The E-Trade Fees Rant

matthew's picture

So for the first time in my life, my stock options vested. Yep, I got a (small) payout by cashing out some stock options I was granted when I was hired a few years ago. I also purchased some stock via my company's stock purchase plan and sold it.

Now, my company does all this stuff through E-Trade. That seems fine, and the transaction was straightforward. But oh, my lands, the fees! Fees for the trade. Fees for the transfer into my E-Trade cash account. Fees for the completion of the sale. A fee to withdraw the money from my account.

I did the math. With my employee stock purchase plan, due to all the fees, I actually LOSE MONEY investing in my company unless there's a substantial stock gain between vestment and sale. The options are basically free money, so "yay!", but losing money because I invested it is just not something that I wanted to do.

There are a couple ways to solve the problem. If I doubled my ESPP contribution, I'd make some money. A little, but some. If I eliminated it entirely, I'd save all the fee money, but eliminate a regular disbursement -- a kind of "forced savings" -- that I like because it gives us infusions of cash while we budget for a lower amount.

Decisions, decisions. Regardless, E-Trade charges too many fees for my liking.

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Ways around disbursement fees

There are no fees to transfer the funds into the cash side of your account, but the disbursement fees for checks and wires can be avoided. Ask E*Trade to send you the free checkbook or debit card for your account. Once the cash settles into your E*TRADE cash account, you can use the card or checkbook to access it. That way, you will only pay the commission to sell the stock (which you would have to pay regardless of what broker your company used) and nothing else. You will even get 5 free ATM fee refunds per month if you use the debit card. The ATM fees are typically credited back to you within 24 hours. If you don't want the checkbook or debit card and want to move the funds to another bank account, use the "Quick Transfer" feature on the E*TRADE website. It usually takes 2 to 3 business days to move funds out to another bank, but the service is free.

matthew's picture

Yeah, I don't believe that

Sorry, I don't believe the "no fees to transfer the funds into the cash side of your account" bit. At least at the time I cashed out the stock options, combining those plus disbursement fees ate up a lot of money.

My company moved from E-Trade to Fidelity. It's a much better experience. E-Trade fee-bombing sucked hardcore. Good for them if they changed their policy, but at the time this piece was written (November 2007) their enormous fees really pissed me off.

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Matthew P. Barnson

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Matthew P. Barnson