimer's at bay.
