Interactive Brokers® review 2023
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Interactive Brokers: Best for
- Active trading
- Tradable securities
- Margin rates
Interactive Brokers seems to make improvements year after year, and it’s the same this time around, too. New mobile apps, well-designed education pages and a podcast join traditional strengths such as a wide variety of tradable securities and low margin rates, making the broker among the very best. In addition to more user-friendly and accessible pages and apps, Interactive Brokers offers both a paid-trading tier as well as a no-commission tier, and mutual fund investors will find a whopping 19,000 funds without a transaction fee. The broker is making a huge effort to attract a broader clientele than the professional traders it’s traditionally courted, and it shows.
Other top-scoring brokers in Bankrate’s reviews include Charles Schwab and Fidelity Investments, both solid picks for virtually any investor. Those on the hunt for a broker with a focus on trading may want to compare Interactive Brokers to TradeStation, too.
Interactive Brokers: In the details
Pros: Where Interactive Brokers stands out
Trading commissions are one of the biggest draws for customers, and Interactive Brokers definitely trumpets its pricing structure, which favors truly high-volume traders, but it operates a no-commission tier, too. The broker runs two service tiers: Pro and Lite, which are the paid and free levels, respectively.
Stocks and ETFs: On its Pro platform, Interactive Brokers’ headline rate for stock and exchange-traded funds (ETFs) trades is $1, but customers should note that’s a minimum commission and you could run up higher costs. 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 can be a good deal if you’re getting a better overall price for your shares with Interactive Brokers’ execution. High-volume active traders will have to evaluate whether the broker’s execution is worth the extra cost. Plus, traders on the Pro platform can receive $0 commissions on more than 150 no-transaction-fee ETFs.
If you’re running mammoth-sized trades (think 300,000 shares and up each month), then you’ll benefit from the broker’s tiered pricing, where commissions reach less than 10 percent of the half-penny rate. It’s another way that Interactive Brokers tries to attract active and professional traders.
But investors with a bit less coin can receive unlimited free stock and ETF trades if they’re part of the company’s Lite program. Plus, you’ll still enjoy many of the features of the flagship program.
No-transaction-fee mutual funds: Interactive Brokers bests all the top players in the number of no-transaction-fee mutual funds on offer. The broker offers more than 19,000 such mutual funds, both domestic and foreign, and these reduced fees are great for beginning investors.
Cryptocurrency: Interactive Brokers charges a commission of 0.12 to 0.18 percent, depending on monthly trade volume, with a $1.75 minimum commission. It charges no spread markups, unlike other brokers who tout commission-free crypto trading. So, for example, a basic $1,000 trade in a month would cost $1.80 and you’ll avoid paying fees that are hidden in the trading prices.
Interactive Brokers’ reputation in low-cost margin loans precedes it. It’s one of the best features of the broker’s Pro program and really stands out from others, and it 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 rates only go lower as you borrow more. In some cases, Interactive Brokers is charging less than half of what competitors are, so investors using margin often should absolutely examine this broker closely.
However, if you’re using the Lite program, you won’t enjoy rates that are quite so cheap. Here rates start at 2.5 percent above the benchmark rate. That’s still much better than comparable brokerages, however, and if you don’t use margin, then it’s not a deal-breaker anyway.
Such cheap margin may allow some clever investors to use their Interactive Brokers account as a way to fund larger purchases tremendously cheaply, but the margin rate is variable and if overall rates rise, so will the costs of your loan.
Interactive Brokers upped its trading platforms in 2022, expanding them meaningfully. Trader Workstation remains the broker’s flagship desktop trading platform, and it’s among the best in the industry. Now available is GlobalTrader, a new mobile app that lets you access more than 90 global markets, and IMPACT, a mobile app that lets you make ESG investments more efficiently and sort those that align with your values.
Back to the workhorse, though. Trader Workstation is not a platform for investors who have never used one before. 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, streaming news and plenty more. The platform also includes tools for risk management, such as option analytics, so 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.
If that’s too much, you can downshift to the basic client portal, a platform that will get the trading job done with its practical and no-frills interface. Or go mobile with its high-powered apps.
If you’re into socially responsible investing, then Interactive Brokers has what it says is a first for the industry: a detailed scoring system for ESG (environmental, social and governance) factors. The system scores companies along granular areas, such as reducing emissions or engaging with human rights or their workforce, and then totals a score for each ESG category and overall.
You’ll be able to quickly scan for companies that score highly and then compare them against one another with easy-to-use graphical representations. For those looking to evaluate their investments on these dimensions, this schema brings a usable way to put it into practice.
Looking to put ESG investing into practice? The broker offers its IMPACT mobile app that allows you to look at your holdings from an ESG perspective and trade in or out, among other features.
