Bank of America Promotes Free Equity Trading For Savers

Contributed by mm | October 11, 2006 6:56 AM PST

Bank of America today announced that it starts to offer 30 free equity trades per month for customers who keep at least $25,000 in BofA deposit accounts.

Bank of America Corporation (NYSE-listed BAC) visits the New York Stock Exchange to celebrate the company's newest offering for its banking and investment customers. Effective immediately, Bank of America's primary retail brokerage unit, Banc of America Investment Services, Inc. (BAI) will offer as many as 30 free ($0) online equity trades per month for self-directed investors who maintain a combined balance of $25,000 or more in Bank of America, N.A. deposit accounts.

According to CNN Money, "Bank of America said the program is available to customers in the Northeast now and will be rolled out nationwide starting next spring."

It is quite a good deal if you have an emergency fund of over $25,000 and also trade often. Bank of America has some good-enough savings offerings, like a 4.75% APY 5-month "Risk-Free" Cd with no early withdrawal penalty (which is essentially high-yield savings account with rate protection) and 5.25% APY 10-month high-yield CD.

If you are not eligible for the free-trade offering, Banc of America Investment Services, Inc. still offers tiered pricing for $5/$7/$10/$14 equity trades for self-directed brokerage accounts.

I will be a bit hesitate to try out BofA's brokerage service though. Although the equity trade commission is competitive enough, BofA has a short list of No Transaction Fee (NTF) mutual fund offering, and it does charge $45 minimum transaction fee for no-load mutual fund trades, making it much less compelling as a one-stop service provider. For now, I'm very happy with the combination of Fidelity and Ameritrade.

(P.S. However, BofA's ambush triggered a sell-off of online discount brokerage pure plays like ET and SCHW.)

This Post Has Received 8 Comments. Share Your Opinions Too.

NLG Commented on October 11, 2006

Sounds like a pretty sweet deal.

Does anyone know of similar deals at Canadian insitutions? What is the best trading deal in Canada?

NG

Michael Commented on October 11, 2006

It looks like ETF purchases will not have any transaction fees, which will be great for people who want to dollar cost average small amounts monthly. This might finally make ETF investing worthwhile for those of use using low cost passive mutual funds at the moment.

Brendan Commented on October 12, 2006

I don't see why anyone would do a 4.75% CD at Bank of America when HSBC and Citibank (among others) are offering over 5% interest on savings accounts.

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PTA Commented on October 13, 2006

Has anyone looked into zecco.com, which advertises commission free stock trades?

TJP Commented on October 15, 2006

No transcation fees will help them gain more customers. I think it's a fairly smart move. they'll avoid competition and still profit.

Sharon Tucci Commented on October 16, 2006

I had originally thought this was a smart move on the part of Bank of America when I first heard about it. It's a fantastic way to leverage their existing customer base and perhaps gain new clients in the process. The thing is - in the end WILL they benefit from this or not? See, from where I am, I see that this will seem attractive to those with savings built up who might have otherwise been reluctant to invest in the market directly. Some of these are likely to be banking customers that would have just left the funds in a low yield account or secure investment.... ie profitable areas for BofA. I don't know... I can only presume they did their homework to know that they'd come out on the positive side by attracting more new business than they are going to lose on savings deposits.

A.B. Dada Commented on October 16, 2006

Of course they'll benefit -- if you put $25,000 into savings, BofA gets a higher balance on their reserves sheets, giving them more loaning power on the opposite end of the balance.

The FED isn't giving banks as much cheap liquidity as in the past, so this is the way that banks attract new liquidity from other banks. The more deposits you have, the higher you can stretch your reserve ratio.

Maximus Commented on October 16, 2006

I want to see execution stats on zecco.com