Yesterday MaoXian took a look at the financials of several brokerages. He noted Schwab’s amazing average of $37.59 per trade:

Charles Schwab reported 178,000 daily average revenue trades in Q1 (62 trading days) with average revenue earned per revenue trade of $37.59 (Yow!). 89% of total trades were placed online, by the way.

A couple of weeks ago I had a conversation with a friend of mine who is a Schwab customer. She mentioned to me that she was paying around $30 commissions. I was aghast! I used to pay those rates back in the early 1990’s. I figured that the only way Schwab could justify such high commissions was if she was making broker assisted trades. Turns out that she wasn’t… all of her trades were online. After asking her a bunch of questions and digging around Schwab’s site I came to the conclusion that she was either just being taken advantage of, or just chose the wrong type of account (or both).

Judging by the jumble of information on their site, it’s no wonder that somebody could get lost in their maze of different account types which each have different commission schedules. On one page you see an account with commissions of $29.95 which drops to $14.95 if you make more than 31(!!) trades per quarter. Yet, on the home page, there’s an ad for “$9.95 flat price for all market and limit equity trades with Schwab Trader CT™.” I have no idea why anybody would choose the $29.95 option.

I think what may have happened in her case is that she’s just been a Schwab customer for a long time and never got the reduced rates over the years. You know like how the cell phone companies won’t give you the better calling plans without you calling and asking for them.

Whatever the reason, $29.95 for non-broker assisted online trades is just criminal. Anybody who’s paying more than $15 commissions needs to rectify the situation immediately.

(FWIW, my trading account is with Schwab’s CyberTrader subsudiary, and I pay $9.95 commissions. Also be conscious of the potential effects of payment for order flow when looking at brokerages. Saving a few bucks on commissions only to lose a lot more due to (potentially) poor executions makes no sense.)