Bank of America offers $0 equity trades
Written By TarikI applauded earlier this week as America’s second largest bank announced free equity trades for existing customers who hold $25,000 or more in their Bank of America deposit accounts.
Bank of America takes a giant step in the right direction to long term success because of three key reasons:
- Free trades is an attempt by Bank of America to encourage its current banking customers to open brokerage accounts with the BofA. BAC has gone away from traditional commission fee in order to take advantage of a more profitable gateway: higher assets versus cheap and highly competitive discount commissions.
- If only 33% of current banking customers sign up for a brokerage accounts, customers who manage $25,000 will account for billions of dollars, adding more asset value to Bank of America’s already hefty banking account holdings.
- Free equity trades were near anyway. Sogo Invest and Zecco, two discount brokerage firms, offer trades for $1 trade and free trades respectively. Bank of America increases its asset position while maintaining a highly competitive price.
I think Bank of America CEO Kenneth Lewis is doing a great job at creating long term value for shareholders through total asset growth rather than searching for dollars in the commission-trade market.
Note: I currently own shares of Bank of America (BAC)
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April 6th, 2007 at 1:41 pm
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