Understanding Brokerage Fees: Every Fee Explained
"Commission-free" doesn't mean free. Here's every fee brokers charge—the obvious ones, the hidden ones, and the ones they hope you never notice.
The Four Categories of Broker Fees
Trading Fees
These are the costs you pay each time you buy or sell. Most are now $0, but not all.
Stock & ETF Commissions
Good news: virtually every major broker offers $0 commission stock and ETF trades. This includes Fidelity, Schwab, E*TRADE, Robinhood, Webull, and more.
Exception: Interactive Brokers Pro charges $0.005/share (minimum $1). This is actually better for large orders because they don't use payment for order flow.
Options Contract Fees
| Broker | Per Contract | Notes |
|---|---|---|
| Robinhood | $0 | Truly free |
| Webull | $0 | Truly free |
| Public.com | $0 + rebates | May get paid on some orders |
| Firstrade | $0 | Truly free |
| E*TRADE | $0.50 - $0.65 | $0.50 with 30+ trades/quarter |
| Fidelity | $0.65 | No volume discount |
| Schwab | $0.65 | No volume discount |
| Tastytrade | $1 open / $0 close | Capped at $10/leg |
| IBKR | $0.15 - $0.65 | Tiered pricing |
Mutual Fund Fees
While ETFs trade free, mutual funds may carry transaction fees:
- Fidelity: $0 for Fidelity funds, $0-$49.95 for others
- Schwab: $0 for Schwab funds, $0-$49.95 for others
- Vanguard: $0 for most funds
Stick to your broker's own funds or their "no transaction fee" list to avoid these charges.
Regulatory Fees
Every stock sale incurs tiny SEC and FINRA fees—typically fractions of a penny per share. Brokers pass these through, but they're negligible (maybe $0.02 on a $1,000 trade).
Account Fees
These are ongoing charges for maintaining your account.
Account Maintenance Fees
Good news: most brokers have eliminated annual or monthly account fees. However, some still exist:
- IRA custodial fees: Some brokers charge $25-$50/year for IRA accounts. Fidelity, Schwab, and Vanguard don't.
- Inactivity fees: Rare now, but some brokers charge if you don't trade for 12+ months.
- Paper statement fees: $1-$5/month if you want physical statements mailed.
Premium/Subscription Fees
- Robinhood Gold: $5/month (margin, higher APY, IRA match)
- Webull Premium: $40/year (lower margin, IRA match, Level 2)
- Moomoo subscriptions: Various tiers for data and features
Transfer & Closure Fees
| Broker | Outgoing ACAT | Account Closure |
|---|---|---|
| Fidelity | $0 | $0 |
| Interactive Brokers | $0 | $0 |
| Schwab | $50 | $0 |
| E*TRADE | $75 | $0 |
| Robinhood | $100 | $0 |
| Webull | $75 | $0 |
Financing Fees
These apply when you borrow money from your broker.
Margin Interest
If you borrow money to buy securities, you pay interest on the loan. Rates vary wildly:
- Public.com: 4.9% (lowest in industry)
- Robinhood Gold: 5.75%
- Interactive Brokers: 5.83% (lower for larger balances)
- Fidelity: 10.575%
- Schwab: 10.00%
On a $50,000 margin balance, the difference between 4.9% and 10.575% is $2,838/year. This is one of the most underappreciated costs in investing.
Short Selling Fees
To short a stock, you borrow shares. The "hard to borrow" fee depends on how scarce the stock is:
- Easy to borrow (Apple, Microsoft): 0.25-1% annually
- Hard to borrow (meme stocks): 20-100%+ annually
Hidden Costs
These are the fees that don't appear on any schedule but definitely cost you money.
Payment for Order Flow (PFOF)
When brokers sell your orders to market makers, you may get slightly worse execution prices. Research suggests this costs $0.01-$0.02 per share on average. On 1,000 shares, that's $10-$20 you didn't know you paid.
Brokers without PFOF: Fidelity, IBKR Pro, Public.com, Vanguard
Cash Sweep Rate Spread
Your uninvested cash earns interest—but brokers often pay far below market rates:
- Schwab: ~0.45% (while earning 4%+ themselves)
- E*TRADE: ~0.55%
- Fidelity: ~2.7% (better, but still a spread)
- Robinhood Gold: 3.25%
- High-yield savings: 4%+ (benchmark)
On $50,000 cash, the difference between 0.45% and 4% is $1,775/year in lost interest.
Foreign Exchange Fees
Trading international stocks often incurs currency conversion fees of 0.5-1%. This is on top of any ADR fees for American Depositary Receipts.
Expense Ratios (Funds)
While not a broker fee, the expense ratios of funds you buy matter enormously:
- Index funds: 0.03-0.10% annually
- Actively managed funds: 0.50-1.50% annually
On $100,000, that's $30-$100 vs $500-$1,500 per year. This compounds over decades.
Total Cost Calculator
Here's a realistic annual cost comparison for a $100,000 portfolio:
Annual Cost Comparison ($100K Portfolio)
| Fee Type | Low-Cost Setup | High-Cost Setup |
|---|---|---|
| Trading commissions | $0 | $0 |
| Options (50 trades/yr) | $0 | $65 |
| Cash drag ($10K uninvested) | $75 | $355 |
| Margin interest ($25K) | $1,225 | $2,644 |
| Fund expense ratios | $50 | $750 |
| TOTAL | $1,350 | $3,814 |
Low-cost: Public margin, Robinhood Gold APY, index funds. High-cost: Schwab cash yield, Fidelity margin, active funds.
The Bottom Line
The biggest fees aren't trading commissions—they're margin interest, cash sweep spreads, and fund expense ratios. A $0 commission broker can still cost you thousands in hidden fees.
To minimize total costs:
- Choose low-cost index funds (0.03-0.10% expense ratio)
- Use a broker with competitive cash yields (3%+)
- If using margin, shop for the lowest rate (Public 4.9%, IBKR 5.83%)
- Consider PFOF-free brokers for large trades
The broker with the best headline marketing often isn't the cheapest. Look at total cost of ownership.
Compare Total Broker Costs
See all fees, rates, and hidden costs side by side.
Full Broker Comparison