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 and metals (gold and silver) here, and can trade stocks on foreign exchanges as well. You’re going to feel like you can trade it all at Interactive Brokers.
In addition, working with Paxos Trust Company, the broker offers cryptocurrency trading, not something you’ll find at every brokerage rival. You’ll be able to trade Bitcoin, Bitcoin Cash, Ethereum and Litecoin at an attractive commission and, again, without those hidden markups.
Besides these traditional choices, Interactive Brokers introduced in 2022 what it calls event trading, which is binary options betting on whether specific events occur in a set time frame. Essentially, you bet on how a futures contract on the Chicago Mercantile Exchange will perform by the end of the day on a “yes-no” question, such as “Will Security X close above $10?”. The broker charges a flat $0.10 per contract fee for event trading.
Account management interface
Dealing with all the stuff surrounding actual trading can be a pain if the account management portion of a broker’s site is poorly laid out. Who wants to go hunting for tax forms? In years past we docked Interactive Brokers for its clunky account management page. It was disorganized, unintuitive and slow. That’s no longer the case, and it’s made serious strides.
Interactive Brokers has cleaned up its account management site, which you have to log into separately from the main trading platform, unlike the rest of the industry, though you can still trade here. It has a clean dashboard layout — with account balances, top positions, clearer menus, and one-click links to “high-frequency” parts of the site, such as downloadable activity reports, tax forms, funds transfer and the like. Plus, a trade button allows you to launch an order ticket quickly.
It’s a welcome change from the prior layout and may now be the easiest-to-use account site among the major online brokers.
Research and education
Interactive Brokers has made great efforts recently to improve the education on its site. While the broker has been historically good about catering to advanced investors, it was less focused on beginners. Now, it’s shifted some of that emphasis and includes content that’s more relevant for a newer crowd, though overall it’s more focused on trading than long-term investing. In addition, the much better content organization has simply made the product much more accessible.
Another notable improvement: the broker has made it clearer for readers how to navigate its educational content such as its Trader’s Academy, which offers tons of articles on investing, economics, using the broker’s tools and so much more. Courses are thematically divided, and you can also separate them out by skill level, with beginner, intermediate and advanced tiers. It also features a clear place to begin, making this some of the clearest broker content out there.
As before, active traders will likely find the offerings very useful, especially as they expand their circle of competence. The broker offers webinars as well as courses on specific markets and its own trading tools. It also offers fundamental analysis and market commentary from nearly 100 pros, including access to free research resources as well as paid research services, all of which may appeal to both new and advanced investors. Tack on a newly launched podcast, too.
It’s worth reiterating: Interactive Brokers has made much progress in its educational offerings, meaning what was a slight negative in prior reviews should now be seen as a solid positive.
Cons: Where Interactive Brokers could improve
Limited retirement account types
If you’re looking for a few of the more specialized retirement account types, Interactive Brokers may not be for you. Of course, the broker offers the big retirement account types – traditional IRA, Roth IRA, rollover IRA and SEP IRA – but it’s lacking a couple of others that have grown popular in recent years, including the SIMPLE IRA (which is organized through a business) and the solo 401(k), which is arguably a better alternative to the SEP IRA.
Interactive Brokers offers so many other account types, including the other key retirement accounts, that these missing types are not a dealbreaker for most people.
No fractional dividend reinvestment
Interactive Brokers has the dubious distinction of being the only major online broker that lets you buy fractional shares but doesn’t allow you to reinvest your dividend that way. So it’s better than brokers allowing only reinvestment, but not quite as good as those doing both — a small point.
That said, the Interactive Brokers fractional purchase program is more robust than rivals, allowing you to buy partial shares in a simply huge number of stocks and funds, including U.S. and European stocks and ETFs — more than 10,000 in total! Tops by our count.
Middle-of-the-road options pricing
Interactive Brokers just hits the industry standard options pricing of $0.65 per contract. Not bad, surely, but other brokers offer better non-discounted pricing with no or little volume (not counting the free apps). For example, Ally Invest charges just $0.50 per contract, while E-Trade charges $0.50 a contract if you make 30 trades per quarter, not exactly high volume.
Firstrade4.0 Bankrate Score
Firstrade is a solid brokerage offering that may particularly appeal to options traders because of its commission-free options trades. You’ll also get access to quality research and its mobile app, but mutual fund investors may be disappointed by the small number of no-transaction fee funds available.
TD Ameritrade4.5 Bankrate Score
TD Ameritrade still offers strong platforms and a range of research for its clients, making it a very solid pick for more advanced traders, even as it is about to merge with Charles Schwab. A wide range of tradable securities and plenty of commission-free mutual funds make this broker interesting for both new and advanced traders, as do the competitive commissions.
