Commissions Cut for Fidelity's Online Investors

By Dian Vujovich

Well, that didn’t take long. When Charles Schwab Corp. recently announced they were going to cut the commission costs for online stock trades, the move sparked what always happens in the competitive world of online brokering: Got other firms to do the same.

Yesterday, Fidelity announced that they’re in the game and will cut commissions for U.S. online equity trades by 60 percent. That’s a chunk. And, will bring the cost of a trade from nearly 20 bucks down to a flat rate of $7.95. To be clear, that translates to $7.95 when buying shares and another $7.95 when selling shares.

Even better, Fidelity customers won’t pay a penny—as in no commission at all– when trading one of 25 different iShare ETFs.

But wait. There’s more. And it’s a catch.

Decide NOT to trade online at http://www.Fidelity.com through their Active Trader Pro, Wealth-Lab Pro or the Fidelity Anywhere program and the deal will cost you more.

When you use Fidelity’s Automated Service Telephone (FAST), you’ll pay $5 on top of that $7.95 bringing the commission cost to $12.95. Place your trade through a representative and the hit is even greater—an additional $25 will be tacked on to the newly discounted price and will bring the commission up to $32.95 per trade. Oh my.

Bottom line: Price wars of any kind do have an appeal but they’re not necessarily a win-win. Just look at the airlines—their fare wars have resulted in lower fares and the addition of ridiculous baggage fees. Does anybody out there have a brain? That they use??