Beginning January 19, 2010, Schwab will be lowering its commission [PDF] from US$12.95 to US$8.95 per trade. That’s a whopping 30-percent off, for a total of 60-percent savings for every stock we buy-and-sell. The $8.95 fee is currently offered only to the rich (one millon dollars or more) or active traders (at least 120 times per year), so that’s great news for the other Schwab customers, who’re neither rich nor active, like me, to be included with the lower fee structure.
I don’t know how that’s going to impact Schwab, whether it will gain enough new customers to cover the loss in revenue from lowering its fees to current customers, or whether it will motivate current customers to trade more because of the lower fees. I hope it works out both ways for Schwab, for I plan to do more trading in 2010, not due to the discount, but because I will be selling my long-term holdings and regrouping my portfolio.
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