WellsTrade2.5 Bankrate Score
WellsTrade handles most of the basics well and could be a good fit for existing Wells Fargo customers looking to consolidate accounts in one place. However, active traders should likely look elsewhere for their brokerage needs due to high options costs and a barebones trading platform.
J.P. Morgan Self-Directed Investing3.0 Bankrate Score
J.P Morgan’s Self-Directed Investing platform is a good fit for existing Chase customers who are looking for a low-cost way to trade stocks, ETFs and mutual funds while getting access to the bank’s easy-to-use mobile app. However, only a few account types are offered and If you’re looking to trade forex, futures or crypto, you’ll need to look elsewhere.
E*Trade4.5 Bankrate Score
E-Trade is likely to be a suitable broker choice for many investors who will appreciate its low trading costs, high-quality research and education, and 24/7 access to customer service. However, if you’re starting small and looking to trade fractional shares, you’ll need to find a different option.
Ally Invest4.0 Bankrate Score
Ally Invest offers a solid brokerage with many of the features that investors have come to love, especially no-commission trades on stocks and ETFs, but it ups the game with low-cost options trades, too. All-hours customer support and an all-encompassing mobile app will make sure you get business done on your terms, though mutual fund investors may be a bit disappointed.
Merrill Edge4.5 Bankrate Score
Merrill Edge brings strong research and education to the investing space, offering a solid trading platform for stocks, bonds, options and funds. You’ll likely find some extra things to love here if you’re already a customer of parent Bank of America, with 24/7 phone support and in-branch service potentially making that relationship even more meaningful to clients.
Fidelity5.0 Bankrate Score
Fidelity Investments is back again with another blowout performance in Bankrate’s reviews. This broker seems to do it all right, from low costs to plenty of research to mutual funds to prompt and courteous customer service. And with so much under the Fidelity roof – banking, credit cards and more – you could capably run your financial life here.
Charles Schwab5.0 Bankrate Score
Charles Schwab is a great all-around broker, whether you’re just getting started investing or are more advanced, and it can bring the heat on almost anything you’re likely to need. Add on strong customer support, a wide investment selection, no-commission mutual funds, and tons of research, and you have the makings of a five-star broker.
Webull4.0 Bankrate Score
Webull offers a lot that investors will like such as commission-free trading, fractional shares and a slick mobile app that allows you to trade on the go or keep tabs on your favorite stocks. But only a few account types are offered and you won’t find the level of research that is available through other brokers.
Robinhood3.5 Bankrate Score
Robinhood has taken its game up a notch or two, pairing its traditional no-cost trading with new IRA accounts (and a special bonus match for clients) as well as improvements in customer service, including 24/7 chat. The mobile app remains an attractive place for options traders but is a no-go for those looking for mutual funds or a wide range of account types.
Vanguard3.0 Bankrate Score
Vanguard’s brokerage offering can handle the basics well and may be a good fit for long-term fund investors. But more active traders will be disappointed by the basic trading platform and high commissions for options trading.
TradeStation3.5 Bankrate Score
TradeStation’s brokerage offering is likely to suit active traders better than it does new investors or those just looking to save for retirement. Customers will get an advanced trading platform with low commissions, but you won’t find fractional shares and the mutual fund offering is limited.
SoFi Active Investing3.0 Bankrate Score
SoFi Active Investing is a low-cost broker that should meet the needs of new investors looking to only trade stocks and ETFs. More experienced investors may be disappointed by the lack of options or mutual fund trading and a limited research offering.
moomoo3.0 Bankrate Score
Moomoo joins a crowded field of discount brokerages with an appeal to individual traders, offering some atypical features, including access to U.S., Hong Kong and Chinese markets. Competitive pricing on stocks, ETFs and options will prove welcome with traders, though others may find the lack of account types, limited available securities and high transfer fees off-putting.
Zacks Trade3.5 Bankrate Score
Zacks Trade is a broker that should appeal to active traders with its advanced trading platform and ample research offering. New investors may be turned off by the high account minimum and fees for mutual fund trades.
Lightspeed3.0 Bankrate Score
Lightspeed is all about active traders who can deliver volume to the broker, and so everything is optimized around making the experience the best for them. That means discounted prices for high-volume trades and multiple high-power trading platforms, but it also means no concern for eliminating the nickel-and-dime costs that other brokers routinely slash.
tastytrade3.5 Bankrate Score
Tastytrade offers some of the lowest commissions around, whether you’re trading stocks, options or even cryptocurrency – and it actually caps your commissions on the latter two. Traders should find a lot to like here, among the commissions, trading platform and the variety of trading securities on offer, though long-term investors may bemoan the lack of mutual funds.