Online Stock Brokers: Comparing Capital One and E*TRADE

By Jordan Wathen Markets Fool.com

There are so many brokerages, and so many ways to compare them, that comparing online stock brokers can be overwhelming. By focusing on the major differences, investors can find a brokerage that suits their investing style without getting bogged down by the details.With this in mind, let's see how two popular brokerages,E*TRADE and Capital One, compare on matters that are important for the long-term investor.

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Trading costs and commissions

Depending on how frequently you plan on trading, commission prices may be more or less important to you. There are some differences in trading costs between E*TRADE and Capital One for various types of trades, which are summarized in the table below.

Broker

Stocks/Options

ETFs

Mutual funds

E*TRADE

$9.99 per trade + $0.75 per options contract

$9.99 per trade

$19.99 per purchase

Capital One

$6.95 per trade + $0.75 per options contract

$6.95 per trade

$19.95 per purchase

Source: Company websites.

Truthfully, you might find your actual trading costs are much lower than published prices. Both brokers offer funds you can trade for free, and some special offerscan further reduce the cost of the average trade at either broker.

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Importantly, Capital One has alternative services through which you can make trades that aren't time sensitive and pay a lower commission. Prices under those options drop to $3.95 per stock trade, or $18.95 to invest in a portfolio of several stocks, ETFs, and mutual funds in one transaction. E*TRADE offers volume-based discounts, which result in lower prices for active traders.

Commission-free ETFs and NTF Funds

More and more brokers are offering commission-free trades on select ETFs in addition to no-transaction-fee investments in mutual funds. E*TRADE and Capital One both have investments that their clients can buy or sell for free.

Broker

Commission-free ETFs

NTF Mutual funds

E*TRADE

100+ (WisdomTree, Deutsche Bank, and Global X)

2,500+

Capital One

None

400+

Source: Company websites.

With more than 3,000 fee-free options at both brokerages, we can't list all the options here. But if you have a particular preference toward a certain fund, we'd encourage you to see if it's on a broker's list of fee-free funds.

Account minimums

If you thought you needed a lot of money to open a brokerage account, think again. Capital One does not have a minimum initial deposit requirement, whereas E*TRADE requires a minimum deposit of $500 to open an account. Neither broker's minimum is particularly high, and shouldn't prohibit any relatively serious investor from opening an account.

Trading platforms

The Motley Fool is a big believer in making investments for the long haul. Therefore, we don't do much trading, and for our purposes, the pros and cons of a trading platform are pretty much nonexistent. If we can place a trade, we're happy.

Ultimately, we tend to think the differences boil down to personal preference, so we'll let you form your own opinion about how a platform fits your investing style.

We invest for the long haul, so trading platforms aren't particularly important to how we invest. Image source: Getty Images.

International stocks and ADRs

Today's investors now have access to invest all around the world and stake their claims as part owners of publicly traded companies, foreign and domestic. While neither E*TRADE nor Capital One allow you to trade directly on foreign markets, both enable their clients to invest in foreign companies via American Depositary Receipts (ADRs).

Many well-known foreign companies (think household names, or massive multi-billion dollar companies) have ADRs. However, many smaller foreign companies do not.

Research quality and tools

It can be advantageous to have access to additional research services or tools that you otherwise might not have without a brokerage account.

E*TRADE offers analyst reports from S&P Capital IQ, Morningstar, and Thomson Reuters, just to name a handful of its research sources. Capital One's research center is based on Morningstar data, and it allows you to quickly compare companies on the basis of key financial metrics. Truly, depending on your process, you can find plenty to supplement your own due diligence with the research provided by either broker.

Mobile app reviews

Brokerages want you to be able to trade from almost anywhere, and mobile apps allow you to do just that. Here's how each broker's users and clients rated their iOS and Android apps (as of 12/14/2016).

Broker

Apple App Store

Google Play

E*TRADE

2.0 stars

4.0 stars

Capital One

3.5 stars

3.0 stars

Source: Relevant app stores.

E*TRADE vs. Capital One: Picking the better online stock broker

Realistically, two different people could declare either broker to be the "better" pick. If costs are your main concern, Capital One has lower commission prices, but E*TRADE has more no-fee funds. Realistically, these brokers are perhaps more similar than they are different, as both have accessible account minimums and provide Morningstar data and research to their clients, for example.

To be clear: The Motley Fool doesn't endorse any particular broker, but we are here to help. Before picking a broker, check out Fool.com's Broker Center for a comparison of several different brokers and their current special offers. If a retirement account is what you're looking for, the Fool.com IRA Center is tailored to retirement investors.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends WisdomTree Investments. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.