At the start of this week, Bank of America said it plans to expand its zero-dollar trading services to all Preferred Rewards program account holders, while cutting out commissions for other customers. The Charlotte, NC-based consumer financial institution currently offers zero-dollar online trading through its established Merrill Edge Self-Directed program.
Bank of America head of Consumer Banking and Investments, Aaron Levine, explains, “We began offering zero-dollar trading 13 years ago as one of the many ways we reward clients for doing business with us.”
Specifically, the Bank of America loyalty program will now provide unlimited free trading of stocks, ETF’s, and options through the online trading platform. Before this new benefit, retail customers with a balance of at least $20,000 would be able to enjoy at least 10 free trades, depending on their account tier qualifications. In addition, Bank of America Merrill Edge service members who are not in the loyalty program will enjoy online trades at a lower fee, down from $6.95 to $2.95 per trade.
Apparently, the expansion of this benefit could certainly be seen as recognizing growth from membership. Indeed, Bank of America reported better-than-expected third-quarter numbers, which helped to quell some concerns that lower industry interest rates would slow growth. It is important to note, however, that as much as 87 percent of the trades made by loyalty group members were already free.
The move from Bank of America actually comes at a time when many other discount brokerages have already done the same. Sure enough, Charles Schwab Corp, Fidelity Investments, and TD Ameritrade have already made the switch to eliminating commissions for online trades. Obviously, this is a clever strategy to entice new clients to choose one platform or another as competition from a handful of fintech startups offering quick and cheap services continues to increase.