Interactive Brokers® Review 2019

James Royal is a reporter covering investing and wealth management. Before joining Bankrate, he worked as a writer for NerdWallet and a stock analyst for The Motley Fool. He holds a doctorate in literature from the University of Florida.

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Interactive Brokers Logo

Best For

  • Active trading
  • Volume discounts
  • Margin trading

Interactive Brokers is a broker for active traders and professionals, offering a high-caliber trading platform, tools and overall experience. It’s a great choice for investors who have some money stocked away and don’t need to worry about the broker’s monthly activity fee. And it’s especially good for investors who actively use margin, since Interactive Brokers offers among the cheapest rates for loans in the industry. The broker’s other major selling point is low trading commissions, as it charges just $1 to execute a trade, for up to 200 shares.

All in all, Interactive Brokers is a great pick for those who are serious about investing.

Interactive Brokers at a glance

Star Rating

4
  • Affordability: 5 of 5
  • Usability: 3 of 5
  • Tools & Research: 5 of 5
  • Mobile: 3 of 5
  • Scalability: 4 of 5
  • Minimum Balance:
    $0
  • Cost per stock trade:
    $1*
  • Cost per options trade:
    $0.70 per contract
  • Promotion:
    None
  • Commission-free mutual funds or ETFs:
    50+ commission-free ETFs
  • No-transaction-fee mutual funds:
    4000+ NTF mutual funds
  • Securities tradable:
    Stocks, ETFs, bonds, mutual funds, options, futures, forex, metals
  • Customer service:
    Phone 24/7, chat M-F 8-8, email
  • Account fees:
    Must generate at least $10 in commissions per month for accounts under $100k, or will be charged the difference up to $10. More punitive for accounts under $2k
  • Mobile app:
    Interactive Brokers offers the “IBKR Mobile” app on the Apple App Store and Google Play Store

*minimum, or $0.005 per share, but also tiered structure

 

Features you’ll love

Trader Workstation: This is Interactive Brokers’ flagship trading platform, and it’s among the best in the industry. This is not a platform for investors who have never used one before, however. It’s a complex, fully featured program that feels like it does just about everything. You’ll get real-time monitoring, market data, customizable charts and streaming news.

The platform also includes tools for risk management, such as option analytics, so that you can see how price changes affect options values. You’ll have access to more than 100 global markets all from your desktop, and you’ll be able to trade virtually anything that trades.

If that’s all a bit too much, traders can downshift to the highly functional WebTrader, a platform that will still get the trading job done with its highly practical and no-frills interface.

Where Interactive Brokers rocks

Low trading commissions

Low trading commissions are one of the biggest draws for customers, and Interactive Brokers definitely trumpets its pricing structure, as it should.

Stocks and ETFs: Interactive Brokers’ headline rate for stock and exchange-traded funds (ETF) trades is $1, but customers should note that’s a minimum commission and you could run up higher costs than that. That’s because the broker’s pricing is based on a per-share cost of a half-penny per share. If you trade more than 200 shares, you’ll start to move above that $1 headline rate. Still, a $1 trade is a good deal, especially if you’re not running thousands of shares in each trade. If you’re running mammoth-sized trades (think 300,000 shares and up), then you’ll benefit from the broker’s lower-tiered pricing, where commissions can reach as low as just 10 percent of the half-penny rate. It’s another way that Interactive Brokers tries to attract active and professional traders.

Options: Among the brokers who charge a commission for options trading, Interactive Brokers stands among the cheapest. Unlike most brokers, Interactive does not charge a base commission and then typically charges a $0.70 per-contract fee. But here, too, the broker offers discount pricing, with rates as cheap as $0.15 per contract, if you trade more than 100,000 contracts a month.

No-transaction-fee mutual funds: With just 50 or so, Interactive Brokers does not offer a lot in the way of commission-free ETFs, but it’s competitive with all the top players in the number of no-transaction-fee mutual funds on offer. The broker offers more than 4,000 such mutual funds, and these reduced fees are great for beginning investors.

Margin rates

Interactive Brokers’ reputation in low-cost margin loans proceeds it. It’s one of the best features of the broker and really makes it stand out from others, and that makes Interactive especially popular with advanced traders. For margin balances below $100,000, the broker charges just 1.5 percent above the benchmark rate, and the fees only go lower as you borrow more. In some cases, Interactive Brokers is charging less than half of what competitors are, so those investors using margin often should absolutely examine this broker closely.

Variety of investing choices

If it trades on a public exchange, it feels like it’s available to trade on Interactive Brokers. Of course, the broker offers the usual candidates – stocks, bonds, ETFs, mutual funds and options – but it goes even further. Traders can also find futures, forex and metals there and are able to trade stocks on foreign exchanges as well. You’re going to feel like you can trade it all at Interactive Brokers.

 

Quick comparison of Brokerage options:
Brokerage Overall Rating Avg. Cost Per Trade Usability Rating
Interactive Brokers logo
$1* 3 of 5
Ally Invest® Review 2019 logo Read Our Review
$4.95* 4 of 5
Merrill Edge® Review 2019 logo Read Our Review
$6.95 3 of 5
TD Ameritrade® Review 2019 logo Read Our Review
$6.95 5 of 5

Where Interactive Brokers could improve

Account fees: The account or inactivity fee that Interactive Brokers charges definitely sets it apart from the rest of the industry, where the trend for a long while has been lower fees. And it’s a relatively large fee, as well. Interactive Brokers expects you to generate at least $10 in monthly commissions, and if you don’t, you’ll be charged an inactivity fee to make up the difference. There are a few scenarios, depending on how much you have at the broker:

  • If you have more than $100,000, the good news is that you won’t pay an inactivity fee at all, even if you don’t meet the minimum monthly commission.
  • If you have more than $2,000 but less than $100,000, you’ll need to meet that $10 monthly minimum in order to avoid the inactivity fee.
  • If you have less than $2,000, the minimum monthly commission rises to $20.  

This tiered structure is confusing and definitely penalizes investors with smaller account balances. To frame things another way, an Interactive Brokers account will cost you at least $120 a year if you have less than $100,000 in assets there.

Clumsy interface: The basic trade platform is stripped-down and, while it has a variety of figures on it, it’s simple enough to enter and execute trades. The clumsy interface comes on the account management side of the site. Unlike the rest of the industry, Interactive Brokers requires you to log in separately to access account information. Once you’re in, you’re presented with all kinds of menus and trading reports. It’s a dizzying array of options, and it’s really not all that easy to navigate to what you want.

That said, Interactive Brokers has worked to make this part of its site more user-friendly, and its messaging program is substantially better than it was, but it’s not as smooth as it needs to be. This is not a deal-breaker, by any means, but you should note that it can take more time than it probably should to find what you need.

Bottom line

Interactive Brokers is well-calibrated for the needs of active and professional investors, with many features that are attuned to their needs:

  • Low margin rates that allow traders to expand their buying power to take advantage of opportunities.
  • A world-class trading platform that allows you to take advantage of Interactive Brokers’ execution capabilities.
  • The ability to buy almost anything that trades anywhere in the world.

Those who think the account fee is a bit too steep could turn to Fidelity Investments or even Merrill Edge, where you’ll be able to find free monthly trades for the same amount that you need at Interactive Brokers just to avoid the account fee. And while Interactive Brokers touts its $1 trade fee, traders turning more than 1,000-share blocks might find a better value at one of the fixed-price brokers such as Charles Schwab, Fidelity, or TD Ameritrade.

 

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