3 Reasons to Dump Your Brokerage Account
by Maurie Backman | Published on Oct. 4, 2021
You may want a new brokerage account if these issues apply to yours.
Opening a brokerage account is a smart move. If you have cash you don't need to stick into savings to cover emergencies, investing that money is a great way to potentially grow it into a much larger sum over time.
But not all brokerage accounts are created equal. And if these things apply to yours, it may be time to get rid of your brokerage account and open a new one.
1. The fees are high
It used to be more difficult to find a brokerage account that didn't charge a fee every time you made a trade. Nowadays, a lot of popular brokerages don't impose per-trade fees. If you're paying those fees, you may want to move your money as soon as possible.
2. There's a minimum balance
Just as some bank accounts require you to maintain a minimum balance, so too do some brokerage accounts. But many brokerages don't require that, so if you want more flexibility, it pays to move your money elsewhere.
3. It doesn't offer crypto
Cryptocurrency can be a risky investment, and it's not right for everyone. But if you're interested in putting money into digital coins, it's convenient to have a brokerage account that lets you buy them. That way, you can manage your stocks and crypto on the same platform. If your brokerage account doesn't offer crypto, you may want to find one that does.
How to switch brokerage accounts
The process of switching brokerage accounts depends on the route you want to take. If you're willing to cash out all of your investments in your current account, you can take that money, close your account, and put it into a new account.
Things get a little trickier when you have investments you aren't ready to cash out. For example, if you own stocks whose share price has fallen, cashing them out means locking in losses.
In that case, you can transfer your shares from one brokerage account to another via an in-kind transfer. When you go that route, your stock purchase history is transferred as well. When stocks are sold at a gain or loss, there are tax implications, so it's important to have a record of your purchase history.
Keep in mind that some brokerages charge for an in-kind transfer. Your current brokerage account, not your new one, would impose that fee. But if that's the case, you might make up for that fee if your new brokerage account offers a sign-up bonus.
Given the number of brokerage accounts today, there's no sense in sticking with one that isn't working for you. If the above factors apply, don't hesitate to take your business elsewhere.
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